Leader: £3bn Revenue contract serves notice to IT suppliers

The decision by the Inland Revenue to award its 10-year £3bn IT outsourcing contract to Cap Gemini Ernst & Young (CGEY) and Fujitsu Services today was not just any government contract announcement.

Despite the fact there has been plenty of speculation over the course of the 21 month procurement process that the Revenue was looking to ditch EDS because of its poor track record, the formal announcement today still sent shockwaves through the IT industry.

Government IT projects, because of their public and often high-profile nature often come in for criticism for wasting taxpayers' money when they fall over. But in recent years that has just resulted in the contracts with the guilty suppliers being renegotiated, usually with more money going to the IT vendor.

So for the Revenue to take the brave step of ditching the entrenched incumbent supplier and all the handover and migration headaches that will undoubtedly involve is a landmark decision. As one analyst told silicon.com: "Incumbency is no longer a guarantee."

And along with the increased scrutiny of Peter Gershon at the Office of Government Commerce and what is happening with the strict conditions and penalty clauses in the procurement process for the NHS' £5bn IT modernisation programme, it signals a real determination on the part of the government to ensure that it gets value for taxpayers' money from its IT projects. Which can only be good news.

But let's not become obsessed by the high-profile government IT failures. Research out this week from services company Steria shows that behind the big headlines the public sector is actually better at managing IT than the private sector. silicon.com has heard many a story of multi-million pound IT cock-ups by blue-chip companies but they are more easily able to brush them under the carpet.