The long-expected axe has fallen on the Government Shared Network (GSN), which State Services Minister Tony Ryall pronounced "financially unsustainable" yesterday.
The network, designed as a dedicated secure network for communication within and among government agencies, will now be dismantled and shut down.
"The previous government wrote off $10.6 million from the GSN project in the 2007/2008 financial year,” says Ryall. “The project had been running at a considerable financial loss ever since it became operational in September 2007 — losing $700,000 per month.
"Despite that the previous government had planned to carry on with it," Ryall says.
The 16 agencies currently using the GSN and others planning to use it will now be moved onto “a new provider in the private sector”, says the minister’s announcement. However, State Services Commissioner Iain Rennie says a single provider will not necessarily get all the work.
“We will be going through a competitive procurement process and the shape of the final arrangement will fall out of that,” he says. “It may well be a single provider, but it could be more than one.”
Work on the transition will start immediately; the procurement process is expected to take a few months and the transition should be complete by the end of the calendar year, he says.
Brent Chalmers, a manager in the business development team at SSC, has been given responsibility for overseeing the transition of GSN clients off the network, says an SSC spokesman.
Rennie declined any comment on more detailed reasons behind the uneconomic cost and the unexpectedly low level of interest by agencies. Some who have spoken to Computerworld say they were not getting the advanced range of services promised; that the network was simply, as one put it, “a fat pipe”, with the applications such as email left substantially to the users to set up.
There are two inquiries into the GSN currently in progress. One is being conducted by PricewaterhouseCoopers into the network itself and another into the cost and value of services provided by consultancy Voco in architecting the network.
Rennie says he cannot give a definite estimate for the release of conclusions from either exercise, “but it won’t be months and months away”.
It will probably make sense to aggregate demand from the various agencies being transferred so that a reasonable and quantifiable volume of traffic can be offered to the private-sector bidders and so that agencies who wish to stay in contact can link to the same network, says Rennie.
Such an approach would minimise the transition cost.
Government-backed standards in security were a big attraction of the GSN. If the traffic were transferred to a private provider or providers, might that suffer?
“We’re hopeful that potentially there are standards for secure connectivity which can be maintained under the new arrangement,” Rennie says.
Computerworld reported last year that telecommunications operators were lining up to offer network lifelines to government agencies using the troubled network.
TelstraClear spokesman Chris Mirams said the original GSN concept had merit “at the time”, but the regulatory landscape had changed.
He said TelstraClear would speak to GSN users about their needs “at the appropriate time”.
Gen-i was also ready to pick up business from any fallout.
“There are plenty of departments in conversation with us and other providers,” said Gen-i’s CEO Chris Quin.
FX Networks, one company in the consortium that supplied the GSN, will also approach agencies, said managing director Murray Jurgeleit.
“We’re constrained from doing that at present under the terms of the GSN agreement,” he said, adding that NZ Police is likely to be an early customer on that basis.
IBM, leading a consortium of providers, won a contract to deliver the Government Shared Network in January 2006.