'Breach of contract' ended ITNet's work with Cabinet Office

ITNet's claim of 'good progress' in delivering on its data hosting contract have been contradicted by the Cabinet Office

The Cabinet Office has fleshed out why it has severed its contract with ITNet for a range of key government contracts, pulling few punches.

On Tuesday, ITNet revealed it had been dropped from three key pillars of the central e-government push.

While ITNet has had success with local contract deals, the Cabinet Office contract, signed last July, was its biggest ever. Tuesday's news sent its share price crashing by over a third.

On Wednesday, the Cabinet Office seemingly contradicted ITNet's claim that it had made "good progress in delivering the contract in accordance with [revised] milestones".

A statement says the agreement was ended because of breach of contract.

It reads: "None of the services under the remit of ITNet's Data Centre Hosting Contract have either been delivered or accepted and the project is several months behind schedule and was forecast to be considerably over budget if continued.

"The decision to terminate has not been taken lightly. Prior to our decision to terminate this contract every effort had been made, over several months, to resolve the issues, without success."

E-envoy Andrew Pinder said that the decision had been taken in line with government efforts to deal with the early symptoms of projects going wrong - something the government has been criticised for not doing in the past, by MPs, the National Audit Office and others.

The Cabinet Office is now in the process of looking for an alternative supplier. When ITNet won the deal last year it was through a 'last man standing' scenario. Other major providers Fujitsu Services and SchlumbergerSema had dropped out, with insiders claiming the contract would be too difficult to fulfil.