MoD gets £578m to improve IT systems

The cash strapped Ministry of Defence (MoD) has been given a £578m boost in the government's spending review to improve IT systems.

The money is part of a total £3.5bn given to the MoD over three years, and will be ring-fenced for replacing outdated legacy systems and putting services online.

According to the review, the money 'will enable the MoD to operate more effectively and will help it to meet its efficiency targets. The additional money will also allow the MoD to modernise its business information systems, especially in the Defence Logistics Organisation.'

Each of the MoD's agencies will be required to bid for a share of the cash from a pot controlled centrally by the ministry.

The lion's share of the new funds will be set aside for the Defence Logistics Organisation (DLO), which was set up in 1999 to streamline operations and cut 20 per cent off the MoD's £4.6bn annual purchasing and logistics budget by 2005.

The DLO is currently engaged in the 10-year £45m Defence Electronics Commerce Services e-procurement project rolled out by Cap Gemini Ernst & Young last year.

Key projects that will bid for the money have not yet been identified, but it will help the department meet government modernisation targets, said a spokesman for the DLO.

'It is a substantial increase and we are reviewing our plans at the moment,' he said.

The main competition to the DLO scheme could come from the £400m Defence Information Infrastructure (DII) project to outsource the armed force's non-military systems to the private sector.

Key suppliers will be talking to the DII later this week to discuss how the contract should be split.

IT projects at the MoD have felt the squeeze since funds were diverted to frontline operations. Earlier this year £20m development work on the Defence Stores Management System was halted.