STRATEGIC PROCUREMENT OF ICT PRODUCTS AND SERVICES BY THE SOUTH AUSTRALIAN GOVERNMENT

Transcription

1 STRATEGIC PROCUREMENT OF ICT PRODUCTS AND SERVICES BY THE SOUTH AUSTRALIAN GOVERNMENT Prepared By: ICT Strategic Sourcing Version: 3.0F Date: 28 August 2013 For enquiries or further information in relation to any aspect of this document, please to: ICT Strategic Sourcing

2 Table of Contents 1. INTRODUCTION WHY STRATEGIC ICT PROCUREMENT? PROCUREMENT OPERATIONS AND GOVERNANCE TRANCHE TRANCHE SOFTWARE TRANCHE CURRENT TRANCHE 3 DIRECTIONS FUTURE DIRECTIONS CONTRACT STRUCTURES THE PROCUREMENT PROCESS FLOWCHART This work is licensed under a Creative Commons Attribution 3.0 Australia licence, To attribute this material, cite the Office of the Chief Information Officer, Government of South Australia Created on 19 October 2011 (2.6F) Page 2 of 14

3 1. INTRODUCTION The (the State) is conducting its next round of strategic ICT procurements, referred to as Tranche 3. An important element of planning for Tranche 3 was to inform and consult with the wider ICT industry, to better understand and structure the way in which the State conducts those procurements. In May 2011 the State, via the ICT Strategic Sourcing (ICTSS) directorate of the Office of the Chief Information Officer (OCIO), wrote to all current contracted suppliers to the State, and to the Australian Information Industries Association (AIIA) representing suppliers, seeking input and suggestions from the industry on a range of matters related to Tranche 3. A number of non-contracted suppliers made informal contact with ICTSS seeking more background information as to what Tranche 3 may include. These suppliers, having not had a direct contractual relationship with the State before, were also unfamiliar with recent history of strategic ICT procurement in the State. ICTSS was informed that this made it difficult for some suppliers to provide suggestions and ideas to the State for Tranche 3. The information on the following pages is aimed at providing background information, particularly to ICT industry representatives, on the recent history of the State s strategic ICT procurements, its current activities, and its plans for the future. Created on 19 October 2011 (2.6F) Page 3 of 14

4 2. WHY STRATEGIC ICT PROCUREMENT? The State has a key responsibility of ensuring that the tax payers of South Australia obtain the best possible value for money 1 outcomes from State agency procurements. This is achieved by approaching the market in a co-ordinated way to achieve economies of scale, reduce duplication and costs, and set a standardised contractual framework (see Section 9). To facilitate this, the State commenced a program in 2003, called Future ICT Service Arrangements Initiative (Future ICT) to centralise strategic procurements for a range of across-government ICT-related products and services. In 2008, the Future ICT team became an operational unit, and is now referred to as ICTSS. The unit is in the OCIO, currently within the Department of the Premier and Cabinet. Over the years, Future ICT/ICTSS has conducted procurement projects grouped in stages called Tranche 1, 2 and now Tranche 3. Tranche 1 (see Section 4) dealt mainly with restructuring the goods and services that were under the previous IT Services and State Economic Development (ITSSED) agreement between the State and (the former) EDS Australia P/L, which expired in It also included a number of other contractual arrangements that were due to be renewed at the same time. Tranche 2 (see Section 5) dealt mainly with the State telecommunications services requirements, including the SA Government Radio Network. Since the 2007/08 financial year, the outcomes of these procurements have generated significant cost reductions and improved value for money, with the State achieving savings from agency budgets in the order of $28m per annum as a direct result of the strategic procurement of ICT products and services. 1 Value for money is achieved by encouraging competitive markets, adhering to non-discriminatory purchasing practices, and using efficient, effective, ethical and transparent procurement processes. Importantly, government agencies must assess value for money on a whole-of-life basis. This means that agencies take into account a range of considerations other than purchase price when determining what constitutes good value for money. Agencies are not forced to choose lowest-cost suppliers when that choice would in the long-run cost the taxpayer more through the purchase of inferior quality goods or high ongoing service costs, or when that choice would have detrimental social or environmental effects. - Australian Government Procurement Statement, July 2009 Created on 19 October 2011 (2.6F) Page 4 of 14

