Heads roll at Siemens after DWP contract loss

Siemens has announced the resignation of its Chief Executive in the UK, Tom White.

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Siemens has announced the resignation of its Chief Executive in the UK, Tom White.

The move follows the loss earlier this month of a major contract to build a central payments system for the Department of Work and Pensions that would oversee the £110 billion in payments made to 17m people each year.

“The contract loss, precipitated by significant project over-runs, was one factor in Siemens' recent profit warning,” said Ovum analyst Phil Codling.

Announcing the profits warning two weeks ago Siemens CEO Peter Loescher, said problems could extend beyond the loss of the DWP contract.

Loescher said the IT Solutions and Services (SIS) unit has assured the management board that no further projects with such risk profiles exist.

"However, while screening other projects in Great Britain, SIS found risks of smaller scales on smaller orders. If you add these risks to DWP, the total burden could be substantial."

Ovum analysts, Cornelia Wels-Maug and Georgina O`Toole, commented on the profit guidance.

"The key issue is that Siemens was hoping to use its experience at DWP to offer similar solutions to client recipients of DWP such as Jobcentre Plus and other 'funds flow' organisations such as HMRC and Defra. This cancellation, therefore, has broader implications."

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