DWP signs big contracts with IBM and Capgemini

IBM and Capgemini government supplier contracts will both run for seven years

The DWP has signed contracts worth an estimated £525m and £70m with IBM and Capgemini respectively.

The IBM contract will run for seven years and see the supplier providing services across 60 applications in the department's business technology estate.

The contract was estimated to be worth between £50m and £75m per annum, although this value may vary according to the work IBM is tasked with and will be dependent on financial approval.

IBM will help with the department and wider government's pledge to re-use existing assets. It will also offer analytics services to provide insight into the department's data.

The technology giant will also facilitate the secure sharing of data with other government departments and suppliers while moving more government services online.

The contract marks the beginning of a "long-term strategic relationship between DWP and IBM, and incorporates the development of applications that will support the introduction of Universal Credit, a vital component of DWP's welfare reform agenda, which will simplify the benefits system," according to a statement from IBM.

The contract scope also includes managing the department's finance and HR applications, which are also used by a number of other government departments in accordance with the Cabinet Office Transformational Government Strategy.

The seven-year agreement, which may be extendable for up to a further three years, was signed on 23 September 2011, with services commencing immediately.

The seven-year contract with Capgemini will see the IT services company help the DWP deliver IT systems more quickly, as well as provide cost savings. The contract is worth between £5m and £10m per year, depending on departmental demand for IT services.

The move is somewhat contrary to the government's pledge to use small- and medium-size companies for services wherever possible, thereby breaking the oligopoly of the big suppliers.

Following the release of the last government ICT strategy, minister for the Cabinet Office Francis Maude said: "We will end the oligopoly of big business supplying government IT by breaking down contracts into smaller, more flexible projects. This will open up the market to SMEs and new providers."

IBM is one of the biggest suppliers to government, and Capgemini already manages the Aspire framework within the DWP worth several hundreds of millions of pounds.