It will enable UK police forces and other government organisations to securely share information and search each other's intelligence and operational information.
The PND will be developed as part of the Impact programme, which was established in response to the Bichard inquiry recommendation for the creation of intelligence sharing systems as a national priority.
Under the initial phase, scheduled to be rolled out in 2010, data will be brought together from five operational areas of policing - custody, crime, intelligence, child abuse and domestic abuse - into a central system. The first phase work will focus on safeguarding children and vulnerable adults, countering terrorism and assisting major crime investigations.
Chief constable Peter Neyroud, chief executive of the NPIA said: "This is a significant milestone for the NPIA, for policing and, ultimately, for the public. Currently, police forces are unable to search or access intelligence or other information that is held on another force's local systems.
"The Police National Database will enable this by making available nationally copies of locally held information on suspects and criminals; making the public safer by improving the ability of the Police Service to share operational information and helping the police to stay one step ahead of the criminal population."
Logica will act as the prime contractor, leading the applications development, management and service provision of the PND. It will also work on mitigating solution and service risks.
Its partners will include Northgate Information Solutions and SunGard Public Sector for application development and business change services, and Cable and Wireless for hosting and communications services.