One of the biggest IT outsourcing deals ever, defence IT services, has been awarded to a consortium led by EDS.

The £4bn services contract with the Ministry of Defence is for 10 years and covers everything from managing battlefield communications to linking civil servants.

The Atlas consortium includes, General Dynamics, EADS, Fujitsu Services and LogicaCMG. The defeated consortium had Computer Sciences Corporation leading BT, CapGemini and Thales UK.

The structure of the contract was blamed for IBM and Lockheed Martin led consortiums dropping out.

The contract centres on a major initative for the MOD, the 10-year Defence Information Infrastructure project. The ministry has split the project into 3 stages. The first, however is only one that it has committed to.

The consortiums however had to demonstrate that they could deliver on all three. Stages 2 and 3 commitment will depend on value for money, contractor performance and the MOD's needs.

The contract has been structured so that the partners are jointly liable for the work. Thus if one falls out, the others have to pick up the pieces.

The National Outsourcing Association has said that parts of the work may be moved offshore. Co-incidentally, EDS last week announced it was closing 21 datacentres in the US and Europe.

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