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ATO boosts DXC deal to $1.5B

ATO boosts DXC deal to $1.5B

The move comes as the ATO works out how to fit in with the Government’s evolving IT procurement policies going forward

The Australian Taxation Office (ATO) has said it will boost its long-running centralised computing contract with DXC Technology to $1.47 billion, with the amended deal running until 2019, as it eyes up incoming procurement changes.

The move adds an extra $195 million to the previous value of the contract, according to a DXC spokesperson.

The multi-year deal, which stems from a 2010 contract renewal with Hewlett Packard’s Enterprise Services business, covers centralised computing services including data warehousing, mainframe, midrange, storage, data centre facilities, private cloud and public cloud.

HP’s Enterprise Services business was spun out of Hewlett Packard Enterprise (HPE) earlier this year and merged with fellow integrator, CSC, in April, as part of a deal worth around US$8.5 billion. The merger resulted in the creation of DXC Technology.

As such, the existing contract, as well as the extension, now belongs in the hands of DXC Technology.

It should be noted that it was under HPE’s watch, prior to its Enterprise Services business being folded into DXC Technology, that the ATO was hit by an “unprecedented” failure of the vendor's hardware.

In December last year, the agency's 3PAR storage area network (SAN) hardware, which had been upgraded in November 2015 by HPE, failed, resulting in widespread outages among many of the ATO’s systems, with continuing outages in the following weeks and months as the system was switched out for a newer one.

HPE subsequently struck a settlement with the ATO over the “unprecedented” storage hardware failure.

The move to extend HPE Enterprise Services' (now DXC Technology's) existing contract comes as the agency works out how to fit in with the Federal Government’s evolving IT procurement policies going forward.

“A number of the ATO’s IT contracts are due for renewal in the coming year,” the agency said in a statement. “Many of these contracts have been in place since 2009/10 and the market and government IT procurement policy has changed over that time. 

“To allow proper consideration of the options available we will be extending some services currently offered by incumbent suppliers,” it said.

The ATO said that, given the circumstances, it had decided to extend its centralised computing contract with DXC Technology until 30 June 2019.

According to tender documents, the ATO’s ongoing centralised computing services is now worth just over $1.47 million over a nine-year period which is set to end in June 2019.

Meanwhile, the ATO has said it expect to finalise its new IT sourcing strategy in 2018. As part of this process, it will progressively extend some services currently offered by incumbent suppliers to ensure continued stability of systems while it approaches the market for services.

“In consultation with the Digital Transformation Agency [DTA] we are revising the way we would use these services to be in line with Government policy,” the ATO said.

The DTA took over the handling of the Federal Government’s IT procurement from the Department of Finance earlier this year, and is in the process of establishing a number of whole-of-government panel arrangements with vendors.

In October, for example, it was revealed that Oracle would join IBM and SAP in talks with the DTA to establish a series of new whole-of-government coordinated procurement arrangements.

At the same time, in August, the DTA put its new whole-of-government software licensing and services (SLS) procurement panel out to tender, recruiting for its initial category in the arrangement, Microsoft Licensing Solutions Provider.

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More about Australian Taxation OfficeCSCDXC TechnologyFederal GovernmentHewlett PackardHewlett Packard EnterpriseHPHPEIBMMicrosoftOracleTechnology

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