HP, BT take hit from UK Government

Hewlett-Packard and telecoms giant BT - the UK government's two largest technology suppliers - have signed memorandums of understanding with the UK Cabinet Office as part of its attempt to cut public services spending by £6.2 billion (AU$10 billion) by 2010-11.   

The pinch will be most felt at HP, which became the largest supplier of IT services to the UK government after its 2008 acquisition of EDS. The company last week promised to lay off a further 1,300 staff by October, bringing its two year total to 4,000. 

Former EDS deals that may be under review include its £7.1 billion Defence Information Infrastructure project with the Ministry of Defence, according to ComputerWorld UK. 

The UK Government has signalled that it may audit government IT contracts valued over 100 million pounds following Sir Philip Green's scathing review of government management of technology.

“HP will continue to deliver all of its existing UK government contracts and will work closely with the Cabinet Office and other government departments to implement the cost savings,” HP said in a statement last week. 

The government’s largest contract management failure, according to Green’s report, was its £2 billion per annum telecoms bill, which he said could have been 40 percent less if the government “bought its own capacity”. 

BT said all its major contracts were reviewed and remained in place, but BT Global Services chief executive Jeff Kelly on Friday only referred to “networked IT services”, stating that the new arrangements should deliver efficiencies to the public service. 

Financial details of that arrangement were not disclosed.

The new deals have been brewing since July. Minister for the Cabinet Office, Francis Maude had  met with the chief executivess of dozens of IT companies and consultancies including Capgemini, Accenture, Fujitsu, CSC, Oracle, Siemens, Microsoft and Vodafone to discuss contract renewals.