U.K. Outsourcing Deal Up for Grabs

As competition for long-term, big-money outsourcing deals heats up, the British government is evaluating vendors for a 10-year, $7 billion contract to integrate and maintain computer systems for the Ministry of Defense (MoD).

It’s the second recent multi-billion-dollar U.K. public sector deal. Last week, Inland Revenue tapped Cap Gemini Ernst & Young over Electronic Data Systems for a 10-year IT outsourcing contract worth just over $5 billion.

Although the winner of the MoD deal won’t be announced until late next year or early 2005, an IBM spokesman confirmed that the Armonk, N.Y., IT giant has been eliminated. The news was first reported by the Financial Times.

“Our services business is still very strong,” IBM’s Joseph Stunkard told internetnews.com. “Our backlog in services exceeds $100 billion and services account for half of the company’s overall revenues.”

Three groups reportedly remain in contention for the MoD deal, including EDS and its partners, Fujitsu Services and General Dynamics.

Others being considered include a joint Lockheed Martin-Hewlett-Packard and Computer Sciences Corp. , which is working with British Telecom and CGE&Y on the proposal.

The MoD contract includes about 150,000 computer workstations. Like government agencies in the United States, the MoD invested huge sums in hardware and software in recent years.

Now, the task, in addition to providing the latest security measures, is to integrate disparate systems so information can be shared between workers.

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