Department says it did not conduct competitive process as long-term supplier ‘has knowledge of’ systems in question 

Credit: Gino Crescoli/Pixabay

HM Revenue and Customs has signed its long-term IT supplier-in-chief Capgemini to a £50m two-year deal to help replace ageing technology systems.

The deal was not subject to a competitive bidding process, but was awarded directly to the IT consultancy, which the department indicated was the only firm with the requisite knowledge of the systems covered by the contract. 

The engagement commenced at the start of last month and, according to recently published procurement information, relates to the delivery of “project services” to support HMRC’s Securing Our Technical Future scheme – an ongoing £300m programme to shut down three Fujitsu-run datacentres and move more than 500 services to public cloud or Crown Hosting environments.

A spokesperson for HMRC told PublicTechnology that: “This contract is to provide support for the migration and replacement of legacy systems that Capgemini has knowledge of, and we consider is best placed to help us modernise them. For this reason, we opted to award the contract under the negotiated procedure without prior publication – where the services can only be supplied by a particular economic operator because competition is absent for technical reasons under Regulation 32 of the Public Contracts Regulations 2015.  These are the rules that govern the purchase of goods and services.”

Capgemini has been the department’s foremost IT supplier since 2004, when HMRC put in place the Aspire outsourcing agreement. During its 13-year lifespan, about £10bn was spent via the deal – which was also supported by Fujitsu.

The Paris-headquartered consultancy has remained a major provider in the department’s post-Aspire IT landscape – in no small part due to the ongoing need to support legacy tech. In March, Capgemini was awarded a three-year deal worth £215m and covering the provision of “support and maintenance services for a set of business-critical legacy HMRC applications”.

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The departmental spokesperson added that the SOTF programme has already made significant progress in upgrading the department’s ageing tech and supporting the move towards the cloud.

“HMRC’s Securing Our Technical Future programme has moved more than half its IT estate to a more modern footing, through a mix of retiring legacy systems and moving others to our hybrid hosting solutions,” they said. “Taking advantage of the cloud is helping us transform how we operate, enabling us to build and run more resilient services, update them easily where we need to, and scale up quickly to meet peaks in demand.”

‘Plan and control’
HMRC has also recently awarded a handful of other contracts to support the SOTF scheme.

These include an £800,000 deal with London-based consultancy Credera, which will support the design and implementation of the programme’s funding and operational models. This six-month contract came into effect on 18 October.

Further top-down support will be provided by IBM, which signed a 16-month contract with HMRC last week. The £700,000 deal covers the delivery of “plan and control” functions for the cloud-migration programme.

Capgemini, meanwhile, was recently awarded a separate £400,000 seven-month contract that began on 18 October and covers the “provision of interim DevOps and cloud infrastructure support to assist migration activities of HMRC business services”.

Work on SOTF began in 2018 and the scheme was originally due to be completed by the end of June 2022 – the point at which Fujitsu’s previous contract to operate the datacentres was slated to conclude. A new deal has been put in place until the end of 2023, despite HMRC chief executive Jim Harra having warned in early 2021 that “any further lease extension [beyond June 2022] is against Cabinet Office guidance and likely to prompt wider commercial challenge”.

The delayed cloud-migration initiative is part of the Government Major Projects Portfolio. The most recent data published by the Infrastructure and Projects Authority reveals that, as of the end of the 2021/22 year, 298 services had been either fully migrated to a new hosting environment or closed down. This equates to 55% of the total of 542 services in scope of the programme.