The federal Auditor-General has given the Department of Veterans' Affairs' (DVA) relationship with its IT outsourcer IBM a clean bill of health, just three days after the department renewed the arrangement for at least another four years.

DVA has partially outsourced its IT operations to IBM since 1992, with follow-up agreements signed in 1997, 2002, and a further AU$90 million renewal just last week.

But the relationship has been rocky at times, with the federal Auditor-General delivering a report in 2002 stating a number of areas for improvement.

In a follow-up audit released yesterday, the federal Auditor-General found DVA has implemented all five key recommendations of the 2002 report in its new arrangements with IBM.

The recommendations were that DVA:

• Make sure contract provisions give appropriate effect to DVA's strategic IT planning and are based on robust estimates of its expected demand for IT services
• Strengthen the role of IT for business enablement in any new contract
• Benchmark its IT services
• Collect and review performance data to enable it to effectively monitor contract performance
• Maintain an up-to-date contract that included variations

"The Australian National Audit Office (ANAO) concluded that DVA had implemented all five recommendations of the original audit under its 2002-2006 IT outsourcing contract and in preparing for the IT outsourcing contract which is scheduled to come into effect in April 2007," the report released this week found.

One particular effect of the Auditor-General's attention to DVA has been the implementation of a more robust disaster recovery plan. "This is a multi-phase project, with completion expected by mid 2007," DVA wrote in the report.

The full report is available online.