Cabinet Office in cost-cutting agreement with Siemens

The Cabinet Office has inked a government-wide savings agreement with Siemens IT Solutions and Services.

Siemens is the fifth supplier to sign a memorandum of understanding with the government, following Accenture, Logica, Atos Origin and Capgemini.

Siemens' work with the public sector includes a £2 billion outsourcing agreement with broadcaster the BBC, which sold its own technology wing five years ago. Siemens provides it with all its IT, technology and transmission services. Siemens' other government contracts include an IT and process overhaul at National Savings & Investments, and computerisation of MOT testing at the Vehicle and Operator Services Agency.

The news of Siemens' agreement comes ahead of the publication today of a government-commissioned report by Topshop boss Sir Philip Green, in which government spending - including across IT suppliers and goods - is expected to be branded as wasteful. It is understood that the Cabinet Office will stick to plans of insisting it signs off any government IT project costing over £1 million.

Siemens declined to give exact details of the company’s agreement with the government, saying only in a statement that it had signed a “long term, strategic” agreement. There would be "short term operational savings that will translate into additional future benefit", it said, but declined to explain whether or not this meant short term cost cuts in return for more work in the long run.

The savings from different suppliers would be targeted in a number of ways, said Tola Sargeant, research director at analyst house TechMarketView. While the individual agreements were not public, she said, "some will concern the extension of contract timescales for the same work", with some "rescoping" of other work. The government would likely "take out some elements" of existing contracts with various suppliers, she added.

Previous agreements with a number of suppliers have included other steps such as cutting administration, as well as the government buying as a single customer  instead of as different departments.

Copyright © 2010 IDG Communications, Inc.

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