Questions over timetable slippage in UK taxman's £7bn 'cliff edge' IT procurement

Watchdog says tenders to be published by September – but HMRC procurement show that's not going to plan

Documents released by Her Majesty's Revenue & Customs (HMRC) suggest its everything-and-the-kitchen-sink re-procurement of £7.1bn in IT spending is slipping, according to a timetable set by UK.gov's major projects watchdog.

The UK tax collector's technology sourcing refresh comes under the Technology Sourcing Programme, which aims to address a £900m annual IT budget. It kicked off in September last year with an early market engagement to talk to suppliers.

In July 2021, the Infrastructure and Projects Authority (IPA), which reports to the Cabinet Office and the Treasury, rated the project as "amber" on its risk scale, noting that "HMRC faces a cliff edge of contract expiry combined with the need to re-balance control over its digital and technology capability" relating to contracts set to run out in June next year.

In data released with its annual report, the IPA said "all remaining procurements pertaining to the June 2022 deadline will be launched during the next six months."

The spreadsheet was dated 31 March 2021, suggesting the IPA expected procurements to be launched by the end of September. But at least two of the procurement strands failed to make that deadline.

HMRC told The Register all the "cliff-edge" tenders were issued before the end of September except for two. Data and Analytics 2 was issued on 5 November and is part of the £2bn government-wide procurement for "Big Data & Analytics", which kicked of an early market engagement in September. HRMC is named as a "key stakeholder" in the framework.

The procurement for Crown Run Hosting was issued on 19 October, also beyond the IPA deadline.

HRMC insisted that despite the delay to both procurements, transition process to the new contract was on track to be completed before the end of June 2022. "We remain very focused on meeting the June 2022 deadline," a spokesperson said.

Meanwhile, recent information released to suppliers via TechUK – a UK tech suppliers body – suggests two other strands of the procurement had not launched tenders before the IPA deadline.

In November, an event for "Post-Covid Recovery & SR21 New Build Activity, and Automation Delivery procurement" said an invitation to tender would be in place by 6 December 2021.

A similar TechUK event for HMRC IT Strategy & Architecture held in October said the invitation to tender would be published by 11 November.

The presentation addressing Digital Delivery Centres COVID recovery & Spending Review 2021 New Build says the plan is to replace "the incumbent contract ending in June 2022" with a contract start date of 1 July 2022.

Meanwhile, the intention is to have a new contract in place for "IT Strategy & Architecture" by April 2022 – allowing time for handover to the new supplier by the end of June 2022. This firmly suggests both strands come within the IPA's idea of a procurement "pertaining to the June 2022 deadline."

HMRC argued that these two procurement strands are not in the "transition state" which has a deadline of June 2022, therefore claims it is not behind schedule in publishing invitations to tender according to the IPA timetable.

A spokesperson said they did not relate to any existing live services, but if it needs the new services before the procurement is complete, it can create them under existing contracts that end on June 2022. "For that reason, we've chosen to align this procurement with the June 2022 deadline," it said.

"Through our Technology Sourcing Programme (TSP), HMRC's aim is to take more control of its IT strategy, management and delivery. To assist HMRC to prepare for this, new contracts, unrelated to the ones we need to replace by June 2022, will be placed in the market. None of the June 2022 deadline contracts are being extended, they are being re-competed under new service-focused contracts," it said.

It said the TSP is a five-year programme that would "radically transform how HMRC works with IT partners.. It was broken down into distinct phases, defined as "transition states." By the June 2022 "transition state", it would replace around 75 per cent of its current IT contracts by value.

The "cliff edge" is related to existing contracts that need to be replaced with new ones by the end of June 2022. All procurements will be completed in time for the required transition states, it said.

"The June 2022 transition state relates to both the re-contracting of the cliff edge and preparing our IT organisation to strengthen the way we work with partners," a spokesperson told us.

Regardless, the timetable has slipped for at least two of the procurement strands.

A little slippage may seem like a mere bump in the road between such friends as HMRC and the IT supplier community if it were not for the fact that the path already travelled was littered with pitfalls.

In 2016, HMRC set out to replace its £10bn Aspire IT contract with Capgemini and Fujitsu through a procurement that was expected to interest smaller and medium-sized companies, as well as larger providers, in a transition said to be fraught with risk.

The department had already said it would save £200m renegotiating its Aspire outsourcing contract from 2012 during the age of austerity.

But by 2017, the government department was forced to defend its decision to ditch a British cloud provider in favour of tax-efficient multinational Amazon, claiming it would reap significant savings. El Reg revealed HMRC had moved its data out of a Manchester-based data centre six months earlier.

Although the Aspire deal, launched in 2004, was reconfigured, HMRC's relationship with the two main contractors did not end. It awarded Capgemini an extension to 2022. And this month, Fujitsu won a two-year extension to its managed desktop services contract, also running to 2022.

Although value for money in the Aspire project was criticised, it was seen by some as effective. The same cannot be said of its predecessor. In 2005, EDS, now part of DXC, paid £71.25m to settle its dispute with HMRC over the disastrous Tax Credit system, which overpaid poor families to the tune of £1bn.

The major procurement "cliff edge" comes at a time of personnel change in HMRC's top tech team. Tom Skalycz, chief technology officer, started at HMRC this month, having served as chief enterprise architect at aerospace firm Thales.

Daljit Rehal, HMRC chief digital and information officer, has been in place for a little over a year. A press release announcing his appointment said he has broad experience in big data, artificial intelligence and machine learning, and agile methods. It is fair to imagine he may need all the agility he can muster in his next conversation with the Infrastructure and Projects Authority. ®