Cap Gemini Ernst and Young (CGE&Y) has won the Inland Revenue's 10-year, £3bn outsourcing contract, ousting incumbent supplier EDS.
The Inland Revenue is one of the largest government departments, and operates systems with a very public profile.
The deal, one of the UK's largest, covers 73,000 desktops, 200 systems, 20 ICL mainframes, and 177 IBM and HP Unix servers, and has an option to extend it for a further eight years. It is estimated to be worth around £300m a year.
Traditionally, large public sector IT contracts have favoured the incumbent supplier, said Tola Sargeant, analyst at Ovum Holway.
"CGE&Y will need to spend the coming months familiarising themselves with the technical details of the systems to ensure a smooth transition," she said.
Together with its partner, Fujitsu Services, CGE&Y will begin the transition work in early January 2004 before taking full control on 1 July 2004.
Fujitsu will be responsible the infrastructure while CGE&Y will need to get to grips with the applications, including the controversial family tax credit system.
The problems that beset the family tax credit system had adversely affected the relationship between the Inland Revenue and EDS and would have weakened the latter's bid, said Sargeant.
CGE&Y will work closely with EDS to ensure upgrades to the tax credit system, due to go live next April, can be achieved smoothly, said Martin Cook, UK vice president of CGE&Y. Cook will head the new team at the Revenue.
"We need to get an understanding of the systems, but will do so without disrupting current development work. Getting the staff on board will be vital to our success," he told vnunet.com.
Fujitsu is reluctant at this stage to unveil its plans for the IT infrastructure. But it plans initially to concentrate on "getting the fundamentals right" before deciding on how to upgrade the infrastructure over the next 10 years, said David Courtley, the company's chief operating officer.
In a statement EDS said it was "disappointed" at the outcome.
"The company continues to believe that it offered the best solution at the best value, one that would provide the most advanced technological development and support for the Revenue's demanding modernisation agenda," it said.
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