Single tender concerns for £83m IT deal

The Cabinet Office has agreed a multimillion pound IT contract despite the fact that withdrawals left just one shortlisted supplier standing at the end of the bidding process.

The decision comes only months after public spending watchdog the National Audit Office (NAO) warned against single-tender contracts.

The Cabinet Office's £83m datacentre hosting contract, called True North, was signed in July with consultancy ITNET.

Sources close to the negotiations told Computing that rival shortlisted suppliers Fujitsu Services and SchlumbergerSema had earlier withdrawn from the competition because they felt the government's contractual conditions, particularly with respect to liability for project failure, were unworkable.

Last-man standing contracts have come under scrutiny following the failure of the Magistrates' Courts Libra IT project.

Earlier this year an NAO report warned: 'When a department unavoidably finds itself in a single tender situation, it should take special care to ensure that value for money is not at risk.'

The Cabinet Office, however, says True North is very different from Libra.

'To progress from more than 100 expressions of interest to the successful vendor, stringent procurement procedures were followed and competitive pressures maintained throughout the process,' said a spokeswoman.

'A public sector comparitor was used to ensure value for money in the final round.'

Liberal Democrat IT spokesman Richard Allan says bidders dropping out of the race should set alarm bells ringing.

'From a public accountability point of view, if serious, reputable suppliers are pulling out of competitions like this it should send the strongest possible warning signals that there is some problem with the way the contract is framed that may lead to problems later on,' he said.

'Maybe there should be a review stage to judge, if competitions get down to a single tender, whether to call the procurement off and re-start it under different terms and conditions,' he said.

What is True North?

True North is a five-year £83m project to consolidate three existing services into a single managed datacentre. The service to be transferred are:

• the Government Gateway - a secure authentication service allowing secure communications and transactions, including electronic VAT returns and online tax self-assessment
• the Knowledge Network - a data-sharing facility that runs on the government secure intranet (GSI) and allows officials to share information across departments
• DotP (Delivering on the Promise) - a pan-government content management system