MPs have 'little confidence' HMRC can achieve transition from government's largest IT contract

Will Green is news editor of Supply Management
27 January 2015

MPs have said UK tax authorities face “an enormous challenge” in moving over to a new contracting model for IT services and they have “little confidence that HMRC can successfully achieve this transition”.

In a report the Public Accounts Committee (PAC) said the current Aspire contract, the government’s largest IT contract, was due to expire in 2017 to be replaced with short-term deals with multiple suppliers.

The PAC said HMRC decided three years ago to move to a new contracting model but it only plans to publish a business case in the spring, leaving only two years to “engage the market, recruit the skills and procure and manage the transition of the services it will need”.

Richard Bacon, committee member and Conservative MP, said: “HMRC faces an enormous challenge in moving to a new contracting model by 2017, with many short-duration contracts with multiple suppliers, and appears complacent given the scale of the transformation required.

“Moreover, HMRC’s record in managing IT contractors gives us little confidence that HMRC can successfully achieve this transition or that it can manage the proposed model effectively to maximise value for money.”

The Aspire contract, which provides HMRC’s major tax collection systems, has cost £7.9 billion over 10 years since it was first let in 2004, generating £1.2 billion of profits for provider Capgemini. It accounts for 84 per cent of HMRC’s total spend on IT and yielded more than £500 billion in tax in 2013/14. In 2007 HMRC decided to extend the contract by three years to 2017.

The PAC said the contract had “delivered certainty and continuity over the past decade but it is frustrating that HMRC is still unable to properly assess the value and risks attached to a long-term contract of this nature”.

MPs also said HMRC had been “outmanoeuvred by suppliers” in the contract and in a “series of disastrous concessions” it had conceded rights to withdraw activities, benchmark prices and share in excess profits.

The report said the Aspire contract “conflicts with current government policy on how departments should buy technology” and in 2014 the Cabinet Office “announced new rules to limit the value, length and structure of IT contracts”. These rules state no contract should exceed £100 million, no single supplier should provide both services and systems integration to the same area of government, and existing contracts should not be extended without a compelling case.

HMRC said it had agreed an amendment to Aspire “which allows us to contract services directly with major IT suppliers”.

"We are making significant progress in preparing for a smooth and effective transition from the Aspire contract, which will give HMRC control over the development and delivery of digital services and enable us to make efficiencies of up to 25 per cent by 2021,” said a spokesman.

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