According to reports, the Department for Business Innovation and Skills (BIS) has predicted that the renegotiation of its Elgar contract will save £5m this year.

Elgar is an outsourcing contract to supply and manage IT equipment and core services put in place by the former Department for Trade and Industry. Fujitsu receives about £28m annually under the terms of the deal.

The renegotiations with supplier Fujitsu were completed last autumn, and "resulted in savings of £50m a year over the life of the contract," from 1 April 2009 to 2014.

The department's resource accounts for 2009-10 say that it renegotiated the contract to remove the majority of the 'technology refresh' element.

BIS will now pay for new hardware directly from its own capital budgets for the remainder of the contract period.