Defra Extends IBM Contract For £30m Due To Brexit Pressure

Department for the Environment, Food and Rural Affairs (Defra) has delayed its plans to reduce its reliance on IBM, instead extending a contract worth £1.4 billion by 17 months, as a result of Brexit-related complications.

The agency cited application development pressures imposed by the UK’s exit from the European Union for the move, which is understood to come at a cost of £30m.

In a contract note Defra said it was extending IBM’s contract due to “substantial application development and maintenance services required as a result of the United Kingdom’s exit from the European Union”.

It also cited economic reasons and issues of inconvenience for the move, but said it may be able to reduce its dependence on IBM during the course of the contract.

App transition

“It is expected that the sole service line provided by the incumbent contractor after the expiry of the original term of the contract will be application development and maintenance,” Defra said in the note. The contract with IBM began in July 2004.

Defra’s UnITy transformation programme, currently at the procurement stage, is intended to shift away from its reliance on two contractors, IBM and Capgemini, to a more diverse supply chain.

An Environment Agency contract with Capgemini is also understood to be undergoing an extension, but for a shorter period.

A year ago it was reported that hundreds of large government contracts coming to the end of their term were being automatically extended or re-extended because Brexit had pushed them down the list of priorities.

Staff crunch

The extensions were occurring in part due to austerity measures introduced since the financial crisis, which have cut the number of civil servants by 26 percent over the past decade without any cuts to the services being provided, according to the National Audit Office (NAO).

At the time the NAO said the EU exit, on top of austerity measures, had resulted in “urgent” skills shortages for the civil service, with the expertise needed for increasingly ambitious digital projects particularly hard to come by.

Rob Anderson of analyst firm GlobalData said more than 250 applications within Defra would need to be amended to continue to function outside the EU regulatory environment, and as such “it is not surprising that priorities have changed”.

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