The department has expanded a contract for the support and upgrade of the core platform for processing National Insurance and PAYE, representing 40p of every pound collected by the Treasury
HM Revenue and Customs has revealed a 50% expansion in the value of a major digital deal supporting the UK’s tax system, taking spending via the contract to more than £125m.
In February 2022, the tax agency entered into a five-year contract with Accenture covering the provision of “business application support and maintenance services for HMRC’s National Insurance and PAYE System (NPS)”.
According to commercial documents, the NPS digital platform is used to collect 40% of all money going into HM Treasury each year. The system has 40,000 users across HMRC and the Department for Work and Pensions and is part of the UK’s critical national infrastructure.
The deal with Accenture, which runs until 2027, was intended to provide “enhancement… [and] solution modernisation services [with] the intent… to disaggregate the NPS solution into a number of components in preparation for going to market in future”.
The agreement was originally slated to be worth £70.4m but, according to a recently released commercial notice, this figure has been raised by £35.2m. This takes total spending to £105.6m – equating to £126.7m, once VAT is included.
The notice says: “There has been a significant increase in the project work which was not envisaged and catered for at the time of the direct award. This will allow the continued provision of critical NPS services, support to major transformational projects and the continuation of the disaggregation programme.”
Other than the rise in spending – which represents an increase of 50% – there has been “no change to the contract scope and no change to the terms of the contract”, according to HMRC.
When the deal was first awarded directly to Accenture, the professional services firm was already the incumbent supplier of the services in question.
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The newly released notice goes on to explain why HMRC needed to expand this deal to accommodate the required services – again, without any competitive process – and was not able to fulfil them via a new engagement or alternative provider.
The notice says: “A change of supplier is not feasible for technical reasons, as NPS has extremely high levels of technical and functional complexity. Accenture have managed these services for many years and have the in-depth knowledge of the HMRC NPS applications and business services and a change of supplier at this stage of the contract would put key services at serious risk.”
It adds: “There would be a significant increase in costs if a new supplier provided the service which would include major delays to programmes.”
But the programme of modernisation being delivered by Accenture is intended to “make the services suitable for competition in future and reduce vendor lock-in… [by disaggregating] NPS into six components to provide more open and independently maintainable business focused services”.
The notice says: “[NPS] has hugely complex processing engines, which are critical to calculate tax, as well as the administration of devolved powers at a subnational level between Scotland, Wales and the UK. This is a large, multifaceted service developed over time with complicated integration and interdependencies to other services within HMRC and external parties such as DWP and NS&I.”
At the same time as awarding the NPS deal to Accenture in early 2022, the department also signed a £215m agreement with Capgemini to deliver support, decommissioning and modernisation work “for a set of business-critical legacy HMRC applications”.
