Victoria cancels plans to outsource CenITex

Victoria's Labor government has cancelled plans to outsource the functions of the state's IT shared services provider CenITex following recommendations of an internal review into the state's delivery of internal services.

The decision ends a long period of uncertainty for the agency's 541 full time employees and contractors (as of June 30 last year), who have faced an anxious wait since the former Liberal state government announced it would dismantle CenITex in 2013.

The market testing process kicked off towards the end of that year, with functions to be bundled into five separate contracts. The state government later decided to consolidate the work together into a single deal and reopened bids, but failed to secure a contract before the November 2014 election.

The outsourcing plans were put on hold in March this year after the Labor party came to power and kicked off a review into service delivery across the government.

It today announced that Project Atlas - the program to outsource the functions of CenITex - has been formally cancelled.

The Department of Treasury and Finance advised that CenITex will remain as is and continue to provide most of its services to government bodies.

No positions within CenITex will be affected, the department advised.

“High quality business systems and technology platforms are critical to driving better results and more collaborative practices across government agencies," Special Minister of State Gavin Jennings said in a statement.

“This review found that the former Liberal government’s proposal to outsource all of CenITex’s services in one package would have left the government worse off.”

The report [pdf] found there was limited confidence that outsourcing the functions to one provider would deliver value for money. It claimed the business case didn't account for the high cost of transitioning to a new provider.

Similarly, the government would have ended up with a fixed package of services from one vendor and allowed the provider to influence decisions on IT service standards, Labor said. 

Not all services retained

But while CenITex will continue to deliver the secure processing and information management services it currently provides, its collaboration services - desktop and end user devices - alongside network carriage services will be outsourced to the market.

"Some of CenITex’s services require a specialist understanding of the Victorian government, or are not readily available in the market," the report said, specifically referencing secure data processing and storage, specialist infosec services, service desk, field technical support and account management for varied processes.

Others - such as email, infrastructure, management of data networks, and standard data processing and storage - do not need to be tailored to Victorian agencies and can be accessed from the market, according to the report.

"It is important to distinguish those ICT infrastructure services which are ubiquitous business services that any business requires from those that underpin core business systems that meet the specific needs of government agencies," the report stated.

"There are many services now available through external providers that Victorian government could choose to use."

The state's department of premier and cabinet will therefore develop standards, requirements and a sourcing strategy to test the market for workplace collaboration and network management services.

It is aiming to finalise the standards and present a new business case by the fourth quarter of this year.

CenITex CEO Michael Vanderheide told staff today he welcomed the certainity they agency now had for its future.

"Due in no small part to your hard work and professionalism over the past two years, we head into that future from a solid base," he said in a memo, sighted by iTnews.

"We will end the year in profit and with a strong balance sheet. We are budgeting to continue to be in surplus in the coming year, which will enable us to reduce prices. Customer project demand is higher than budget, we're meeting service levels and our attrition rate remains at historically low levels.

"Our focus will shift from preparing for a smooth transition of services to an external vendor, to building a closer relationship with our customers, delivering a more contemporary workplace environment and exploring the opportunities that the cloud offers for greater efficiency, mobility and lower cost."

VicConnect dumped

Plans by former chief technology officer Grantly Mailes - who was ousted in a recent restructure - to introduce a a single government network have also now been cancelled by the Labor government.

The so-called VicConnect project was to replace the 11-year old telecommunications purchasing and management strategy (TPAMS) deals, which were split between Telstra, Optus and NEC and worth worth hundreds of millions of dollars.

It would have created a single network linking up all the data centre and server facilities currently operated by the state’s agencies to establish a whole-of-government cloud.

The project began in earnest early last year with the first approach to market. The former Liberal government committed $9.5 million to the project over four years.

But the state government today said it would discontinue the project and leverage the work completed so far to develop the new standards for the network management and workplace collaboration bundles to be outsourced to the private sector.