Contract renegotiation to save taxpayer £200 million

14 March 2012

Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily

14 March 2012 | Adam Leach

The government has reduced the amount it will pay a major IT supplier by £200 million over the next five years.

Speaking today, Cabinet Office minister Francis Maude said a renegotiated deal for Capgemini to provide IT services such as laptops, desktops and tax and credit systems to HMRC will deliver £200 million in savings by 2017 as a result of reducing the unit cost it pays for IT services.

The deal, which was negotiated by a team of representatives from the Cabinet Office, HMRC and the Crown Representative Network, will also restructure services provided through the deal and allow HMRC as the contractor, to open up to competition some areas previously covered by Capgemini.

Speaking at Procurex National in Birmingham, Maude, said: “We said government would operate more like a good business and that is what we are seeing today. Our message to industry is that we will keep driving to get better value for taxpayers, break up large contracts and create opportunities for new, smaller companies to enter the market.”

Christine Hodgson, UK chairwoman of Capgemini, said: “This agreement confirms Capgemini as HMRC’s system and service integrator through to 2017. It also reaffirms our position as a key partner to the government, and underlines our commitment to the UK public sector overall.”

The Cabinet Office said experiences learned from the deal would be shared across government as best practice to help other departments with their negotiations.

Last year, renegotiations with government suppliers generated savings of £800 million and it expects a further £140 million this year.


Portsmouth / Bristol - Nationwide Travel
£40,000 - £45,000 per year
£39,511 + substantial pension and benefits
Ministry of Defence: Defence Infrastructure Organisation
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates