The National Audit Office has warned that there are “serious risks” to HM Revenue & Customs’ business if its programme to replace an existing technology contract fails to meet its objectives by June 2017, when the contract ends.
The ‘Aspire’ deal with Capgemini was the government’s largest technology contract, costing £7.9bn between July 2004 and March 2014, and was intended to ensure the continuity of HMRC’s information and communications technology services, improve performance and provide access to up-to-date skills and technologies.
However, the NAO’s report stated that the contract is at odds with current government policy on how departments should buy technology.
It said that since 2011, “HMRC has accepted the Cabinet Office view that, as a long-term prime contract for technology, Aspire was no longer providing value for money and that changes needed to be made, but the department has had limited success in negotiating these with suppliers”.
While the contract has provided the continuity of service to enable HMRC to collect around £500bn of tax each year with few significant service failures, much more work than was originally modelled has been commissioned, and “evidence from benchmarking suggests that it has paid above market prices for additional work”.
HMRC used provisions within the contract to extend it and increase the amount of services and projects bought through it. The NAO estimated that by the time the contract ends in June 2017, HMRC will have spent £10.4bn compared to the £4.1bn used when evaluating Capgemini’s bid.
The report added that pressures to find cost savings in the short term led HMRC to trade away its negotiating power and hindered its ability to get strategic value from such a long-term contract.
Amyas Morse, head of the NAO, commented: “HMRC faced complex, long term technology challenges, and Aspire provided an appropriate means of working through them and limiting risk.
“However, there has been a lack of rigour in HMRC’s commercial management of the contract. It is essential in any contract that the client retains the independent expertise to challenge the supplier.
“HMRC now faces a considerable challenge in a limited amount of time to negotiate reform to the contract while at the same time defining its technology strategy for post-Aspire.”