5 3. PROCUREMENT OPERATIONS AND GOVERNANCE The procurement of ICT products and services is conducted under the direction of the ICT Board 2, which is composed of several government agency Chief Executives, and chaired by the Chief Executive of the Department of the Premier and Cabinet. Cabinet approve the commencement and scope of each Tranche, and approve the final contractual and expenditure outcomes of the individual procurements. The Minister responsible for strategic ICT procurement is the Minister for the Public Sector. The State Procurement Act 2004 established the State Procurement Board to oversee procurement operations of public authorities. The State Procurement Board s role in relation to strategic ICT procurement is to approve plans to commence procurements, as well as approve purchase recommendations at the end of each procurement. The Procurement Steering Committee s role is to assist the ICT Board to carry out its responsibilities for the successful conduct of strategic ICT procurements for the State. The Committee provides advice and makes decisions relating to these procurements. All ICTSS procurements are conducted in line with normal government procurement processes: rocurement%20processes.pdf 2 ICT Board is not representational, meaning members make strategic decisions based on what is best for the State, not necessarily best for their respective agencies. Current members include Chief Executives from Dept of the Premier & Cabinet (Chair), Dept of Treasury & Finance, Dept of Health and Ageing, Dept of Communities and Social Inclusion, Dept of Primary Industries and Regions SA, and the SA Government Chief Information Officer. Created on 19 October 2011 (2.6F) Page 5 of 14

6 4. TRANCHE 1 Tranche 1 dealt mainly with breaking up the previous ITSSED agreement between the State and (the former) EDS Australia P/L, which expired in It also included a number of other ICT-related contractual arrangements that were due to be renewed. While the ITSSED agreement was of benefit to the State at the time, there was widespread agreement among State agencies that after nine years another one size fits all approach was no longer appropriate. The Future ICT initiative implemented a more targeted, fit-for-purpose approach, and established a number of contracts based around logical groupings of similar functions. Some of these contracts, established as part of Tranche 1, are still in operation. They include: Contract Description Distributed Computing Support Services (DCSS) Electronic Messaging Services (EMS) Hosting Services Panel (HSP) Internet Service Provider (ISP) Services Mainframe Computing Services Managed Network Services (MNS) Microsoft Large Account Reseller (LAR) Threat Management & Protection Services (TMP) Two suppliers, responsible for the provision of server management and support services on agencies distributed server infrastructure (where the State owns the infrastructure) expires 30 Jun 2014 A single supplier of electronic messaging services to the State (based on the Microsoft Exchange 2007 application) expires 30 May 2014 A panel of suppliers of hosting services, including unmanaged colocation, shared hosting and dedicated hosting expires 9 Oct 2021** A single supplier of ISP services to the State Providing Disengagement Services until 31 Oct 2014 A single supplier of mainframe computing services, where the mainframe and operating system are owned, managed and maintained by the supplier, and user agencies own, manage and maintain the applications running on the mainframe (this could be considered, in today s terminology, as a Platform-as-a-Service arrangement) expires 22 May 2018 A single supplier responsible for the management, maintenance and support of the State s central and local data networks (where the State owns the infrastructure) Providing Disengagement Services until 2 Mar 2014 A single supplier of Microsoft LAR services to State agencies expires 30 Jun 2015 State Agencies must adhere to the State s Technical Standard for Anti- Virus products (these products include Computer Associates/Total Defence, McAfee and Microsoft). Microsoft licenses are purchased from the State s Microsoft LAR. Agencies can purchase Computer Associates/Total Defence and McAfee licenses from any supplier approved reseller. McAfee license purchases are made subject to the State s software licensing agreement with McAfee, which expires 24 June ** The HSP is an open panel, which allows the State to include new suppliers periodically as advertised on SA Tenders and Contracts. Created on 19 October 2011 (2.6F) Page 6 of 14

