The National Audit Office (NAO) says that HMRC’s Aspire outsourcing IT contract is set to end up costing twice the original estimate, and may have cost a total of £10.4bn by the time it concludes in 2017.
Several projects have over-run, leading to the multi-billion pound overspend, including online self-assessment filing, and the merger of the Inland Revenue and Customs & Excise (which created HMRC).
Unsurprisingly, the Government has been strongly criticised for wasting taxpayers money – particularly due to the NAO finding that the Aspire contractors have made a handsome profit from their involvement – £1.2bn out of the total £7.9bn paid by HMRC between March 2004 and March 2014.
Has HMRC’s IT improved over the past 10 years?
It should be noted that the NAO report does show that HMRC has become significantly more efficient since its IT systems have been upgraded over the past decade.
HMRC’s operating costs have fallen by 30% over the past 7 years, and the number of minutes lost per HMRC employee due to IT malfunctions has fallen sharply – from 2,736 minutes (2007-8) to 387 today.
Another failure to manage large projects
Andy Chamberlain from PCG said that this is merely the latest example of the Government “letting let the taxpayer down by failing to manage large projects.”
The organisation’s Senior Public Affairs Manager said that instead of awarding such huge IT projects to single companies (in this case Capgemini), such projects “should be broken up and awarded to smaller businesses and collaborative groups of self-employed specialists.”
“The Government must review its procurement policy before more money is wasted and vital public services are put at risk.”
What does the future hold for the Aspire contract?
In fact, such long-term ‘prime contracts’ are no longer favoured by the Government. Departments are now required to work with larger numbers of suppliers, on short-term contracts – “to increase competition and promote innovation.”
Departments are also expected to take more responsibility for their own IT needs, and strengthen their own in-house expertise.
However, despite efforts to reform the Aspire contract, the NAO found that HMRC has had little success in doing so, and may face ‘serious risks’ to its business if it is unable to replace it with a more cost-effective, competitive contract, by 2017.
One of main risks, of course, is that HMRC will be forced to renew the Capgemini contract in 2017, and continue to pay a hefty premium for its technology needs.
You can download the NAO report (in PDF format) here.