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By | Kat Hall 27th January 2015 12:53

HMRC fails to plan for £10.4bn contract exit... because it's 'too risky'

Small matter of £500bn down the drain if it goes titsup – MPs

HMRC's eye-wateringly expensive £10.4bn IT deal – "the largest technology contract in government" – could be too risky to change as the department has failed to plan for a new contract model, MPs have warned.

The Aspire contract underpins the collection of £500bn tax income for the government. It has also generated £1.2bn in revenue for Fujitsu and Capgemini. The deal, signed in 2004, has so far cost more than double its original estimated value of £3bn-5bn and has already been extended by three years to 2017.

Although HMRC decided three years ago to move to a new contracting model it still does not have a detailed business case for the change, said the Public Accounts Committee watchdog.

"There are substantial risks to tax collection if the transition fails, which would create havoc with the public finances," warned Richard Bacon MP.

HMRC spends 84 per cent of its ICT budget with the integrators that run the Aspire contract.

By 2017 HMRC has committed to changing the structure of the deal in line with the Cabinet Office model of short-duration contracts with multiple suppliers.

Yet the PAC accused the department of being "complacent" given the scale of the transformation required.

"Getting the skills to manage multiple suppliers, and to design and integrate technology, is a pre-requisite for the success of the proposed change," said Bacon.

"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 expects the new arrangements to reduce its running costs by 25 per cent. However, the department was unable to estimate the cost of change, said the PAC. "It could not even provide the Committee with a range," added Bacon.

The Cabinet Office has set a restriction on IT procurement above £100m, but PAC said this is not a realistic amount in a business as large as HMRC’s, "or that transformation on this scale is achievable by July 2017." ®

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