Owner Kate Upcraft Consultancy Ltd
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Replacing HMRC’s Aspire IT contract

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14th Jun 2016
Owner Kate Upcraft Consultancy Ltd
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Kate Upcraft explains why HMRC is replacing its IT provider and what will happen next.

Policy

Aspire (acquiring strategic partners for the Inland Revenue) has been the government’s largest IT contract, expected to cost around £10bn over 13 years to its close in 2017. Cabinet Office policy is that government departments should move away from large, long-term contracts with single suppliers that are extended on numerous occasions, preferring instead that contracts are placed with more IT suppliers including SMEs. Hence Aspire must go.

PAC review

The Public Accounts Committee (PAC) heard evidence yesterday on the progress HMRC has made in replacing the Aspire IT contract. The National Audit Office briefing note to the PAC provided an illuminating insight into the contract negotiations thus far.

The NAO pointed out that the longevity of the Aspire contract has led to HMRC’s technology becoming out of date. However, the NAO also commented that the Aspire contract has provided stable but expensive IT solutions. For example, in 2014/15 the annual spend was around £700m, although that was a reduction on earlier years when up to £800m had been spent.

PAC findings

In January 2015 the PAC found that the stability provided by the length of the Aspire contract had come at a significant price. Of even greater concern to them was the fact that little progress had been made on the replacement for Aspire, given the contract end date was June 2017. 

At a follow-up hearing in March 2015 the PAC found HMRC still couldn’t provide a business case as supplier negotiations were ongoing. The NAO reports that this delay was partly due to the DWP extending its contract with Hewlett Packard in February 2015, as it was unable to negotiate a variation to that contract. Capgemini then took the view that government policy had changed on extending contracts and pushed for their contract for certain services to be extended beyond 2017.

In March 2016 HMRC announced that negotiations had been concluded and that the Aspire contract would come to an end. The project to replace Aspire is now called “Columbus”.

The Columbus plan is to replace Aspire in phases, with phase one to start in December 2015. The last phase should be completed by 2020, when making tax digital should also be complete.

HMRC has agreed on the phasing out plan for five of the services provided by the two main Aspire suppliers: Capgemini and Fujitsu, a further five services by provided by these two suppliers will now run on until 2020. An announcement on the exit plans from the third major supplier: Accenture, is expected later this month.

Costs and savings

HMRC has forecast that replacing Aspire will cost up to £700m, but it will deliver recurring savings of between £233m and £374m, although this is up to 60% lower than its original plans. These savings are a large proportion of the £717m of annual savings HMRC is committed to making under the 2015 spending review.

In-house

Around three quarters of the savings from scrapping Aspire will come from removing profit margins paid to suppliers and reducing overheads by bringing services in-house. To this end HMRC has established a new company: revenue and customs digital technology services (RCDTS).

Over 200 staff were transferred to RCDTS from Capgemini. The idea is that this would enable RCTDS to pay higher base salaries to those individuals, rather than being constrained by lower civil service salaries plus the heavy burden of civil service pension arrangements. 

Independent review

The infrastructure and projects authority, who oversee government projects of this size, assessed progress on the replacement of Aspire three times in 2015. Each time it awarded a rating of amber/red – meaning that “successful delivery of the project is in doubt, with major risks or issues apparent in a number of key areas.”

In April 2016 the “Columbus project” managed to achieve an amber rating – which means “successful delivery appears feasible but significant issues already exist, requiring management attention.”

In March 2016 the Columbus programme board outlined 14 high risk elements to the final replacement plans: no doubt the PAC report will focus on HMRC’s plans to mitigate these risks.

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Replies (4)

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Francois
By Francois Badenhorst
15th Jun 2016 11:27

There we go, another PAC-HMRC skirmish, another somewhat unsatisfying result.

As usual Meg Hillier and her PAC cohorts made their ritualistic attacks on HMRC. It was deja vu: Customer service and evasion and avoidance. For an added bit of intrigue, there was also a progress report around replacing HMRC's gargantuan Aspire IT contract.

Jon Thompson, HMRC's avuncular new chief exec, performed quite well from a personal standpoint. He gamely parried the PAC's criticisms, stating that HMRC has made a “significant recovery” in its levels of customer service.

Thompson's argument don't hold much water, however, as, just a few weeks ago, the NAO released a report saying "the quality of service provided by HMRC for personal taxpayers collapsed in 2014-15 and the first seven months of 2015-16 when average call waiting times tripled”. (See: https://www.accountingweb.co.uk/tax/hmrc-policy/hmrcs-digital-dreams-roc...)

Another big topic was the always popular political beach ball of tax evasion and avoidance.

Speaking on the aftermath of the Panama Papers leak, HMRC reported to the PAC that the joint government task force set up to investigate the leaks will not report back to the government until the end of this year.

As far as Aspire, HMRC's chief information officer mark Dearnley told PAC that HMRC aims to decide on its next IT model by 2018:

“What we’re doing is looking at whether we got the right type of bricks and the right organisation of those bricks as we go through each phase of our transformation.

“We’re now executing the organisation of those bricks we’ve decided will get us from the Aspire contract through the next few years and into the transformation we’re running. Once we’ve done that we will need to re-look at those bricks, see which ones have worked best and what organisation we need going forward.”

Another interesting tid-bit from Dearnley was about HMRC's API strategy. Dearnley reported that the API platform (which will allow software companies to integrate with HMRC) has gone live and is now in public beta.

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By SE_Confused
16th Jun 2016 11:16

ha-ha- make sure they leave user docs behind for the code they created:)

deja vu as I worked in technology as Quality Assurance for over years Some big wig sees some profit on paper and then creates a mess. the more suppliers the merrier, no accountability or integration. Bring it on ...

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By mydoghasfleas
16th Jun 2016 12:48

No surprise to see nothing really changed, except for the worse, under Lin Homer. Each failure seemed to be rewarded with promotion.

The problem with PAC is it always seems more intent on a good soundbite than making the examined account to the public.

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By AndrewV12
17th Nov 2016 14:56

I recently saw a programme on TV called 'whos spending Britains money' it was how private consultancy firms charge the government billions for the provision of services.

It starts with how consultancy firms prepare a loss leading document for local authorities, consultancy firms see local authorities as in experienced, inept and incompetent.

Their saying is land and expand, and before you now it they are working at the heart of government, as Governments and local authorities cannot make decisions theses days.

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