Cabinet Office cancels £83m datacentre contract

The Cabinet Office has terminated the £83m True North datacentre contract with supplier ITNET.

When the deal was signed last July, Computing revealed that the two other shortlisted bidders had dropped out of the running because they felt the government's contractual conditions, particularly with respect to liability for project failure, were unworkable (Computing, 3 September).

Public spending watchdog the National Audit Office warns against the dangers of signing 'last man standing' contracts, following the failure of the magistrates' courts' Libra deal. But the Cabinet Office still went ahead.

ITNET claims it has delivered on the government's requirements. The company says it has already been paid £5m, and expects the further £20m-plus it has invested to be fully re-imbursed.

'To date, ITNET has spent £15.2m on the fixed assets of the datacentre (for which it has received a pre-payment of £5m), approximately £10m on the implementation of the datacentre, and has made further commitments in relation to software maintenance and other contracts,' says the company's statement to the Stock Exchange this week.

A spokesman for ITNET told Computing: 'We will vigorously pursue the total reimbursement of our expenditure. We are absolutely confident of our position that we met the continually revised milestones for the contract.'

The Cabinet Office was working on an official response as Computing went to press but emphasised it had not agreed ITNET's Stock Exchange statement.

True North was a five-year project to consolidate Government Gateway, the Knowledge Network and the DotP pan-government content management system into a single datacentre.