The EDS-led Atlas consortium won the race for the Ministry of Defence's (MoD's) £4bn 10-year Defence Information Infrastructure (DII) contract last week (Computing, 3 March), ending speculation that the US giant was no longer the organisation to beat for UK government deals.

The DII contract is the largest single technology contract in the UK public sector, and has been in procurement since April 2003.

Under the deal, Atlas will develop a consolidated IT infrastructure across all three armed forces, providing a managed service to some 340,000 users in 2,000 locations in 24 countries.

The DII programme will ultimately cover permanent military sites, airfield and staging units, as well as battlefields, ships and submarines.

'As we got more into network-enabled business and support, and even operations themselves, our existing infrastructure made it difficult - we weren't as joined up as we needed to be,' said a senior MoD official. 'We wanted to put together a single infrastructure to improve the way we manage and command the battlespace.

'There was also a need for supporting infrastructure for modernising initiatives in human resources, finance, logistics and operational support.'

The MoD says it has learned the lessons of previous government IT programme failures.

'A lot of the difficulties have come from when you get into the business transformation space and the requirements haven't been clear enough,' said the MoD official.

'What differentiates DII is that we have looked hard at the diagnosis of where these other programmes haven't achieved the goals that were set for them.'

The biggest challenge will be the scale of the programme, rather than the technology.

'Both the competing consortia would admit it is probably not the technology, it was the programme management issue. Who could cope with a project of that scale?' said Georgina O'Toole, analyst at Ovum.

EDS's public sector business has had some problems recently. Not only did the company fail to win any of the £6bn worth of NHS deals, it also lost out on the £3bn Aspire deal and was replaced at the Inland Revenue by Capgemini.

Coupled with continued problems at the Child Support Agency and legal wrangling over blame in the tax credits fiasco, the company's reputation has taken something of a battering.

By winning the DII contract, EDS has proved not only that it is still an important player, but also that track record does not count for everything.

'Any experience is good experience and EDS is the company with the most experience in managing large-scale programmes in the public sector,' said O'Toole. 'Whether they have gone well or not, EDS has the bruises and has learned its lessons from them.'

According to Ovum's figures, even with the loss of the Aspire deal EDS's UK public sector revenues were about £1.5bn in 2004, more than double those of its nearest competitor, Fujitsu Services.

DII has proved there is still considerable supplier interest in public sector deals, says Nick Kalisperas, director of public sector at supplier trade body Intellect.

'It shows that companies are still prepared to put up with the vagaries of the public sector procurement process and they are not being put off by the problems,' said Kalisperas.

'Evidence suggests that the public sector is still where the large-scale procurements are taking place, while in the private sector there is a degree of caution in the IT spend.'

How the deal will work

THE Atlas consortium - which includes EDS, Fujitsu Services, EADS, LogicaCMG, General Dynamics, IBM and HP - will manage the MoD Defence Information Infrastructure (DII), to improve communications between civil servants and personnel in the Army, Royal Navy and Royal Air Force.

The IT contract is expected to sustain more than 2,000 jobs, maintain 70,000 desktops and rationalise 5,000 applications.

The contract for the DII Future project will be broken down into three increments, with Atlas having to meet performance criteria on phase one before being awarded the next phase of the project.

Increment 1, worth an estimated £2.5bn, focuses on maritime and will run until the first quarter of 2007. Increments 2 and 3 focus on land and air and will run from April 2007 - March 2008 and March 2008 to the first quarter of 2009 respectively.

Priority projects will include the development of joint personnel administration systems, joint asset management and engineering systems and defence medical applications.

The consortium will be measured and paid based on a set of benchmarking tools and performance indicators. Where service falls below a satisfactory level, monthly service charges will be fined.