7 5. TRANCHE 2 In December 2005, Cabinet approved the Tranche 2 procurements which dealt mainly with the State s telecommunications services and the SA Government Radio Network (SA-GRN). Contracts established as part of Tranche 2 that are still operational include: Contract Active Devices Equipment Panel Mobile Carriage Services (MCS) PABX Services & Equipment SA Government Radio Network Telecommunications Services Panel (TSP) Description A panel of suppliers for the supply and delivery of active devices (i.e. switches, routers etc.) expires 2 Mar 2014 (currently negotiating further extension) Two suppliers of mobile voice and mobile data carriage services to State agencies expires 31 Oct 2014 A single supplier responsible for the management, maintenance and support of the State agencies PABX expires 19 Nov 2015 A single supplier of operational management services for the SA-GRN, as well as maintenance and support of SA-GRN equipment (note: this contract is now managed by the Department of Justice) expires 23 May 2014 A panel of suppliers of fixed voice and data carriage services to State agencies expires 31 Oct 2014 Created on 19 October 2011 (2.6F) Page 7 of 14

8 6. SOFTWARE Since the commencement of Tranche 1, the State has run an ongoing program to identify software that is commonly used across-government, and establishes arrangements, such as Master Licence Agreements, with authors of those software products. These arrangements are most often characterised by: The software is already in common use across-government, and therefore the State would benefit from agreeing to a standard set of terms and conditions with the software authors; No commitment from the State for any business under the agreements; The State being recognised as the single licensee, with agencies being recognised as end-users, allowing the State flexibility in re-allocating licences amongst agencies; An agreed and approved standard set of terms and conditions that meet all of the State s policy requirements, such as liability limitation; and Offers of volume discount/government pricing. Software procurements that are competitive in nature or require a commitment from the State (e.g. Microsoft licences) are conducted in line with normal government procurement processes. Created on 19 October 2011 (2.6F) Page 8 of 14

9 7. TRANCHE 3 The ever changing and converging face of ICT required the State to review the scope and approach to new procurements and, where necessary, make modifications to accommodate new business requirements and market offerings. The review considered the entire breadth of current across-government ICT contracts (i.e. those established as part of Tranches 1 and 2). At the time of planning the scope of Tranches 1 and 2, the ICT industry was still largely split along traditional information technology and telecommunications lines. This is no longer the case. Traditional telecommunications companies now regularly compete to provide as-a- Service or Cloud IT offerings, while traditional IT companies compete to provide services such as Voice over IP (VOIP). Tranche 3 needed to consider the impact of as-a-service and Cloud offerings, both from a procurement perspective (i.e. very different business models), as well as from an operational/budget perspective (i.e. transformational change). Therefore, Tranche 3 is a combination of nearly every procurement the State has previously undertaken since 2003 (the only exception being the SA-GRN, which is not within scope of Tranche 3), along with a number of new or different product offerings from the industry. The planned outcome is a new generation of contractual arrangements to best suit the business and operational requirements of State agencies. 7.1 Current Tranche 3 Directions ICTSS uses a Category Management approach to structuring its procurement projects, as follows: Hardware; Software; Services; and Systems Development. Within each of these Categories (with the exception of Systems Development), various procurement projects are either completed or underway. Created on 19 October 2011 (2.6F) Page 9 of 14

10 Contracts already established as part of Tranche 3 include: Contract Client Computing & Server Equipment (CCSE) Document Output Devices (DOD) Microsoft Software Licensing Description A panel of suppliers for the supply and delivery of desktop PCs, notebook PCs and file servers expires 31 Dec 2014 (with 2 extension options available up to a further 3 years each) A panel of suppliers for the supply and delivery of printers and multifunction devices expires 30 Jun 2015 (with 2 extension options available up to a further 3 years each) A single supplier of Microsoft Software and Services expires 30 Jun 2016 More details of current contracts can be found at: ompleted_procurements_summary.pdf Procurement projects currently underway as part of Tranche 3 include: Procurement Messaging and Business Communication Services (MBCS) Network Management Services (NMS) Distributed Computing Support Services (DCSS) Network Carriage Services (NCS) Network Internet Services (NIS) Description Seeking a single supplier of electronic messaging services to the State. The contract term is expected to be for 3 years with an extension option available up to a further 3 years. Seeking a single supplier to be responsible for the management, maintenance and support of the State s central and local data networks (where the State owns the infrastructure). The contract term is expected to be for 3 years with 2 extension options available, each up to a further 3 years. Seeking a single supplier or panel of suppliers to be responsible for the provision of server management and support services on agencies distributed server infrastructure (where the State owns the infrastructure). The contract term is expected to be for 3 years with an extension option available up to a further 3 years. Seeking a panel of suppliers of data, voice and mobile carriage services to State agencies. The contract term is expected to be for 3 years with 2 extension options available, each up to a further 3 years. Seeking a single supplier of ISP services to the State. The contract term is expected to be for 3 years with 2 extension options available, each up to a further 3 years. The current status of these procurements can be found at: ement_process_status.pdf Created on 19 October 2011 (2.6F) Page 10 of 14

