Government cancels £160 million ERP contract

Government cancels £160 million ERP contract

Department for Communities and Local Government wields the axe

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The Department for Communities and Local Government (DCLG) has cancelled a desktop and enterprise resource planning (ERP) contract worth up to £160 million, citing changes in the wider government’s ICT policy.

DCLG first published a contract tender back in December 2009 for services from a single supplier to provide desktop upgrade services and IT infrastructure support for the department and for the soon-to-be-defunct Government Office Network (GON) for the regions.

The seven-year contract, entitled ‘CLG & GO ICT Procurement Project’, was valued at a value of £30 million to £50 million over seven years, and included an option for elements such as the design and implementation of an ERP system, which would have taken the value up to an estimated £160 million.

Today the DCLG said: “As a consequence of changes to the departmental requirements, as well as developments in the wider government ICT policy, this tender process and the associated procurement have been cancelled.”

The cancellation comes as a report from the National Audit Office, ‘Information and Communications Technology in government, Landscape Review’ revealed that more than 80  IT projects over £50 million, worth more than £28 billion overall, are being reviewed.  

This has resulted in the cancellation of two IT projects totalling nearly £2 billion, with just 26 projects worth more than £4 billion being allowed to continue unchanged. More than 50 IT projects worth £22 billion have been rescoped or are subject to ongoing reviews.

The government recently told its major suppliers that the days of huge IT contracts were over, and that government contracts will now be opened up to smaller suppliers.

To this end, last week, the government announced measures that would make it easier for SMEs to get involved in government procurement, including the launch of a Contracts Finder website. It also said that it was looking to eliminate Pre-Qualification Questionnaires (PQQs) for all central government procurements under £100,000.

But another reason for the DCLG contract cancellation is likely to be the fact that GON was been marked for closure, in the 2010 Comprehensive Spending Review, at the end of March 2011. As at the end of 2009, the GON operated 11 offices in England and had around 3,000 IT users.

The network was a regional representation of 12 central government departments, including the DCLG, Department of Energy and Climate Change (DECC), Department for Business, Innovation and Skills (BIS), and the Department for Work and Pensions (DWP).

According to the original contract tendering notice, Fujitsu Services supplied the network’s IT support, for 2,000 desktop and 1,000 laptop devices running Novell, NetWare, Novell Applications on Windows XP and Microsoft 2003.

DCLG also had around 3,000 IT users, with 2,000 desktop and 1,200 laptop devices running on an all Microsoft client-server environment. Steria supplied the IT support, while SAP provided the department’s ERP platform that it had planned to either replace or upgrade as part of the contract.

The DCLG’s intention was to unify and operate as a single entity the networks and systems currently being operated by the DCLG, GON and the DCLG Arms Length Bodies. It had also planned to consolidate the number of suppliers to just one.

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