UK MoD pauses £92m Oracle contract amid governance review
Final leg of Whitehall-wide cloud overhaul postponed to 2026
The UK Ministry of Defence (MoD) has put its £92 million contract to implement Oracle's Fusion cloud-based ERP system on hold.
The MoD confirmed the pause in a recent procurement notice, citing an ongoing internal governance review within its Corporate Services Modernisation (CSM) Portfolio.
The notice says that the business case for the transformation and implementation (T&I) phase, critical to the project's next steps, is still awaiting formal approval and is unlikely to be signed off before late 2025.
As a result, the MoD now expects to launch procurement for the five-year contract in early 2026.
This delay pushes back what was set to be the final major piece in the Shared Services Strategy for Government, an initiative launched in 2021 to bring cloud-based ERP platforms to all central government departments.
The Strategy was rated as ‘unachievable’ in 2023, judged – then – to be lacking critical skills and dedicated resources, although progress has continued.
The MoD, already an Oracle customer, had committed to Oracle Cloud Fusion as its primary ERP technology for the next generation of finance, HR, and commercial services across both civilian and military operations.
The decision to delay comes after a market engagement session in September 2024 revealed serious concerns from potential bidders.
Suppliers warned that without a clear and stable set of deliverables, their proposals would need to include significant risk premiums, potentially inflating costs and introducing delivery uncertainty.
"The [MoD] recognizes the need to have clear outputs to facilitate the T&I phase," the notice stated.
"This need was reinforced by the market… [which warned] that significant risk pricing would be built into any bids submitted and likely result in significant scope changes… [putting] the delivery timelines at risk."
In the interim, the MoD awarded a separate £8 million contract to KPMG in May this year for Phase 2 of the project, focused on design and implementation planning.
This phase involves detailed design work, capability building, and pre-implementation readiness activities, paving the way for a full-scale ERP rollout once governance approvals are secured.
The MoD's cluster, encompassing the military branches and the Armed Forces Pension Scheme, is the final group to progress toward full ERP transformation under the cross-departmental strategy.
Other clusters have already completed their major procurement milestones:
- Synergy Cluster: In September 2024, IBM and Oracle secured a £711 million contract to implement Oracle-based ERP systems for the Department for Work and Pensions, Ministry of Justice, Defra, and the Home Office.
- Matrix Cluster: In October 2024, Workday and Cognizant won a £144 million contract to deliver SaaS-based ERP solutions for departments including the Cabinet Office, Treasury, Department for Science, Innovation and Technology, Department for Energy Security and Net Zero, and the Department for Culture, Media and Sport.
- Unity Cluster: November 2024 saw SAP and Deloitte secure contracts worth up to £366 million to overhaul ERP systems for HM Revenue and Customs, the Department for Transport, and the Ministry of Housing, Communities and Local Government.
While the MoD's delay may push back the overall timetable for completing the UK government's ERP transformation, officials say it is important to proceed with a clearly defined and well-governed implementation strategy.
The department says it remains committed to the Shared Services Strategy and intends to proceed with the project once governance processes conclude in late 2025.