PracticeConsultingRevenue shorlists bidders for IT contract

Revenue shorlists bidders for IT contract

The Inland Revenue has revealed the shortlisted bidders for the government's largest ever outsourcing contract - worth an estimated £4bn over ten years.

A BT Plc team and Cap Gemini Ernst & Young will compete with the incumbents EDS and Accenture for the deal that will run from 2004.

It will cover 73,000 desktops, 200 systems, 20 ICL mainframes, and 177 IBM and Hewlett-Packard Unix boxes. The sheer size of the deal has lead the Revenue to begin the process at this early stage.

BT’s services arm Syntegra will lead a team consisting of BT Ignite, and the research and development unit BT Exact.

‘It is a prestige contract and we have put together a team we are confident can win,’ said a BT spokesman.

The shortlist was drawn up after over 100 expressions of interest and four firm bids. Those selected will all now have access to the Revenue’s IT systems between now and October, when the invites to tender will be sent out. A final decision is expected by the end of next year.

‘Capability as a strategic partner, to deliver the Inland Revenue’s services requirement, to deliver technology enabled change and innovation, and in transition management,’ were the key criteria used to draw up the shortlist, said a Revenue spokesman.

But MPs, market watchers and rivals have expressed concerns that the competition is loaded against those bidding against EDS.

A Public Accounts Committee in 2000 asked for assurances on an open and fair process after being told EDS had been sanctioned 100 times in five years by the Revenue for failing to satisfy its service level agreement, resulting in penalties totalling £2.5m.

And Inland Revenue IT director, John Yard, has repeatedly claimed the new contract would not automatically go to EDS and Accenture.

‘Other organisations have a very good chance of being able to win this competition,’ he told Computing last year.

But analysts claim the fact none of EDS’s major rivals, including IBM Global Services and Computer Sciences Corporation (CSC), have made the shortlist proves otherwise.

“My initial reaction is one of surprise,” said UK services market analyst Richard Holway.

‘The closest BT would come to undertake this would be Syntegra or BT Ignite, but neither has taken on anything of this magnitude before, and CGEY is not really involved in large scale outsourcing contracts.’

CSC was expected to bid for the contract but told Computing it felt there was no realistic chance of ousting EDS.

‘CSC looked seriously at bidding for the Inland Revenue outsourcing contract but through our own choice decided against bidding,’ said a CSC spokeswoman.

‘Having looked at the scope and structure of the deal CSC felt that there was not an opportunity to mount a serious bid against the Inland Revenue’s incumbent outsourcing provider.’

It is a constant criticism that has been levelled at the Revenue that the cost of bidding for a contract likely to stay with EDS would put companies off.

To counter this the Revenue has said it will consider meeting those costs, estimated at up to £10m, in order to encourage competition.

A decision has yet to be made though, said a Revenue spokesman.

‘We are still considering what our approach to bid costs will be. We will review the position as the competition progresses.’

None of the bidders would comment on whether they expected the costs to be paid for by the Revenue, but both EDS and CGEY said they were “delighted” to be selected.

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