HMRC floats £500m in software and SI deals for government shared services plan

The tax department is leading the Unity cluster, which also includes DfT and DLUHC, to implement standardised back-office software platforms, with potential vendors required to pair up with system integrators

HM Revenue and Customs has opened bidding on £500m in technology contracts for suppliers to deliver software and system integration services to enable government’s shared-services ambitions.

The tax agency is at the head of Unity – one of five ‘clusters’ of departments that, in over the coming years, will each standardise on a unified back-office software infrastructure. HMRC is joined in the grouping by the Departments for Transport, and Levelling Up, Housing and Communities.

Both DLUHC and HMRC currently use SAP platforms, while the DfT is the sole Whitehall department to use software from Arvato.

HMRC has issued a contract notice seeking to appoint to respective long-term contracts an enterprise resource planning software firm to provide the core technology platforms, and a systems integrator to serve as “technical delivery partner” for the shared services project. Although the two companies will be contracted separately, they must submit a joint bid.

The SI will fulfil a contract for an initial term of five years, plus optional extensions of up to two further years. Between £100m and £115m is expected to be spent via the deal.

The software vendor will sign an engagement of 10 years – which could ultimately run for a further five, taking the deal’s potential end date to the beginning of the 2040s. This contract is forecast to be worth between £355m and £385m.

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The Unity cluster is interested only in software provided as a “cloud-based service, leveraging the capabilities offered by a SaaS ERP platform and associated technologies”.

Software firms will be allowed to put forward proposals with multiple potential delivery partners – whereas SIs will required to choose a single vendor and bid only once.

“HMRC recognises that there is a limited market offering relevant software solutions, when compared to those who may be able to provide system integration support,” the contract notice says. “System integration providers will not be entitled to submit a bid alongside more than one software supplier, however, there will not be a restriction on the number of system integration providers with whom a software supplier may elect to work alongside for the purposes of submitting a joint bid response to this procurement.”

The first stage of bidding must be completed by 15 January, after which the tax department will draw up a shortlist and negotiate with a small collection of suppliers.

Unity becomes the latest cluster to go to market seeking to identify long-term technology partners. The four delivery-focused departments in Synergy cluster opened bids on a mammoth £1bn-plus opportunity in May, while the nine departments that form the policy-focused Matrix grouping issued a £200m tender in July.

The HMRC notice added: “The objectives of the Unity programme are to: design and operate a centralised Finance, Procurement, HR and Payroll shared service function; operate a standard set of processes that are fit for the purposes of all Unity departments; design, build, deploy and operate a standard, single set of systems that are scaled to the future and that deliver performant services underpinning the business processes; and migrate data from the Unity Departments’ existing systems to the new target Unity systems such that each business process continues to operate without disruption.”

Sam Trendall

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