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The Atlas Consortium, led by Electronic Data Systems (EDS), moved into the lead in the race to win the contract to provide the Ministry of Defence with its new £4 billion IT infrastructure. The contract, which includes an unprecedented "no failure" clause, involves the replace-ment of 300 separate information systems across 2,000 locations and encompasses over 170,000 desktops. The 10-year deal will create a unified IT infrastructure for the Royal Navy, Army and Airforce.

UK defence and technology contractor, QinetiQ, is preparing for flotation later this year on the London Stock Exchange. The company, which was formed in 2001 with the privatisation of the UK's government's Defence Evaluation and Research Agency, expects its initial public offering to raise over £1 billion.

In an apparent U-turn, Microsoft announced that it will release a new version of its Internet browser separately from the next version of the Windows operating system. A trial version of Internet Explorer 7 (IE7) will be released this summer following continued delays with 'Longhorn', the next version of Windows, and a loss of market share to the Firefox open source browser.

A bidding war erupted in the retail software sector as applications giant SAP struck a $496 million acquisition deal with the board of supply chain specialist Retek only to see Oracle come in with a rival offer. Retek, which counts Gap, Sears, Sainsbury's and Tesco among its clients, would help push SAP's share of the US business applications market to over 50%, SAP executives claimed - a statement that spurred the counter-offer of $525 million by Oracle's CEO, Larry Ellison. Wall Street investors pushed Retek's share price to $10.45, 23% above the agreed price with SAP.

Furniture retailer MFI declared itself back on track with the implementation of a new supply chain system, having seen earlier problems take a chunk out of company sales. MFI recorded an operating loss of £46 million for its UK retail outlets and a 9.4% decline in revenues to £825 million in the year ending 31 December 2004. Contributing to that were problems encountered when implementing a new supply chain system, based on software from SAP, which cost the company £36 million in refunds.

Barclays bank signed a seven-year contract with BT, potentially worth over £500 million, for the implementation of an IP-based voice and data network. Barclays said it expects to cut voice and data costs by 30% over the life of the contract through the introduction of the IP network.

Microsoft said it was acquiring Groove Networks, the collaboration software company founded by the original developer of the Lotus Notes groupware package, Ray Ozzie. Ozzie will be appointed chief technology officer of Microsoft. No price was mentioned, but Microsoft was already a major investor in Groove, having pumped in $51 million in 2001 and $38 million in 2003.