Siemens has lost a contract with the Department of Work and Pensions (DWP) which was due to run until 2010.

It is rare for any government department to sack its IT supplier, no matter how bad relations get. In 2003 the Inland Revenue did end its contract with EDS and Accenture but the contract had run for 10 years and then had a scheduled recompete which was won by Aspire - a group including Capgemini, Fujitsu, and BT.

The new system was meant to speed payments and improve management controls, according to the Sunday Times.

The DWP said only it had terminated the contract for the Central Payment System programme.

Siemens said: "The contract is at an end and for contractual reasons. Siemens is unable to comment further."

When EDS lost the contract to provide the NHS with email it threatened to sue. An amicable and secret arrangement was made between the two before it reached court. EDS was in the frame again when the Child Support Agency systems went into meltdown, but the two continue to work together. A Parliamentary committee described the contract as "one of the greatest public administration disasters of recent times". ®

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