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Mega agency Corrections seeks change in 'aged' $40 million outsourcing contract

Mega agency Corrections seeks change in 'aged' $40 million outsourcing contract

Department of Corrections lays out its options, including expanding its supplier pool.

Mt Eden prison, Auckland

Mt Eden prison, Auckland

Credit: ID 103901155 © Rafael Ben Ari | Dreamstime.com

New Zealand's largest government agency is signalling significant changes to its "aged and expiring", decade-old ICT outsourcing contract.

Prison and rehabilitation operator Corrections' current contract, for telecommunications, information technology production support and infrastructure management services was established by tender in mid 2010.

The contract, valued at around $40 million over its first three years, was won by a consortium including Optimation and HCL. 

It has been renewed ever since but is set to expire at the end of August 2022.

In this year's Budget estimates examinations, Corrections reported its major ICT suppliers were Spark for information technology outsourcing, Optimation and HCL to support its core integrated offender management system and SAP for payroll and procurement.

Infrastructure and technology operations services spending by the department currently exceeds $70 million a year including $50 million of services.

Now, a new notice of information published to the market indicates replacement arrangements could be markedly different, not least because the pool of suppliers is likely to expand to deliver more choice for the department.

Corrections is also aiming to adopt more modern and better ways of working, to implement more flexible and fit for purpose contracts and to accelerate its shift to “as a service” and cloud.

The notice said future state model options range from or could include, first, selecting a managed service provider to minimise breakage of delivery chains between vendors, and the selection of specialist service providers.

Another option is to select multiple service providers that are best in market, including a service aggregator or integrator;

Corrections could also select multiple service providers that are best in market and be responsible for the service aggregation and integration functions itself.

Following early market research the department is developing a provisional target sourcing model that
can align to the the first or second options. 

Three managed services "towers" would cover core service delivery management, IT operations, and platforms and services including as a service.

Under option two it would appear these could be allocated to different suppliers.

"This is subject to change as further service design is advanced during August 2021," the notice said.

The draft model features a managed service term of up to eight year term, with an initial five years plus rights of renewals of two and one more year.

Alongside that, services "co-sourced" by the department and specialist providers could also be contracted for eight years, with an initial three followed by two and three year terms.

The department is currently anticipating a multi-stage procurement process.


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