Background

The Department of Veterans' Affairs (DVA) serves members of Australia's veterans and defence force communities, their widows or widowers, and eligible dependants, through programs of care, compensation, commemoration and defence support services. Currently DVA has around 470 000 beneficiaries who are veterans or dependants, and a further 60 000 beneficiaries (current and former defence personnel) through the Military Compensation and Rehabilitation Service. In the 2006–07 Budget, responsibility for compensation services for the Australian Federal Police moved to DVA.

DVA has a national office in Canberra and operates through state and regional offices around Australia. It also deals directly with many hospitals and other care and transport providers in every state and territory. To support its activities, DVA operates a number of Information Technology (IT) systems. In 1992, DVA partially outsourced its IT services and signed further agreements for IT outsourcing in 1997 and 2002. It expects to sign a new contract in late 2006 for IT services that will be provided from April 2007.

Previous Audit

ANAO Audit Report No.46 of 2001–02, Management of an IT Outsourcing Contract, assessed how well DVA was managing its contract with International Business Machines Global Services (IBMGS) for the provision to the department of a range of IT services.

The audit made five recommendations for improvement. DVA agreed with four of the recommendations, and agreed in principle with the other recommendation.

Audit Approach

The objective of this follow-up audit was to assess the extent to which DVA had implemented the recommendations from the original audit during the period 2002–06, including in its preparation of the IT outsourcing contract which will operate from 2007.

Key Findings

The following table summarises DVA's progress in implementing the recommendations from ANAO's previous audit report.

Table 1: DVA’s progress in implementing recommendations of ANAO’s 2002 audit

Conclusion

ANAO concluded that DVA had implemented all five recommendations of the original audit under its 2002–06 IT outsourcing contract and in preparing for the IT outsourcing contract which is scheduled to come into effect in April 2007.

The ANAO makes no further recommendations in this report.

During the audit, ANAO also identified some of the problems that government agencies may face in purchasing IT goods and services. As a result, ANAO compiled a list of some of the risks involved in the management of IT outsourcing and the key management actions which can contribute to achieving successful outcomes, for the benefit of other agencies involved with new tenders or renewing contracts.

DVA's Response

DVA notes and agrees with the ANAO assessment that the department has implemented all of the recommendations from the original audit during the period 2002 to 2006 and also in preparation for the IT outsourcing contract which will operate from 2007.

The conclusion highlights the department's ongoing commitment to strategically managing its Information and Communication Technology environment and its outsourcing arrangements to ensure that government services are efficiently and effectively delivered.

DVA notes that as part of the report, ANAO compiled a list of some of the risks involved in the management of an IT outsourcing contract and identified key management actions in achieving successful outcomes. DVA supports the identified actions and notes the department's achievement in addressing the majority of these for both the 2002 contract and in the draft 2007 contract.

DVA advises that its Disaster Recovery Project has commenced with the outsourced provider having established a second site for a secure back-up for data systems. This is a multi-phase project with completion expected by mid 2007.