BT loses flagship contract for second time

BT has failed in its bid to win back the lucrative deal to design and host the government's UK Online website.

The telco was forced to re-tender for the contract after its original deal expired in September and renewal negotiations with the Cabinet Office broke down.

Stuart Hill, head of BT's government service Stepchange, told silicon.com last month that he had a "tiger team" working on the new bid. "We're re-thinking, re-shaping the contract," he said. "I'm still positive we can win it back."

But in a bitter blow the Cabinet Office announced today that it has chosen Loudcloud instead. A spokeswoman for the e-envoy's office said the US start-up was "newer and more cutting edge" than its rival.

"We chose on reliability and value for money," she said. "And we want a service that allows us to be more innovative and offer flexibility."

Founded in 1999 by Marc Andreesen, the brains behind Netscape, Loudcloud has carved a niche in the web-outsourcing market but has struggled to reach profitability.

In June, it posted a first-quarter net loss of $60.4m on revenues of $11.7m - compared with a net loss of $14.6m on revenues of just $86,000 during the same quarter in 2000.

But despite its financial worries, the company has won high-profile deals with the likes of Adidas, Blockbuster, Estee Lauder, Ford and the UK Post Office.

Ian Ordish, Loudcloud's European chief and former CTO of Blockbuster, claimed the company won the contract because of its reputation for website stability.

"The challenge for us is to provide technical infrastructure and a management framework that is scaleable and reliable," he told silicon.com.

The site, at http://www.ukonline.gov.uk is home to information on such diverse topics as moving house or having a baby, and government services like TV licences and passport applications.

The e-envoy's office is planning a revamp of the government portal to launch in spring next year. Loudcloud will take over the hosting at the same time.