Existing contracts hinder Revenue integration plan

The practical problems of combining systems and contracts in two large government departments are highlighted in a document...

The practical problems of combining systems and contracts in two large government departments are highlighted in a document released to Computer Weekly under the Freedom of Information Act.

The document gives details of the difficulties of terminating, for the convenience of the government, a 10-year £1bn contract at Customs and Excise, held by Fujitsu since 1999, and rolling the work into a larger £3bn "Aspire" deal at Inland Revenue, which was won by Capgemini and Fujitsu in 2004. The Customs Infrastructure Services Agreement with Fujitsu expires in 2009, and Aspire ends in 2014 - although there is an optional eight-year extension.

The paper, entitled "Commercial Integration of the Aspire and Fujitsu Contracts" went to the executive committee, which was created to oversee the design of a newly merged department, HM Revenue and Customs. The merger became official last week, and the committee has been considering evidence of the risks of a merger and the integration problems.

"In an ideal world it would be sensible to roll everything into Aspire and operate with a single contract but there are a number of difficult problems," said the paper.

These included the costs of terminating Fujitsu's Infrastructure Services Agreement with Customs. Issues listed in the paper included "compensation for Fujitsu's outstanding credit arrangements", redundancy payments, compensation for Fujitsu's "loss of future profits", subcontractor contract breakage costs, and "exit costs".

In addition, "12 months notice will need to be given, potentially leading to a difficult exit period". It also said there are "risks around staffing implications".

The paper suggests pushing new work into Aspire as it arises and migrating existing Fujitsu work to Aspire "if there are opportunities to do this without breaching the Infrastructure Services Agreement".

Preliminary work suggested that "there is the potential for significant savings from this approach".

"The commercial integration team have been discussing with Capgemini and Fujitsu a mutually acceptable way of closing down the Infrastructure Services Agreement which might mitigate potential claims for compensation from Fujitsu."

At a departmental board meeting in January, the Inland Revenue noted, "[The] challenge is not just to drive out efficiencies but to radically change how we do things. [The Revenue] recognised there is a huge challenge for managers both to manage the changes in their own areas and to contribute to the corporate process."

In a statement on the paper, the Revenue said an alignment of Customs' and the Revenue's contracts "would not be recommended if there were no overall financial savings".

 

Merger teething troubles: two contracts, one roll-out     

Revenue and Customs are both engaged in the large-scale roll-out of Windows XP to desktop systems, but a document released to Computer Weekly under the Freedom of Information Act said, "Because we are unable to guarantee negotiating the move of the [Customs' Fujitsu contract] into [the Revenue's] Aspire in the time available, we will need to assume that the roll-out will start separately under both contracts. The planning and management of the roll-out will be complicated by the need to track progress under different agreements, especially difficult where there are shared locations."

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