ATO pursues major restructure of IT outsourcing, seeks new tech contracts by 2023

ATO IT Contracts

In a major push to “modernise” its IT outsourcing portfolio, the Australian Tax Office (ATO) has announced plans to approach the market for new centralised computing, end-user technology and enterprise service management (ESM) providers.

The ATO is set to issue a Request for Information (RFI) in June to kick-start its three-year IT Strategic Outsourcing Program.

The RFI will begin market engagement “to inform bundle structure, scope, commercials, pricing approaches and procurement strategies”, with a key focus on anticipating how the IT ecosystem will look in 2023.

Of the ATO’s four managed services bundles, two are currently held by Leidos (end-user computing and hardware, enterprise services management centre [ESMC]), and the third by DXC (centralised computing, which includes data warehousing, mainframe and midrange, data centre facilities, and cloud), the biggest of the current set of contracts, valued at $2.1 billion.

Meanwhile, a fourth bundle, network services (which includes voice and data carriage, telephony, wide and local area networks, and contact centre infrastructure) is currently held by Optus.

The ATO was seeking suppliers in December 2019 to outsource six new network services bundles; in June 2020, however, it was revealed that the agency extended its network megadeal with Optus by 18 months, it said to “support the transition to new suppliers”.

The ATO’s procurement approach and current IT contracts have been in place since dividing its monolithic outsourcing deal with IT service provider EDS (now DXC) in 2009.

The new program aims to “reshape” the ATO’s managed services ecosystem and “modernise” the agency’s IT outsourcing portfolio by developing “market-aligned” and “more flexible” bundles, ATO chief information officer Ramez Katf said.

In line with the agency’s new program, 2021 will see market sounding and analysis, which will progress over 2022 and culminate in contract execution, transition and service transformation by 2023.

“Consistent with the Whole of Government agenda, our aim is to provide greater opportunities for competition, delivering better value for money for the Australian community,” Katf said.

The ATO’s Annual Procurement Plan can be viewed on AusTender.