Her Majesty’s Revenue & Customs (HMRC) will be unable to successfully move away from its Aspire outsourcing contract by the July 2017 deadline, MPs have warned.
In a Public Accounts Committee (PAC) report, MPs called the department overly complacent about the scale of the move away from one of the biggest IT outsourcing deals ever signed by the UK government. The report also stated HMRC doesn’t even have a business case for the transformation change, despite three years passing since the decision to abandon the contract.
MPs also branded the Cabinet Office’s new rules of restricting IT contracts over £100m unrealistic for departments as big as HMRC.
“We do not believe that the Cabinet Office’s ‘red lines’ on IT procurement, such as its restriction on any IT contracts over £100m, are realistic in a business as large as HMRC’s, or that transformation on this scale is achievable by July 2017,” said Richard Bacon, MP, as the report was published.
Bacon said HMRC faces an enormous challenge in moving to a new contracting model for collecting UK taxes by 2017.
“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,” he added.
HMRC told the committee that it hoped to publish a business case for the move away from Aspire in the spring, which leaves it only two years to approach the market, recruit necessary skills and manage the transition of the services it will need before the existing contract expires in 2017.
The Aspire contract between HMRC and Capgemini accounts for 84% of HMRC’s total spend on IT, and while the department has said it expects to save more than £200m a year by abandoning Aspire, the PAC report stated the department couldn’t provide the committee with a rough estimate of the cost of the change which will arise from moving staff, equipment and office space.
Meanwhile, HMRC has said it is confident it can meet the 2017 deadline, although “some of the key milestones may shift”, read the report.
The PAC report suggested HMRC and the Cabinet Office should jointly agree key milestones and warning flags leading up to the end of the contract in June 2017, “with contingency plans that manage the risks to the stability of the tax collection system and the risks to value for money should these milestones be missed”.
Last year, the National Audit Office warned HMRC about its Aspire challenges, saying it posed serious risks to HMRC’s business should it fail to replace the Capgemini-led deal.
Since the Cabinet Office’s new rules on large outsourced IT deals were introduced, HMRC has been trying to break up the contract into manageable chunks. But the NAO said the department has had only limited success in negotiating new agreements with suppliers.
The department had planned to move to direct contracts with Capgemini’s main subcontractors, Fujitsu and Accenture, but the NAO said it had seen no evidence of any new contracts being agreed.
Commenting on the PAC report, Julian David, CEO of techUK, said its members welcomed the PAC's recognition of this and its view that the size of individual contracts should be determined by the requirements and circumstances facing individual departments rather than being constrained to fit arbitrary limits.
“We share the Cabinet Office’s desire to see the widest available supplier base made available to public sector organisations, and techUK and its members work with government departments to help them take advantage of innovative suppliers of all sizes – large and small,” said David.