Cabinet Office inks cost cutting agreement with Logica

The Cabinet Office has signed a Memorandum of Understanding with IT supplier Logica, as part of attempts to improve efficiency.

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The Cabinet Office has signed a Memorandum of Understanding with IT supplier Logica, as part of attempts to improve efficiency.

Under the agreement, Logica will retain all of its government contracts, but will attempt to cut the government’s costs.

MoUs are not normally legally binding, but are considered a formal agreement of intention between parties. Logica is the third company to sign such an MoU with the Cabinet Office, after Atos Origin and Capgemini earlier this month.

Typical steps to be taken under the agreement will include introducing more flexibility to procurement, and rationalising administration and bureaucracy in larger projects, it is understood. The impact on the number of contractors employed is not known.

It is also understood that the government will procure from Logica as a ‘single customer’, rather than as different departments, as with agreements being signed with other suppliers.

Logica said in its interim results announcement last month that it was “looking at solutions that reduce cost while changing the mix of how these front line services and back office savings can be delivered”.

More than 55 UK government departments and agencies use Logica, and the company said UK public sector work accounts for around 63 percent of local revenues.

The supplier insisted the discussions with Cabinet Office Minister Francis Maude had been “speedy and straightforward”. Craig Boundy, head of Logica’s UK business, said the company is now in discussions with the government on “longer term initiatives” to cut costs.

Neither Logica nor the Cabinet Office had revealed more details at the time of writing.

Three weeks ago, Atos Origin signed a separate MoU with Atos Origin, under which the government also agreed to procure from it as a ‘single customer’. Details of Capgemini’s agreement were not made public but are understood to reflect similar terms.

Other suppliers involved in the negotiations with Maude are HP, BT, IBM , Fujitsu, Capita, IBM, Telereal Trillium, CSC, Steria, Oracle, Siemens IS, C&W, Microsoft, Accenture, Serco, G4S and Vodafone.

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