£3.8B later, old tech supplier flames still burning for HMRC

In the last five years, the UK's tax collector has spent £3.8 billion with tech suppliers - including £591 million without any outside competition - on top of a £10 billion project intended to end in 2017.

Following the award of a £35 million additional fee to Accenture revealed by The Register last week, a joint investigation with government procurement researcher Tussell shows how His Majesty's Revenue & Customs (HMRC) remains wedded to suppliers of tech services managed under the Aspire agreement.

The Aspire arrangement originated in 2004 after HMRC struck a deal with Capgemini and its subcontractor, Fujitsu, to provide and support a set of systems for HMRC over ten years, initially valued at £7.9 billion. Accenture was also a subcontractor and was tasked with providing application development and support.

Aspire was extended until June 2017, at a total cost of around £10 billion. In 2016, government spending watchdog the National Audit office concluded [PDF] Aspire "provided stable but expensive IT systems."

In April 2022, HMRC said all contracts awarded under the Aspire contract would end by June 30, 2022.

But the tax collector's bond with the same suppliers continues. Research from Tussell and The Register shows that in the last five years, HMRC has awarded the three suppliers £591 million in deals without offering the opportunity for others to bid for the work.

Officially, these were either direct awards or negotiated procedures. An HMRC spokesperson told us: "We follow government procurement rules when awarding contracts and look for solutions that will improve services and get the best deals for taxpayers.

"For transparency, we publish contract awards along with contract variations ... and recently published our commercial pipeline so that suppliers can see upcoming opportunities and engage appropriately with us."

HMRC continues to manage older technology on its IT estate, although The Register understands it has moved or decommissioned more than 60 percent of its services out of datacenters to cloud or Crown Hosting. The tax collector aims to modernize its IT estate to support an ambitious plan for a digital tax system.

Nonetheless, continuing reliance on IT service providers with which it secured deals more than 20 years ago might concern those looking at value for money and competition in the UK's tech supply market.

Tussell collects open procurement data published by contracting authorities, which is then aggregated, cleansed, and structured by the research company.

Working with The Register, Tussell analyzed the most recent five years of HMRC IT spending from the beginning of 2020. It found the tax collector awarded Fujitsu, Capgemini, and Accenture a total of £3.8 billion in that period. For comparison, HMRC Group's annual expenditure on IT and telecoms was £1.1 billion for fiscal 2023 to 2024. Of the total spend with the former Aspire contractors, £2.37 billion was contracted via frameworks where there can be some competition among a limited set of suppliers that have been pre-approved to provide specific services for a pre-arranged price structure.

Meanwhile, HMRC awarded £591 million in deals to the same three suppliers without any competition, either in direct awards or negotiated procedures. The remainder, around £839 million, came from open competition in the same five-year period.

Contracts awarded without competition include a £105.6 million contract for Accenture, launched as a £70.4 million, five-year deal in March 2022, to run the National Insurance and PAYE System (NPS), which was first introduced in 2009, when Accenture provided application development and support services to the Aspire contract. On December 23, 2024, HMRC added £35.2 million to the award, saying there had "been a significant increase in the project work which was not envisaged and catered for at the time of the direct award."

"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," HMRC said last month.

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On October 21, 2022, HMRC awarded Fujitsu a £52 million contract for unspecified services and projects because of an "absence of competition for technical reasons" relating to applications running on the provider's infrastructure waiting to be migrated.

Again, in October 2022 – five years after Aspire was supposed to end – HMRC awarded Capgemini a £50 million contract without competition because only the French supplier had "the knowledge of, and source code and configurations for, the applications that are to be migrated in their current form."

"The contractor also holds a significant amount of knowledge about how the entire HMRC digital estate operates and interoperates," the public procurement notice said.

In March 2022, The Register reported another win for Capgemini without competition, this time for a £215 million contract for applications that were set to be decommissioned. It was set to last between three and five years. "HMRC's assessment is that support services for applications which only have a time-limited life before they are decommissioned can only be provided by Capgemini," it said.

In October 2020, the tax collector waved through five-year £168.8 million Fujitsu contract because no one else could hold up the 30-year-old infrastructure. The agreement was to continue to run the Customs Handling of Import and Export Freight (CHIEF) system HMRC began planning to replace in 2013. All users were set to be migrated from CHIEF as of June 2024.

Under a project called the Technology Sourcing Programme (TSP), HMRC began to break up its five biggest IT contracts into 30 smaller, more flexible ones, aiming to access the latest technology and bring its IT estate up to date. These five contracts include deals with Accenture, Fujitsu, Capgemini and BT, which had also provided a WAN under Aspire. They also included a collation of suppliers referred to as the Digital Delivery Centre.

In a March 2023 submission to the now-defunct Infrastructure and Project Authority, HMRC said it was on schedule and would be complete the TSP by December 2025. ®