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By | Lucy Sherriff 8th November 2005 14:16

DTI hands Serco £125m IT deal

Lots riding on this one

Serco has won an IT services deal with the DTI that could be worth as much as £125m over the next nine years.

The services vendor is now responsible for delivering the government's business.gov programme. This will mean working with plenty of government departments, including the DTI, the Treasury, the Cabinet Office and HM Revenue and Customs.

Specifically the deal is to develop and manage the DTI's Businesslink.gov.uk portal, with the aim of making it easier for smaller businesses to work with the government.

The contract will initially run for five years, with four year-by year renewals up for grabs if Serco performs well.

Earlier this year, Serco acquired ITNET, and inherited a number of public sector contracts, one of which (a BPO deal with Hounslow council) it promptly lost. In 2004, ITNET had a contract with the Cabinet Office terminated less than a year into its five year run.

The company certainly has something to prove. John O`Brien, of analyst house Ovum, said that the deal will be a test of Serco's reputation with central government.

"Serco obviously can't afford to make mistakes given the history here. A lot hinges on its ability to deliver a successful service. If it fails, Serco's new-found credibility in central government could all be undone," he said. ®

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