HMRC this week announced that it had reached a formal agreement with its IT outsourcing suppliers to complete its phased exit from the £10bn Aspire contract next year.
When it ends in 2017, Aspire will have earned more than £10.4bn for the Aspire consortium over a 19-year period marked by controversy, cost overruns and data processing errors.
In its 2011 report on government IT rip-offs, the Public Administration Select Committee called Aspire “a case study of what is wrong with the present procurement culture”.
The MPs pointed out that such a large contract was too complex to manage and committed too much power and money to a single supplier.
In 2014 the National Audit Office estimated that the project’s costs would be £10.4bn by 2017 - double the original estimate and with double the amount of profit for the contractors. The department committed to Aspire contract extensions knowing that it might not get market rates and did not have the independent expertise to challenge its suppliers, the NAO noted.
In response to these criticisms, HMRC resolved to break its technology services package into to a series of smaller, more flexible contracts with existing and new suppliers.
“The key point about this agreement is that it will be a phased replacement,” an HMRC spokesman told AccountingWEB. “It won’t be Aspire one day and one big switchover the next. To mitigate that issue the new contracts will have different start dates.”
Some elements of the Aspire contract were already brought back in-house last August. Having staff in-house before the end of the contract will “provide stability” during exit process, HMRC said, adding that it will start seeking tenders for a number of IT services from next month.
According to HMRC, Aspire currently accounts for around 84% of its technology expenditure. The new approach will is designed to save up to 24% of its £854m annual IT spend by 2020-21.
Such claims do not have a great track record and both the Commons Public Accounts Committee and the PCS civil service union have questioned whether HMRC has the expertise and detailed plans in place to manage the transition.
This morning’s announcement is a slightly odd, post-holiday postscript that merely confirms details that have been widely reported before.
One element of the PR plan may be to emphasise that HMRC is clearing away the technology deadwood before ushering in its gleaming new Making Tax Digital strategy within an all-new IT set up. The HMRC press release mentions that HMRC has an additional £1.3bn to invest in its transformation programme over the next five years to “make it quicker and easier for the majority of individuals and businesses to manage their tax affairs online”.
The announcement also gave departing HMRC chief executive Lin Homer an opportunity to put her personal stamp on the strategy.
“HMRC’s ambition is to be one of the most digitally-advanced tax authorities in the world, and the agreement we have reached to exit the Aspire contract brings that a huge step closer,” said Homer.
“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.”