The Australian government's unemployment agency, Services Australia, has signed an AU$110 million ($78.55m) mainframe contract with IBM.

As reported by Innovation Aus, the contract will enable the agency to keep its IBM mainframes operating through to June 30, 2031 to support services such as Medicare and Centrelink, Australia's government payments and services organization that handles pensions and benefits.

According to the contract award notice, it could be extended to June 30, 2033.

It is part of IBM's Whole of Government Arrangement 2.0, a standing offer that runs between the end of 2022 and the end of 2027.

Described as a "mainframe direct access storage device upgrade," the contract is a continuation of previous agreements with IBM, despite Services Australia having previously sought to move off the platform.

Services Australia's mainframe system, which is used to calculate pension entitlements, has faced some criticism of late after a federal audit earlier this year found that an IT system error had led to overpayments of entitlements by AU$19.8 million (US$14.14m).

The pension mainframe system is known as the Income Security Integrated System (ISIS) and is undergoing a risk assessment on the use of automation. Services Australia had sought to replace the system back in 2014, and while parts of it have since been modernized (completed in 2022), the mainframe solution is still in use.

In 2023, Services Australia abandoned a project to develop a revamped entitlements calculation engine (ECE) for Centrelink, which aimed to replace ISIS. Being developed by Infosys, iTNews reported in September that year that the program ran slower than the mainframe system.

At the time, it was said that AU$191 million (US$136.4m) had already been spent on ECE, but that it did not perform well in a production setting, taking minutes to provide an answer that ISIS could offer in seconds.

Services Australia is a known customer of Canberra Data Centres, having signed an extension on its contract in February 2025 which spans five years and is valued at AU$226.1 million (US$141.7m). Under that agreement, Services Australia would continue to lease space in CDC's Hume and Fyshwick data centers, located in the Australian Capital Territory.