Human Services inks $480m IBM hardware contract

The Department of Human Services has signed a $481 million contract with mega vendor IBM to continue to support its mainframe environment.

The new five-year ICT hardware lease deal will push out a long-running partnership between the pair until at least 2023.

It brings the total value of their relationship to close to $2 billion since 2005, after the last four year mainframe deal was signed back in 2016 for the almost identical sum of $484.2 million.

Legacy mainframe systems provided by IBM – and increasingly z14 mainframe systems –remain the backbone of key government programs like Centrelink and Medicare.

DHS is also is the process of building out a private cloud that will initially sit across x86 and IBM Power Systems hardware, which will house a data lake, analytics and machine learning capabilities.  

The new contract follows the introduction of the government-wide arrangement with Big Blue last month to synchronise essential IT buying across big and small agencies.

That deal - brokered by the Digital Transformation Agency - is slated to cost approximately $1 billion over the term its five year life.

However it includes around $300 million of existing contracts with agencies, meaning DHS' new contract makes up the bulk of the projected spend.

“As a major buyer of IBM’s products and services, the deal enables us to maximise the return on our ICT investments and ensures that taxpayers are always getting the best possible value for money,” Minister Assisting the Prime Minister for Digital Transformation Michael Keenan said at the time.

A spokesperson told iTnews that DHS' component of the agreement "is worth approximately $480 million" and extends the 2016 mainframe lease and maintenance contract out to 2023.

Mainframe sales continue to represent a significant chunk of the IBM revenue, with the latest financial results revealing that its IBM Z mainframe business has doubled year-on-year.