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Department agrees extension worth £30m, asking IBM to help take strain of the “substantial application development and maintenance services required as a result of the UK’s exit from the EU.”
The Department for the Environment, Food and Rural Affairs (Defra) appears to have agreed a 17 month contract extension with IBM to enable it to cope with the application development pressures of Brexit.
According to a contract note seen by Government Computing , Defra requires “additional services within the scope of services provided under the existing contract for up to 17 months following the expiry of the contract.” The total value of the extension is understood to be £30m.
The note gives technical reasons as the rationale for the contract extension, saying, “Simultaneous transfer of service lines to replacement contractors. Substantial application development and maintenance services required as a result of the United Kingdoms exit from the European Union. Economic reasons: Increased costs of project management and technical resources needed to manage safely the transition and development of new applications. Inconvenience: Increased risk of delay or system failure during transition. Duplication of cost: Increased and unnecessary costs of additional project management and technical resource.”
The note says that although the contract has been extended by up to 17 months, there is an ability “to reduce the service lines provided by the incumbent contractor as those service lines are transitioned to replacement contractors. It is expected that the sole service line provided by the incumbent contractor after the expiry of the original term of the contract will be application development and maintenance.”
Defra is in the middle of procuring for its UnITy transformation programme, which should see ICT delivery reconfigured from provision by two SIs (IBM and Capgemini) to a wider supply chain. But clearly the demands of Brexit has persuaded it that for now, it needs to extend the IBM contract. It is also understood an Environment Agency contract with Capgemini is also being extended but for a shorter period. IBM has had a contract with Defra since July 2004.
GlobalData principal analyst Rob Anderson said, “This is a prime example of the impact that preparation for Brexit is having on key departments. There are over 250 applications within the Defra family that will need to be amended to continue to function in a non-EU controlled environment which is clearly a huge task for the IT staff. Whilst prospective suppliers to the UnITy programme will be frustrated by further delays, it is not surprising that priorities have changed.”
Defra has been approached for comment about the contract extension.
Given the governments previously stated desire for small and medium-sized companies to gain a greater share of government and public sector business, Defras contract extension with IBM is likely to be scrutinised for any emerging SME opportunities.
Jan Joubert, chief executive of Rainmaker Solutions said, “This is just another example of Government being unable to untangle itself from the grip of large systems integrators, at a cost of millions to the taxpayer. The same large suppliers who have held departments to ransom, whilst failing to deliver what they promised, for years.
“Rather than being a risk, post-EU exit offers departments a chance to overhaul processes and replace archaic, legacy infrastructure with adaptable, iterative technology solutions, offering better services at lower cost. Indeed, the Government’s own guidance is to disaggregate from large, expiring IT contracts and it encourages using SMEs to do it.
“Nobody ever got fired for hiring IBM. Well, perhaps they will be for extending them. Time to bring back Francis Maude?” |
