NSW IT outsourcing could expand beyond ServiceFirst

Documents outlining the NSW government’s plans to outsource the functions of shared services provider ServiceFirst have revealed the state’s market-focused agenda could grow to take in other areas of the public sector.

The Department of Finance and Services today formally invited registrations of interest in three bundles of services (including ICT) currently supplied by ServiceFirst to several agency clients including the rest of DFS, the Department of Premier and Cabinet cluster and the NSW Treasury cluster.

ServiceFirst currently supplies IT services including ERP provision and support, IT infrastructure, end user computing and IT service desk.

The government pitch to bidders made clear they should demonstrate “the potential to undertake an increased and/or expanded scope of activities in the future”.

“There may be potential to secure business from additional government agencies when the value proposition is proven,” the documents state.

A spokeswoman for the DFS said while the current ROI process was strictly limited to “considering ServiceFirst and its clients”, DFS was open to onboarding more agencies in the future.

“DFS is considering how current services can be delivered in a better, more cost effective way with consistent quality. If the model succeeds, other agencies may wish to use the services of the provider,” she said.

Under the state’s 2010 shared services blueprint, larger departments operate single internally managed shared services units, while smaller entities are served by ServiceFirst.

The NSW government has been quietly planning to outsource the shared service provider since 2013 at least.

Finance and Service Minister Andrew Constance confirmed the state was looking into the option back in September.

Tender documents reveal a formal scoping study commenced in 2013 “in response to NSW Government's request to explore opportunities to derive greater benefits from shared services”. Later in 2013 it handed back a recommendation to outsource, which was approved by the minister earlier this year.

The confirmation that ServiceFirst's functions would be put to the market will have added to a series of shocks suffered by the agency's staff since the change of government in April 2011.

Machinery of government changes initiated by the incoming O’Farrell government saw swathes of ServiceFirst’s client base shifted into new cluster arrangements.

In response ServiceFirst was forced to cut 118 FTE positions, taking its workforce down to 346. This “internal efficiencies program” reduced the agency’s operating costs from $103 million in FY11 to $90 million in FY13.

ServiceFirst’s client base currently sits at about 7500 – but is set to drop again before the most recent tendering process is completed.

The NSW Catchment Management Authorities, NSW Consumer Trader and Tenancy Tribunal and NSW Office of Water – which collectively represent about 1200 end users – all plan to pull out of their ServiceFirst deals in July this year.

The NSW government will start taking final bids from shortlisted vendors in July 2014, ahead of negotiating one or more contracts.