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Government spends £9.4bn on top 10 most expensive ICT contracts

By Kathleen Hall

The government's top 10 most expensive IT contracts are worth a combined value of £9.44bn, Computer Weekly has found.

The government's recently published data on ICT projects worth more than £1m totals around £16bn, with as much as 60% coming from the 10 most expensive contracts.

Of around 150 contracts listed, the Department of Work and Pensions' Enabling Retirement Savings Programme (ERSP) is the most costly at £1.88bn, followed by the Data Centre Consolidation, G-Cloud and Applications Store for Government (£1.55bn) from the Cabinet Office.

Philip Virgo, secretary general of Eurim, the information society alliance, is an outspoken critic of large government IT contracts. "I would strongly expect most of the contracts to be broken up or renegotiated quite quickly," he said.

"The interesting question is if the government wants to save money, should it not bring things back in house and allow government department staff to bid to do things themselves? When you have in-house teams bidding against external suppliers, it's always cheaper."

Large contracts are not always beneficial to suppliers, he adds. "The reason why BT Global Services made a loss is because of public sector contracts. The bigger the contract, the bigger the overheads and the bigger the loss. Small contracts can often be much more profitable," he said.

However, Sureyya Cansoy, director of public sector at industry body Intellect, says some large ICT contracts - such as the roll-out of London's Oyster card system, have been successful. "I think it's important to look at the situation on a case-by-case basis. And for some projects that are vital to public services it may be necessary to spend a large amount to get them right," she said.

The government had pledged to cap contracts at £100m, but a recent report from the National Audit Office suggested this limit may no longer be implemented.