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IT CONTRACTS EXCEED 1995 LEVELS BY 70%

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The value of local authority IT contracts let last year recovered sharply on 1995, according to a review of the mar...
The value of local authority IT contracts let last year recovered sharply on 1995, according to a review of the market by supplier ITnet.

Contracts worth£29 million were let in 1996, a growth of 70% on 1995's figure of£17m. The average value per contract increased from£1.2m in 1995 to£1.4m. This was largely due to two contracts worth more than£5m a year each being signed during 1996.

Renewals accounted for 58% of the value of 1996 contracts.

A total of 21 contracts were let last year, an increase of 50% on 1995's figure of 14. Of these, 13 were deals signed by councils contracting out for the first time. Eight were renewals, three of which saw councils switch suppliers.

The ITnet Index suggests there is no trend towards IT services being taken back in house, although it is evident that authorities now have the confidence to switch suppliers where appropriate.

But, according to the index, the market has still to match 1994 levels, when 25 contracts worth£30m were let.

Overall, 69 authorities, or 15% of the market, have now contracted out part or all of their IT, with London boroughs and county councils leading the way. The total value of all local government IT contracts stood at£116m in 1996, a 13% increase on the 1995 figure of£103m. London boroughs accounted for 37% of the market, metropolitan and district councils 22% each and unitary authorities 2%.

But ITnet warns that the packaging of IT with financial services contracts under CCT is already affecting the market. The firm says this will reduce the size of remaining council IT expenditure, resulting either in smaller contracts being let or authorities keeping their IT in-house.

ITnet also predicts that 1997 could see the first moves towards letting contracts under the private finance initiative.

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