Large cloud deals to stick with Federal sourcing rules

Federal agencies will likely continue facing lengthy tender processes for large-scale cloud computing projects, despite a Government proposal to facilitate low-value deals with a "multi-use list" of services.

The Australian Government Information Management Office (AGIMO) last month proposed to maintain an opt-in, multi-use list (MUL) of cloud-like services that were pre-vetted for deals worth less than $80,000 and spanning less than a year.

According to Ovum's public sector research director Kevin Noonan, AGIMO's proposal was a small first step towards cloud computing; "more nibbles than main meal".

MUL arrangements are less stringent than typical, mandatory panels, but Noonan said the $80,000 ceiling could limit the list's usefulness to many agencies.

AGIMO's first assistant secretary John Sheridan agreed that the arrangement would not appeal to any agencies looking to offer 2000 workers a virtual office for ten years.

But he said the MUL addressed some 72 percent of Federal ICT services contracts that were valued under $80,000 and would otherwise struggle to attract quotes from three suppliers to test the market.

Meanwhile, deals worth more than $80,000 would be required to comply with Commonwealth Procurement Guidelines, using established tender processes to test the market and determine the best course of action.

AGIMO's Better Practice Guide on cloud computing (pdf) does not impose price ceilings on deals. Sheridan said that AGIMO’s approach was to test the market for what suppliers were willing to provide.

“This [MUL] is not meant to be a vehicle for everything that is cloud or cloud-like,” he said.

Cloud providers have highlighted utility-based, pay-as-you-go pricing as a core tenet of cloud computing, but Sheridan said the Government could consider other payment models that would better suit small to medium suppliers.

He added that the pay-as-you-go model was particularly well-aligned with existing arrangements for deals worth less than $80,000, since agencies typically paid for low-value deals in arrears.

“Rarely do we pay for a job below $80,000 in advance,” Sheridan said.

“Clearly one of the cloud attributes is pay-as-you-go but there may be some other way of doing this that is also possible ... this does not have to be pay as you go."

Industry backs 'conservative' approach

AGIMO’s data-centre-as-a-service (DCaaS) discussion paper (pdf) indicated that the Government hoped to make it relatively cheap and easy for suppliers to join the MUL by charging a registration fee of $250 per supplier or lower.

“[The list] opens up the market, because if you are registered on the multi-user list, your quotes will appear when agencies choose capability," Sheridan said.

"And you will have declared upfront the degree of capability that you have as a vendor.”

Industry members have largely backed the cloud computing MUL proposal.

Peter James, chairman of infrastructure-as-a-service provider Ninefold, said the price limit was "conservative" but noted that "that's the way [the sourcing arrangements] should be designed anyway".

AIIA chief executive officer Suzanne Campbell said AGIMO was "trending in the right direction" with its cloud MUL proposal.

AGIMO has invited comments from the public on the proposal until 30 April, with Sheridan convening a formal meeting on the proposal at the end of the month.

Sheridan said he was open to changes to the proposal and keen to gauge vendor and agency reactions before committing to establish a new multi-user list.