ITNet is contemplating legal action against the Cabinet
Office after the sudden cancellation of a £83m datacentre contract
last week, just 12 months after it was
awarded.
The Cabinet Office said the IT services company had delivered none
of the services due under the contract. In a tough statement the
Cabinet Office said it had terminated the contract "to avoid
non-delivery of this IT project and to prevent unacceptable and
unplanned over-expenditure against contractually agreed
costs".
But ITNet maintained it had made good progress and delivered one of
the services required against a background of constantly shifting
requirements from the client. ITNet is now seeking reimbursement
for a £15.2m outlay for datacentre assets and £10m spent on
implementation. It is considering taking legal action.
"Although the outcome of any legal process cannot be predicted with
certainty, the contract provides for reimbursement by the customer
of expenditure both incurred and committed," the company said in a
statement.
Georgina O'Toole, a senior analyst with Ovum Holway, said, "What
shocked me was the tone of the Cabinet Office statement and how
damming it was."
The company was contracted to supply a datacentre to support the
Government Gateway, a portal to share public-sector services across
departmental boundaries.
During the contract tendering process, two rival companies
abandoned the competition, leaving ITNet as the only bidder. "It
should have rung warning bells when [the Cabinet Office] was left
with a single supplier and two viable suppliers were pushed away,"
O'Toole said.
She expected the National Audit Office and eventually the House of
Commons Public Accounts Committee to investigate the contract's
failure.