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CSC drops out of £2bn BBC IT contract race
And then there were two…

By Andy McCue

Published: Friday 11 June 2004

CSC has withdrawn from the bidding for the BBC's £2bn IT outsourcing contract, leaving Accenture and Siemens to battle it out.

The BBC decide to farm out its BBC Technology subsidiary after an internal review identified potential annual savings of at least £20m if the services were outsourced.

The shortlist was announced earlier this year and the winning bidder will buy BBC Technology and take over a range of services including: IT hardware, systems and applications for 25,000 users; telephony; consulting; project services and broadcast system services to the BBC's infrastructure.

A spokeswoman for BBC Technology said the BBC and CSC had "reached a different understanding" on the objectives and both parties "decided it was not appropriate for CSC to continue" bidding.

She said this will not affect the contract timetable and that the winning bidder is expected to be announced early July with final contract negotiations continuing through to handover in the autumn.

CSC said in a statement: "We can confirm that CSC has withdrawn from the procurement process for the BBC's Technology Services Agreement. This decision was judged to be in the best interests of both parties. CSC looks forward to working with the BBC in the future."

Richard Holway, analyst at Ovum Holway, said CSC's withdrawal could be down to the acquisition side of the deal.

"We had put CSC down as the most likely to win the outsourcing contract. So our suspicions are now around the acquisition part. BBC Technology includes a number of IPRs for various software products. How these get valued is, as we all know, more of an art than a science," he said.

Holway said the move is also an indication of growing commercial realism among some IT companies, which are not prepared to take a hit on the bottom line by taking on deals just to win market share.