EXCL: Cabinet Office terminates £9m Microsoft migration contract – but still plans switch from Google to M365

Department removes vendor from Falcon programme after completion of discovery phase, and is now mulling options to proceed with delivery of scheme – which includes creation of new Official IT system

The Cabinet Office has terminated a £9m “migration delivery” contract with Microsoft less than 10 months into its planned three-year term – but still intends to make a department-wide switch to the vendor’s software from its current Google systems, PublicTechnology can reveal.

The department is currently delivering the Falcon IT Platform Refresh and Migration programme – a £52m scheme comprised of two main strands, known as workstreams.

The first of these covers the creation and implementation of a new single cross-department IT system – replacing two incumbent platforms – for enabling accredited users to access data and documents classified at Official level. This is the lowest of the three tiers of security classification, below Top Secret and Secret, which covers much of government’s daily business.

The second workstream of the Falcon programme concerns the migration of all of the department’s users and data from a Google Workspace environment and onto Microsoft’s M365 technology. The aim of this switchover is to “align with the rest of central government and enable better collaboration opportunities”, according to the text of commercial documents published in 2023.

Last year the Cabinet Office signed two partners to deliver the Falcon programme: Capgemini, as technical partner; and Microsoft, as migration partner.

In April 2023, the two companies were each appointed to three-year contracts, cumulatively worth almost £22m.

The Microsoft deal, which was initially scheduled to run until April 2026, was terminated on 22 January – less than 10 months into its term, according to amendments made to a commercial notice.

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“Following the completion of the Discovery phase of this contract and after careful consideration, the Cabinet Office has taken the decision to exercise its right to terminate the contract under Clause 18.1 of the terms and conditions,” the notice added.

The clause in question specifies that the department has the right to terminate the contract “at any time by giving 30 days’ written notice to the supplier… [and] the supplier’s obligation to provide the services will end on the date in the notice”.

Microsoft was paid about £1.87m for the delivery of the discovery phase. If the deal had run to its full three-year term, a total of more than £9m would have been spent.

Although the Cabinet Office has chosen to end its contract with Microsoft and “off-board” the vendor from the Falcon programme, it is understood that the department still plans to pursue plans for a wholesale switch of its user-computing systems to M365.

A spokesperson for the department said that, having terminated its direct deal with Microsoft, it will now consider its options for how to deliver the software switchover.

“The programme always contained a planned pause after the discovery phase, in order for us to submit the full business case and fully embed all work and learnings to inform our progress,” the spokesperson said. “Following the successful completion of the discovery phase of our Falcon programme, we are reviewing options to deliver the migration workstream.”

This review will take into account recommendations and reports submitted by Microsoft during the discovery phase and which, PublicTechnology understands, will inform the content of the project’s full business case.

Capgemini has been retained as Falcon’s technical partner and, with discovery phases having been completed for both workstreams, the IT services firm will now press on with delivering the new Official IT system as the programme’s priority focus.

The formal timeline for full completed delivery of Falcon is March 2025 – although the programme’s documentation has, from the outset, specified that a “contingency of one year” beyond this may be invoked, subject to the findings of the discovery phase.

Having been extended last year, the Cabinet Office’s current deal with Google for core software licences is currently scheduled to conclude on 29 September 2024. Since it was first signed in 2021, almost £10m has been spent via the engagement.

Sam Trendall

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