The British Library confirmed this week it had quietly shelved a library digitisation procurement, marking the collapse of another private finance initiative deal.
The reason given by the library for the project failure was because of "irreconcilable differences" between the library and its sole bidding supplier.
The final failure of the 16 month tender, which happened unannounced and unreported last December, is another blow to the government's private finance initiative (PFI), of which the British Library project was one of the most significant. It is the third significant IT PFI deal to have been cancelled at a crucial stage in recent times.
A library spokesman said: "There was an unbridgeable gap between our public interest as a library and their commercial interest."
The library has been forced into issuing a new tender, on which it has not placed a value, and is currently short-listing suppliers.
The only bidder was a consortium comprising computer giant IBM, official publisher, the Stationary Office, and publishing distributor, Dawson Holdings. A rival bid involving Unisys and electronic publisher Chadwyck-Healey had been ruled out by the library on technical grounds in August 1998.
A "disappointed but not annoyed" Dawson Holdings group financial director David Lowther said the bid had collapsed because there was no sustainable business case underlying it.
The library had hoped that the private sector would earn enough cash from taking control of some of the library's commercial operations to pay for the technological investment to create a digital database of some of its holdings and make them widely available.
David Lowther said: "There wasn't an agreement where we could see a sensible income stream. The private sector isn't a charity."
The private finance initiative has been dogged by over-complexity and delays in the five years since it was introduced. Under its terms a private sector firm designs and builds an IT asset which it then leases back to the public sector.
Other contracts cancelled were ICL's £1 billion retail network for the Post Office and swipe cards for recipients of social security benefits, axed in May this year, and the Prison Service's £350 million administrative systems replacement, which dropped its initial plans in August 1998 and totally revised them.
Special Report: Prime minister Tony Blair's review of government IT, quietly revealed by the Cabinet Office at the end of last month, will open up a Pandora's Box of disaster, delay and dropping morale, vnunet.com reveals in an exclusive report today.
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