DWP and EDS realign contract for £500m a year

The Department of Work and Pensions (DWP) and EDS, technology services company, have entered into an arrangement which, the Department claims, will mean it gains substantial savings on IT costs whilst getting an improved service.

On average, over the next five years, the Department will be spending around £520 million a year on services delivered by EDS, compared to more than £700 million a year spent since the DWP was created.

The DWP cites the benefits as an upgraded IT infrastructure, improved system availability and faster system response times.

Realigned contracts

The cost changes are a result of a contract realignment which simplifies the complex structure of separate contracts inherited by the DWP when it was created out of the former Department of Social Security and Department for Education and Employment.

The realigned contract brings together and standardises the different historical arrangements and ensures highly competitive, benchmarked prices for the services EDS delivers. The new contract structure enables EDS to increase its previously stated estimates for revenue from the DWP over the next five years by £800 million.

Sir Richard Mottram, Permanent Secretary at the DWP, said: "The Department is committed to modernising all aspects of its work to achieve efficiency savings reaching £1 billion a year by 2007/8. We have agreed with EDS new ways of working using wherever possible industry standard processes and best practice. Compared with present practices, we expect a better, more robust service and substantial savings. This will make an important contribution to the efficiency savings to which we are already committed."

EDS

The realigned contract also provides EDS with greater certainty of their income from the Department, which subject to their performance, is valued at £2.6 billion over 5 years. If EDS performs well under the contract the Department could award the company additional work valued at up to £180 million over the lifetime of the contract.

Doug Hoover, EDS Vice President and managing director, UK, Ireland, Middle East and Africa, said: "We are pleased that we have realigned our relationship with DWP. This renewed partnership, consistent with EDS' Agile Enterprise commitment, paves the way for improved services and substantial long-term savings for the Department. The consistency and flexibility in IT services will better equip the Department to meet its demands".