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.