HMRC extends Accenture and Capgemini deals, as Aspire breakup lumbers on [UPDATED]

With Capgemini and Accenture again signed in to long-term deals at HMRC, the tax collector can now celebrate 22 years of outsourced IT failure

HMRC has extended Accenture's application services agreement until 2020, just a few months after announcing that Capgemini will remain a ‘strategic supplier' in application development and maintenance services for the same duration.

Accenture's contract will be to develop new digital functionality for tax services, including the release of a cloud-hosted tax management platform for taxpayers.

In 2015 when the government released its last Comprehensive Spending Review, it committed to investing £1.3bn to transform HMRC into one of the most digitally-advanced tax administrations in the world, "with access to digital tax accounts for all small businesses and individuals by 2016-17".

However this vision won't be realised in full via the Aspire contract, which is widely recognised as an expensive failture.

The Aspire deal, originally set up in 2004 to underpin the annual collection of £500bn in tax revenue, is an outsourcing agreement that sees Capgemini manage a variety of IT services using a number of other sub-contractors. This contract, itself a response to the previous failed IT outsourcing deal with EDS that ran from 1994 to 2004, will already have cost taxpayers just under £11bn by the end of 2016.

It has received heavy criticism from within the government, with the National Audit Office (NAO) attacking its poor project governance in 2015, and the parliamentary Public Accounts Committee (PAC) publicly doubting its ability to exit the deal by 2017.

With the extension of the Accenture and Capgemini (two of the principal firms employed under the Aspire contract) deals until 2020, it seems that these concerns were well-founded.

Indeed, earlier this month the PAC criticised Aspire's value for money, and explained that future strategy is for shorter contracts involving smaller bodies of work.

"The contract accounted for 84 per cent of HMRC's ICT spend and cost over £8bn between 2004 and 2014, about twice the cost anticipated when HMRC procured the contract, which was extended for a further three years. This makes it the government's largest technology contract.

"The Aspire contract is a 'prime supplier' approach which is no longer government policy for buying technology. It will be replaced in 2017 to reflect the new model involving many smaller contracts of shorter duration to increase competition and value for money."

HMRC has committed to replacing Aspire in phases, with the final end date now set in 2020.

However, a recent report from the NAO reveals the scope of work HMRC still has before it in order to make that a reality.

"Leading up to the final phase of the Aspire contract, HMRC has further important
activities to complete. HMRC needs to:

• Determine the IT model it will adopt from 2020 onwards, and make the commercial and operational changes necessary to implement that model.
• Build the range of commercial and IT capability and capacity needed to replace Aspire while managing its other IT change programmes and business as usual.
• Close its IT skills gap. HMRC has identified a 25 per cent gap in the skills of its IT workforce."

Speaking to the PAC last month, HMRC CIO Mark Dearnley defended the Aspire deal. He claimed that the department's strategy was to manage the breakup in "the most efficient way", but suggested that HMRC had to ensure there was no risk to tax revenue being brought in.

"There are many ways in which we could approach this... when the original Aspire contract was done, doing a large monolithic deal was the way things tended to be done because the pace of change was lower.

"As we've learned what's happened over this period, and as the industry has evolved, the skills have evolved and also the hour by hour importance of IT in our ability to collect tax [has come into play]," he said.

"We think there's a different model going forward that doesn't break it up into huge numbers of different pieces but breaks it up into chunks that can then be managed individually and optimised as we go through," he added.

According to rumours, Dearnley is set to leave HMRC shortly.