The Cabinet Office has signed a memorandum of understanding with its largest supplier, HP, to make significant cost cuts. A substantial portion of the change involved is likely concern IT services deals signed by EDS, before HP acquired the company in 2008. The company has been extensively shedding UK staff since the acquisition, with 1,300 cuts announced last week.

Deals signed by EDS include the £7.1 billion Defence Information Infrastructure project with the Ministry of Defence, under which the supplier is providing hand-held terminals to 300,000 forces personnel around the world, as part of a single information and communications platform that will handle sensitive in-the-field mission data.

That programme, which initially experienced lengthy delays and was lambasted by committee MPs, is being reassessed on cost as part of the Strategic Defence Review, the conclusions of which will be published on Tuesday.

HP also has a major infrastructure and services deal with the Department for Work and Pensions. However in February it lost some of the work to Fujitsu when the Japanese supplier signed a desktop deal worth £330 million over six years.

In June, the company signed a 10 year renewal deal with Atomic Weapons Establishment, a government-owned company that supplies nuclear warheads to the controversial Trident submarine.

HP, which is also a major supplier of hardware to the government, did not give details as to how the cross-governmental savings across would be achieved or what the target was, other than to suggest it would ensure procurement is easier for the government. Similar agreements signed with other suppliers have stated that the government will centralise buying as a single customer, rather than as individual departments.

Craig Wilson, UK managing director at HP, recently told Computerworld UK that the company predicts that clients, including the British government, will look for cost savings through automation. HP itself is investing to design its own fully-automated and standardised datacentres, with the plan to enable clients to migrate their applications to the platforms, and to run faster and cheaper services.

HP is the eighth supplier to sign an MoU with the government, following a path taken by Oracle, Microsoft, Siemens, Atos Origin, Accenture, Logica and Capgemini.