The Foreign and Commonwealth Office (FCO) is to spend £320m on a public private partnership (PPP) deal with HP for the upgrade of its global IT infrastructure.
The FCO said the seven-year deal is based on a "joint delivery model" rather than a traditional outsourcing arrangement, with individual elements of service delivery handled by both HP and the FCO's in-house IT team.
HP's part of the contract is worth £180m over the seven years and the company will still retain lead responsibility for overall management of the service. In addition to that the FCO said its internal IT costs for the deal will be £140m.
The new deal is for the upgrade of its existing Windows-based global desktop infrastructure known as "Firecrest", which covers 11,000 desktops in FCO locations around the world.
HP beat off competition from a SAIC-led consortium during the two-year procurement process for what became known as "Future Firecrest", which aims to provide a single secure online infrastructure for all FCO locations in the UK and overseas.
The FCO and HP will jointly design, plan, implement and operate the new system, including the deployment of new hardware, software and services, over a two-year period.
FCO permanent under-secretary Sir Michael Jay said in a statement: "This has been a ground-breaking procurement, which represents a genuine partnership as opposed to a more traditional outsourcing arrangement."
The deal comes just a week after HP ousted its CEO Carly Fiorina over a board disagreement over the future direction of the company.