35 government IT contracts in danger of review

E-Borders just one of a potential 35 contracts to see changes to contracted work

Some 35 major government IT outsourcing contracts are at risk of renegotiation in the coming years, according to a report from analyst Ovum.

The release of this report, called UK Central Government: IT Services, Trends and Opportunities, follows a move today by government to axe the £750m e-borders contract provided by Raytheon Systems.

Ovum came up with the number by working out how many contracts are valued in excess of £100m, the cap the government has put on IT contracts.

John O’ Brien, senior analyst at Ovum and the report's author, said that while it is highly unlikely that every one of the 35 £100m-plus contracts will be changed, there is ample room for the new administration to make significant cost savings.

He said: “Cutting expenditure on these major deals by 10 to 15 per cent over the next few years would amount to cutting between £270m and £408m from central government IT spending annually.”

Ovum believes the new government will seek “quick wins” where possible. The £600m TCS contract with the Pensions Administration and Delivery Agency, signed with the previous Labour administration just weeks before the general election, is one of the first to face renegotiation.

Beyond this, the government is likely to target existing IT programmes that are perceived to provide limited value or return on investment, such as Serco’s £100m-plus BusinessLink contract with HMRC, according to the report.