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HMRC reaches agreement with IT suppliers on Aspire contract exit

HM Revenue & Customs (HMRC) plans on going to market next month for a number of smaller IT services contracts for a phased exit of its Aspire outsourcing deal

HM Revenue & Customs (HMRC) has reached a final agreement with Fujitsu and Capgemini on the exit of its £800m per year Aspire outsourcing contract.  

HMRC aims to save £200m a year by 2020-21 by scrapping the contract. It has reached an agreement with the suppliers to make the phased exit from a “single overarching IT contract” by breaking it into several smaller and more flexible contracts.

The department aims to begin tendering next month for a number of IT services, which it expects will be of interest to small and medium-sized enterprises as well as larger suppliers.

Lin Homer, chief executive of HMRC, said the agreement brings the Aspire exit, set for July 2017, one step closer.

"Our new approach enables HMRC to secure the adaptable, cutting-edge IT services we need to transform our services to customers and modernise the way we work, at much better value for money for the taxpayer,” she said.

As part of the phased approach to the exit, the department signed a three-year extension with Capgemini as a strategic supplier for application and management services, meaning its contract now ends in 2020, rather than 2017 as originally planned.

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Salil Parekh, who sits on the Capgemini group management board, said that the company’s ambition had always been to remain a significant partner to HMRC after 2017.

The 10-year Aspire outsourcing deal is one of the biggest IT contracts ever signed by the UK government, and has been heavily criticised for its high costs. By the end of the contract, its prime contractor Capgemini will have cashed in £10.4bn of taxpayers’ money on the deal.

In January 2015, MPs claimed HMRC’s July 2017 deadline was unlikely to be achieved. However, the department began transferring 250 Capgemini staff back in-house in 2015, and has remained confident of its deadline.

In October 2015, the department signed a contract worth up to £20m with consultancy Bain and Company, to help with the strategic and cultural issues that come with moving away from the large outsourcing deal.

HMRC received a £1.3bn reinvestment as part of the spending review to transform the department into a digital tax administration.

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