UK government lines up billions to refresh legacy tech in 600-system tax dept

Let's hope DALAS procurement is a tad more sensible than its soap opera namesake

The UK government's commercial wing has begun to set up a contracting agreement set to be worth up to £4.5 billion ($5.4 billion) for application software services supporting the nation's tax collector.

The Crown Commercial Services, which sits within the Cabinet Office, has launched a consultation with tech market suppliers to create a framework agreement to contract work for Her Majesty's Revenue & Customs (HMRC) as it strives to become "less dependent upon legacy technologies."

HMRC has one of the largest and most complex IT estates in Europe with over 600 systems, 800 terabytes of data, 1,000 IT changes a month and a 24/7 IT operation. It serves 45 million citizens and more than 5 million business taxpayers.

A procurement notice said the multibillion-pound spending figure – the top limit of what may be available under the contracts – would be spread over four years, beginning from July 2023. The budget sets a maximum of £1.125 billion ($1.4 billion) in spending under the contract for each financial year.

"The framework will provide a commercial vehicle to replace existing contractual arrangements that are due to expire between September 2023 and January 2025, and will provide the basis for letting a large proportion of HMRC future application services requirements," it says.

The mega-contract will be the responsibility of the minister for the Cabinet Office, currently paymaster general Michael Ellis.

The procurement program, dubbed Digital and Legacy Application Services, or DALAS, is intended to "provide a strategic gateway to support the delivery of future application services and move HMRC toward an application services support model that is less dependent upon legacy technologies," the notice said.

The procurement will kick off discussions with potential suppliers before formal competition begins in September. Although designed for HMRC, the framework will also be available to other public bodies.

Contracts are expected to come under five main lots, although two of those are sub-divided. Lot 1 applies to consulting, including enterprise architecture advice, design and delivery support, as well as legacy service decommissioning and disposal.

Lot 2a is set to address topics including the integration of software life cycle from application development to release and IT Ops. Lot 2b seems to express a desire to move to a DevOps including "process, workflow, forms and application development, deployment and live support using automated tooling to support rapid release of stable products and microservices, through discovery, alpha and beta phases, built on Dev/Sec/Ops principles by design."

Lot 3 addresses management of new or existing custom applications and middleware, including APIs, API platforms, and enterprise service buses. Lot 4 is about specialist support and software licensing as well as product support for cloud-based platform and software-as-a-service.

Finally, lot 5 is about education and training for technologies including SAP, Microsoft Dynamics and Power platforms, and ServiceNow.

The procurement overlaps with the Technology Sourcing Programme, a re-procurement of £7.1 billion ($8.5 billion) in IT spending with a five-year life-span that would "radically transform how HMRC works with IT partners," according to the tax authority. Documents released last year suggest some slippage, according to a timetable set by UK government's major projects watchdog.

Both procurements arrive shortly after a new tech leadership duo. Tom Skalycz, chief technology officer, started at HMRC eight months ago, while Daljit Rehal, HMRC chief digital and information officer, has been in place since September 2020.

In November 2020, the head of UK public spending watchdog the National Audit Office warned HMRC about the investment required to update legacy applications due to earlier cost-cutting.

Comptroller and auditor general Gareth Davies said: "HMRC has recognized that, due to the need in the past to forgo operational maintenance and upgrades to its systems to secure cost savings, its IT systems now constitute a significant risk to the Department. This will require significant investment and will need to be at the heart of any future Spending Review settlement." ®

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