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Fujitsu gets £250m extension on HMRC work dating back to 2017

Questions linger over Technology Sourcing Programme as 2nd supplier in a week gets significant extension for historic contract

Updated UK tax authority HMRC has awarded Fujitsu a £250m contract for managed desktop services (MDS), extending a deal that dates back to 2017.

According to a procurement notice published this week, the work awarded is for "a trusted partner to provide all of HMRC's managed desktop, print, and workspace services." It is set to last until 2027 and started this month.

HMRC is in the middle of a £7bn technology procurement exercise, which at the outset promised to "deliver a step-change in how HMRC delivers IT, works with IT suppliers to procure and utilise technology and how we work more broadly as an organisation."

But Fujitsu first won the MDS contract in 2017. The following year, Conservative MP Mel Stride, then financial secretary to the Treasury, said the agreement worth between £79m and £90m had been awarded to the Japanese supplier until June 2020.

In September 2020, Fujitsu announced it had agreed to a two-year extension to the MDS contract, which supports 65,000 HMRC employees. It did not disclose the value of the deal.

As of November last year, MDS was at the evaluation and moderation stage of the procurement, which comes after an invitation to tender but before the contract is signed, according to a statement provided to The Register at the time.

The latest contract award means either Fujitsu has won the contract extension as part an open competition within the Technology Sourcing Programme (TSP), or desktop services were removed and HMRC decided to extend Fujitsu's contract in a separate engagement. The Register found evidence the TSP was slipping in December last year. Either way, it hardly looks like a "step change."

The Register has contacted the HMRC for comment*.

Fujitsu's original desktop services contract was part of HMRC's Columbus IT procurement program, named after the Italian explorer who thought he'd found the western route to Asia but actually landed in the Caribbean. Columbus was in turn set to replace Aspire, the controversial IT outsourcing arrangement between HMRC, Fujitsu, and Capgemini.

Between July 2004 and March 2014, Capgemini and Fujitsu made a combined profit, as measured by the contract, of £1.2bn, according to UK public spending watchdog the National Audit Office [PDF].

In 2016, the National Audit Office said the Aspire contract had "provided stable but expensive IT systems. The contract has contributed to HMRC's technology becoming out of date."

Capgemini has also continued to hang onto significant work from the Aspire era. Earlier this week, we revealed it had won a £215m deal to "provide business application, support and maintenance services for a set of business-critical legacy HMRC applications."

Like Columbus, the contractors might not know exactly where they are but seem to have hit upon a rich seam of wealth. ®

* Updated to add at April 5, 2022:

HMRC maintains that the new quarter of a billion pound contract is not an extension of the Aspire contract, stating that contract would come to an end in June 2022.

Nonetheless, we should point out that it is continuing to contract the same work to the same suppliers, which is hardly in the spirit of the step-change they promised with TSP.

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