IBM, Siemens venture lands £4.8bn German army IT deal

German military officials have awarded a €7.1bn (£4.8bn) 10-year contract to modernise and manage the German Federal Armed Forces’ IT systems to a consortium including IBM and Siemens.

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German military officials have awarded a €7.1bn (£4.8bn) 10-year contract to modernise and manage the German Federal Armed Forces’ IT systems to a consortium including IBM and Siemens.

The deal follows more than three years of negotiations with six vendors.

IBM and Siemens will own 50.1% in BWI Informationstechnik, a new company set up to supply the IT services. The German federal government will own the rest.

The venture is currently the largest public-private partnership in Europe, according to Siemens.

IBM will be responsible for modernising the army's datacentres and running business applications such as Lotus Notes, enterprise resource planning and supply chain management software from SAP. The company will also implement public key infrastructure technology, ensuring electronically transmitted documents comply with signature and encryption regulations.

Siemens’ IT services subsidiary SBS will modernise and operate a huge fleet of IT systems, including 140,000 PCs, 7,000 servers, 300,000 fixed-line phones and 15,000 mobile phones at more than 1,500 locations in Germany. The company will also be responsible for managing the army's local and wide area data networks, in addition to its dedicated voice networks.

IBM and Siemens won the high-profile contract at the third attempt. The companies submitted their first bid in 2002 as part of the TIS consortium with Deutsche Telekom, competing against Isic 21, a consortium that included CSC Ploenzke, Mobilcom and the European aeronautic defence and space company, EADS.

Despite winning the first round, Isic 21 ended negotiations with the German defence ministry when it failed to agree on terms and conditions. Finance was the key sticking point. Isic 21 concluded that it would not be able to supply all the equipment and services the military sought within its proposed budget.

The departure of Isic 21 reopened the door for TIS, which submitted a new bid in January 2005. But a month later, Deutsche Telekom dropped out of the consortium for undisclosed reasons, forcing the remaining partners, IBM and Siemens, to submit their third, ultimately successful bid.

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