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UK taxman waves through £168.8m Fujitsu contract because no one else can hold up 30-year-old infrastructure

What's another three years amid project delays and Brexit uncertainty?

UK tax collector HMRC has awarded Fujitsu a £168.8m contract without competition to ensure critical applications keep running as projects to replace them are delayed and Brexit pressures mount.

Under the deal, the Japan-based IT services firm is set to continue hosting for 13 HMRC applications on its Virtual Managed Environment (VME) Platform. At the same time, Fujitsu will continue to support the Customs Handling of Import and Export Freight (CHIEF) system beyond the 31 March end point of the current agrement, according to a tender document. Both services are now set to be run by Fujitsu until 2025.

HMRC needs to keep the application platform running for a few more years while the taxman "completes the rollout of its delayed application transition and decommissioning Programme".

At the same time, it needs to carry on supporting the customs system because of similar delays and "uncertainty regarding the impact of the EU Exit final deal on the future, volume and operation of some applications".

Both sides of the deal have intriguing backstories.

CHIEF was first introduced in 1994, when John Major was the UK's prime minister. It was managed by BT until 2010, when it was handed over to Aspire, a joint venture between Capgemini, Fujitsu, and HMRC. HRMC ended Aspire in 2017 and in-sourced the work, although it kept Fujitsu and Capgemini on as contractors until 2022.

HMRC has been preparing to replace CHIEF with an alternative called the Customs Declaration System (CDS) from IBM since 2013. The government and Big Blue were planning to have the new system up and running by January 2019.

In 2018, the NAO said the target date to migrate all traders from CHIEF to CDS in January 2019 was "unlikely" because the platform was only due to be released a month earlier.

The new procurement casts doubt on whether that timetable is being met.

Meanwhile, the VME system has been in place with HMRC for over 30 years and is heavily integrated with legacy applications.

HMRC has been planning to move its applications to the cloud supported by Azure and AWS in a programme that was expected to be complete by 2022.

Clearly HMRC is also concerned this is not going to plan, although it has not responded to requests for comment on this or the CHIEF programme.

The tender notice justified awarding the multimillion-pound deal to Fujitsu without competition from alternative suppliers because no one else could do it.

"The VME hosting platform is proprietary to Fujitsu and so VME-based services are technically only available from Fujitsu and are not available in the market from alternative third-party service providers," the document said.

The tender also underscored HMRC's dependence on Fujitsu to run the services without failure. "The applications generate substantial taxes and revenue for the UK and a number of key applications are also CNI [critical national infrastructure], which must be wholly reliable. It is therefore imperative that the support of such applications continue to be delivered safely and without interruption."

Last month HMRC said it was opening up its entire £900m annual IT budget to the wider supplier landscape via a new Technology Sourcing Programme. Although no start date was offered for the new programme, Capgemini and Fujitsu supply contacts were both set to end in 2022.

With Fujitsu getting a slice of the pie until 2025, question marks remain over how much will be left for the rest of the market. ®

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