Programme director David Myers, a former IT director at BAE Systems, joined Defra earlier this year after the department came under fire from MPs for the lack of leadership in its massive technology outsourcing project.
Myers said an in-house IT department would be key to successfully managing the relationship with the supplier. "The emphasis in the retained IT department will be more on planning and forecast management than policing," he said.
The majority of the 85 staff in the IT department will be recruited from within Defra. The new body's responsibilities will include account and programme management as well as business and technical design.
Richard Sykes, chairman of outsourcing consultancy Morgan Chambers, said Defra is taking a sensible approach to a complex situation. "It is a long-standing element of best practice in the outsourcing world that you keep a team of experienced people in-house," he said. "The real value from the use of IT increasingly comes from people and process, rather than just making the technology work."
Defra's outsourcing strategy has already prompted criticism from trade unions. Last year, the Public and Commercial Services Union threatened strike action amid fears that privatisation could threaten up to 1,000 jobs.
However, Myers said that, at this stage, no job losses are anticipated and urged the 400 affected Defra staff to see outsourcing as an opportunity for advancing their careers.
"It is an opportunity to develop careers in the IT industry for those people transferring [to the supplier] and an opportunity for people to develop new managerial skills and customer relationship skills in the retained IT function," he said.
Last month Accenture, Cap Gemini Ernst & Young and IBM were all shortlisted for the Defra outsourcing contract. Myers said the department is working hard to ensure that the needs of existing staff will be met by the successful bidder.
Defra will be inviting the bidders to meet with unions and staff later this year, said Myers. The contract is due to be awarded in June 2004.