It has emerged that The Department for Work and Pensions (DWP) has awarded two of the remaining lots in its multi-million pound IT outsourcing deal to the incumbent supplier, HP.
TechMarketView analyst Georgina O'Toole reported that HP had won the contract to provide services for the DWP’s core benefits system and the one for application support.
The two lots form part of the DWP’s £1.92bn application deployment tower IT outsourcing strategy, which it launched in 2009. The aim was to reduce expenditure at the department through the use of off-the-shelf software packages.
The application deployment tower will be critical to the success of the development of a universal credit system, which the DWP and HM Revenue & Customs expect to go live in early 2013.
Last year, bidding for the two lots now awarded to HP was suspended. At the time, the DWP said the suspension was necessary to allow the department to look at how it could cut costs in line with spending restrictions imposed by the then new coalition administration.
The five contracts for application development and maintenance services that form the application development tower were all previously run under a single agreement with IT services firm EDS – now owned by HP.
The DWP had previously been sharply criticised by MPs for its management of large IT projects.
And the award of the contracts to HP will only underline the difficulties public sector bodies face when trying to open up contracts to suppliers other than the IT services giants.
Joe Harley, the chief information officer for both the DWP and the government as a whole, had promised to make it easier for smaller firms to win government contracts.
The award of the lots to HP “looks suspiciously like an admittance that, in times of austerity, large broad-ranging deals with one supplier can help to keep costs down,” said TechMarketView’s O’Toole. “Spreading the spoils, between a variety of large and small suppliers, looks like a good idea on paper but won't always get the best deal for departments in reality.”
Last week, the DWP had confirmed that IBM has won the contract for business facilitating services – such as the HR and financial shared services that are used across Whitehall. Capgemini was awarded the contract for business prototyping, a core element of the technology behind the DWP’s new welfare systems.
In a statement the DWP said:"We are strongly committed to broadening the use of SMEs in the delivery of our IT. We already use SMEs extensively to help deliver our business and they make up 21 per cent of our prime contractor base. We actively encourage the use of SMEs as subcontractors and they are widely used in our supply chains."