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The contract for the 10-year Defence Information Infrastructure (DII) project will be awarded in the first quarter of 2005. It will provide IT support to about 300,000 MoD and military staff and integrate more than 200 legacy systems.
The MoD plans to split the 10-year project into three stages. The partners will be selected on their ability to deliver the complete 10-year requirement, but the MoD will initially commit only to the first stage.
Commitment to the second and third stages will depend on the contractor's performance, value for money delivered, and the MoD's needs.
Bob Quick, DII project team leader for the MoD, said the initiative could shave as much as 20% off the current IT expenditure by consolidating purchasing arrangements and helpdesk functions.
The MoD has a poor record of delivering complex technology projects. A report from the National Audit Office last December said it had underestimated the risks involved in major projects and allowed time slippage in procurement programmes.
A shortlist will be announced in November.