Feeds

Fujitsu and Capgemini's giga-quid HMRC lashup given drubbing by govt auditors

Fatcats slapped for 'depressing' outsource bill

  • alert
  • submit to reddit

Top 5 reasons to deploy VMware with Tegile

In yet another example of a sprawling government contract gone monumentally wrong – the second of the day – HMRC has splashed £7.9bn on an IT outsourcing deal that is looking very tough to justify.

Capgemini and Fujitsu won the ten-year Aspire deal – a merged Inland Revenue and Customs & Excise contract – way back in 2004, and inherited staff and IT services work that had been handled by HP over the prior decade. The estimated cost to March 2014 had been £3bn to £5bn.

Fast forward to this spring and the outsourcing agreement was extended for three years to ensure continuity of service and access to up-to-date tech skills, taking the taxman's total spend on this deal to £10.4bn by 2017. This extension came in spite of the Cabinet Office's efforts to steer government away from mega outsourcing deals with mega integrators.

A report by the National Audit Office stated the suppliers had kept the lights on to help collect £500bn in taxes each year with few significant server failures – but this had come at a cost.

"HMRC has commissioned much more work through Aspire than was modelled when the contract was let and has not market-tested any significant element of the contract," the NAO stated.

It claimed that in four out of every five projects, HMRC and the outsourcing firms altered the plans, timing or budget.

"Evidence from benchmarking suggests that it had paid above market prices for this work," the report claimed.

The NAO estimates the Aspire contract will cost the taxpayer £10.4bn when it wraps up in three years, versus the £4.1bn "used when evaluating Capgemini's bid". It added that pressures to find cost savings led HMRC to "trade away" negotiating power and "hindered its ability to get strategic value from such a long-term contract".

The report also found HMRC was far too reliant on the “technical capability” of the suppliers and this dampened its ability to manage the contract "commercially".

"HMRC faces a considerable challenge to reform the Aspire contract while evolving a new approach to its technology suitable for its planned move to digital services. HMRC now has minimal time contingency to do this before the Aspire contract ends in June 2017," it added.

In a statement on the back of the report, Margaret Hodge, chairman of the Public Accounts Committee, said that while HMRC may receive a decent level of IT services by the end date, costs more than doubled.

She added that HMRC had failed to negotiate well, speaking of the "depressing" situation that "once again a government contract has proved better value for the private companies involved than for the taxpayer, with CapGemini and Fujitsu pocketing an incredible £1.2bn in combined profits - more than twice HMRC expected".

The plan to replace Aspire with the extension is "still half-baked" Hodge added, "with no business case and no idea of the skills or resources needed to make it work". ®

Security for virtualized datacentres

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
US court SHUTS DOWN 'scammers posing as Microsoft, Facebook support staff'
Netizens allegedly duped into paying for bogus tech advice
Feds seek potential 'second Snowden' gov doc leaker – report
Hang on, Ed wasn't here when we compiled THIS document
Verizon bankrolls tech news site, bans tech's biggest stories
No agenda here. Just don't ever mention Net neutrality or spying, ok?
NATO declares WAR on Google Glass, mounts attack alongside MPAA
Yes, the National Association of Theater Owners is quite upset
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Choosing a cloud hosting partner with confidence
Download Choosing a Cloud Hosting Provider with Confidence to learn more about cloud computing - the new opportunities and new security challenges.