11 7.2 Future Directions Storage Equipment This is a possible new procurement, but will be dependent upon a number of factors that will be assessed at a later date. Processing & Storage A new procurement project planned to eventually replace the new Distributed Computing Support Services single/panel contract(s) and also consider the scope of the current Hosting Services Panel (HSP), which the State has recently extended to 9 October This procurement will also possibly include a range of as-a-service offerings such as Infrastructure-as-a-Service and Storage-as-a-Service. Created on 19 October 2011 (2.6F) Page 11 of 14

12 8. CONTRACT STRUCTURES A significant outcome of the approach to the strategic procurement of ICT products & services for State agencies has been the establishment of a standard, structure of contracts, which has improved the efficiency and effectiveness of contract management across agencies, and between the State and Suppliers. The structure of these across-government contracts is as follows: HEAD AGREEMENTS The Head Agreement deals with a limited number of significant issues that are relevant to the commercial relationship between the State and a Supplier, such as: Insurance (e.g. public liability, product liability and professional indemnity); Performance (e.g. parent) and financial (e.g. bank) guarantees; Government Policy (e.g. restrictions on employing persons who have taken a targeted separation package from the State within the previous 3 years); Contract Administration; and Liability of the Supplier and whether or not liability will be capped or unlimited. It is expected that there will be one Head Agreement between the State and each Supplier, regardless of how much business that Supplier is granted. A central State agency will manage the Head Agreement currently this obligation rests with the contract management section of ICTSS within the OCIO. PURCHASING AGREEMENTS The Purchasing Agreement contains the bulk of the relevant contractual provisions with a Supplier for specific products and/or services, such as: Services specification; Service levels; Key performance indicators; Service debits; Pricing and price review; Invoicing; and Reporting. The Purchasing Agreement also sets out the terms and conditions on which the Supplier will offer to supply the products and/or services to a Department/Agency. There will be at least one Purchasing Agreement between the State and each Supplier that has a Head Agreement, but if a Supplier is granted more than one segment of Government business, a separate Purchasing Agreement for each segment will be issued. A central State agency will manage the Purchasing Agreement(s) currently this obligation rests with the contract management section of ICTSS within the OCIO. Created on 19 October 2011 (2.6F) Page 12 of 14

13 CUSTOMER AGREEMENTS The Customer Agreement is the contract between a particular Department/Agency and a Supplier and specifies the exact products and/or services the Department/Agency is purchasing from the Supplier. A Customer Agreement relates only to the Purchasing Agreement specifically referred to in the relevant Customer Agreement. There may be multiple Customer Agreements that relate to a specific Purchasing Agreement. The signing Department/Agency will manage its Customer Agreement(s). CUSTOMER ORDERS This is the mechanism used to order or modify the products or services being procured under a Customer Agreement. Created on 19 October 2011 (2.6F) Page 13 of 14

14 9. THE PROCUREMENT PROCESS FLOWCHART Below is a flow chart of the procurement process followed by the State when procuring ICT products and/or services (note that the processes in red text are those that a supplier would see or be involved in all other processes are internal to the State): This work is licensed under a Creative Commons Attribution 3.0 Australia licence, To attribute this material, cite the Office of the Chief Information Officer, Government of South Australia Created on 19 October 2011 (2.6F) Page 14 of 14