IT expenditure by HM Revenue & Customs is set to reach £8.5bn
over the next 10 years, almost triple original
estimates.
Matters have not been helped by the high costs associated with
changing suppliers that weren’t delivering in the eyes of HMRC,
said the
Commons Public Accounts Committee (PAC).
ASPIRE (Acquiring Strategic Partners for the Inland Revenue) is
HMRC’s contract with Capgemini for the provision of IT services.
Edward Leigh MP, chairman of the PAC, said, “The re-competition
of the IT services for the former Inland Revenue ended with the
incumbent suppliers, EDS and Accenture, being replaced by
Capgemini.
“The transition was successful but very costly. It is hard to
find a justification for HMRC paying so much, nearly £52m, towards
bidders’ costs to encourage competition. Any department doing this
in future must show there is no other cost-effective way of
securing competition.”
Leigh added, “HMRC could also have been sharper in its
negotiations. The actual costs of transition were agreed after the
contract was awarded and competitive tension had vanished – and the
costs even included a profit margin for the successful bidder.”
Leigh said, “There has been a very steep rise in HMRC’s spending
on IT services – the forecast figure is some £8.5bn over the ten
years of the contract compared with the original estimate of nearly
£3bn. If profit margins carry on at the current level, then
Capgemini could make £1.1bn on the contract, nearly four times the
amount originally envisaged.”
Leigh said HMRC should have foreseen that its demand for IT
services could vary significantly and determined how this might
affect its contractor’s prices and profit margins. He said these
will have to be “rigorously benchmarked” in future to make sure the
prices fairly reflect the actual volume of work being carried
out.
HMRC keeps books closed on spiralling IT
costs>>
Revenue has lost control as cost of IT contract
soars>>
Revenue keeps Accenture ties despite
14m-pay-off>>
The full PAC report on HMRC can be viewed
here>>
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