Veterans' dept inks AU$90m IBM renewal

"Yesterday we renewed our outsourcing contract with Veterans' Affairs," IBM executive Simon Walsh told ZDNet Australia today via telephone. Walsh holds down the title of sector services executive, public sector, in the Global Technology Services division of IBM's Australian and New Zealand arm.

The executive revealed the value of the deal to be a little over AU$90 million. The contract is for at least four years, with another four years in potential extensions. DVA has had an outsourcing relationship with IBM for a little over nine years.

The renewal will see IBM continue to take responsibility for key items of DVA's ICT infrastructure, with the services giant providing mainframe, mid-range server, local and wide area network, voice telephony, helpdesk and laptop services. But the contract also expands on the pair's relationship a little.

"We're continuing to do those areas, but there are a couple of slight additional differences in the contract, moving forward," said Walsh. "There is an enhanced disaster recovery solution that we're providing, and more emphasis on server virtualisation -- so using VMWare to provide a virtual Intel server environment for them."

Walsh declined to comment on reports IBM was the sole vendor to respond to DVA's request for tender for the contract, but he said as a general statement the outsourcing market was still very competitive.

"You just need to look around Canberra at the federal government marketplace -- there are a lot of outsourcing service providers in town. With some of the overseas competitors coming into the market as well, it certainly adds another degree of interest," he said.

Walsh said there seemed to be a slight upsurge in outsourcing activity at the moment, being driven in federal government somewhat by contract renewals like the one signed with DVA, but the executive is also seeing interest in other sectors.

For example, IBM recently signed a five-year contract to take charge of retail chain Myer's IT operations. In another large deal announced this morning, New Zealand-based dairy multinational Fonterra renewed its own global outsourcing arrangement with IBM rival EDS.

Walsh said that although it depended on the customer, some clients were tending to break up large comprehensive outsourcing contracts into smaller pieces as they came to an end.

DVA is responsible for implementing policy and programs to fulfil the nation's obligations to war veterans and their dependants. The department has around 2,200 staff.

DVA had not responded to a request for comment on the contract by the time of publication.