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IBM's £400m Defra IT deal gets the green light

But will it save us money?

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IBM has been confirmed as the IT partner for the Department of Food and Rural Affairs (Defra), in a contract worth at least £400m over the next ten years.

Three hundred and thirty Defra IT staff will transfer to IBM, but there is disagreement within the department as to whether or not this will save money.

According to Marilyn Bayes, the union representative, the shift in personnel will mean a real terms increase in costs: "We've never spent anything like this amount on IT on an annual basis," she told The Register. She says that the deal looks good on paper because of the way budget is allocated: administration costs will be resuced when staff move to IBM, but the budget for the contract comes from a different pot.

Official Defra channels disagree. David Myers, Defra's e-business director, said that the contract will lower the department's IT expenditure.

Recent analysis of Defra's finances indicate that the department spends, on average, £85m per year on IT, or £850m over a decade, Myers explained. This covers both basic IT sevrices, and application development.

On the face of it, the £400m looks like a substantial saving. However, the contract with IBM covers only the basic IT services. Any application development will cost extra, albeit at a discounted rate.

Myers said: "It would be wrong to report this as freeing up £450m for application development over the next ten years; we may or may not have planned to spend that money in that way. But it does represent a saving for the taxpayer." He said that even basic services currently cost Defra more than they will under the terms of the deal with Big Blue.

He also insists that Defra is not about to cut all its existing partners out of the loop: "This is about creating an internal economy of organisations that carry out development work" he said.

Bayes says that the government mantra on technology is that IT should be left to industry, not the civil service.

Staff affected by the transfer were told some months ago that the move was coming. Bayes says that most of the terms of transfer have been agreed, and will stay the same as the terms of employment within Defra. "We have no major concerns," she said. "The kinds of things we need to tidy up now are things like dates of pay and annual holiday periods."

Although IBM does not officially recognise unions, a spokeswoman for the company said that IBM respected any individual's right to be a member of a union, and said that the company has always sought to have a positive relationship with unions, wherever neccessary.

Transferred staff will not count towards the overall headcount reduction required by Gordon Brown's civil service cuts. ®

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