HM Revenue & Customs (HMRC) will need to spend £600 million to replace its £10 billion Aspire contract with Capgemini, the department’s chief information and digital officer Mark Dearnley (pictured) has revealed.
The contract, which was signed in 2004 and due to expire in June 2017 at a cost of £10.4 billion, was already the most expensive technology contract in government, according to the National Audit Office (NAO). The additional cost of replacing the contract now takes the total value of Aspire to £11 billion.
Dearnley told the Public Accounts Committee that the extra cost will help to reduce HMRC’s annual ICT costs to fall by 25 percent from £800 million to about £600 million by the 2019/20 financial year.
“You will get to the point where it’s £600 million a year, but it’ll cost you £600 million to get there,” he said.
The additional sum will be used to hire new staff, migrate to more modern infrastructure, set up three new 'digital delivery' centres, set up new contracts and test services.
HMRC plans to hire 193 full-time employees to help improve in-house skills as part of the Aspire replacement plan. They will include nine senior civil servants, 47 managers and 137 technical staff, Dearnley said.
The department is part-way through migrating its infrastructure from traditional servers to a 'private cloud', he added.
Dearnley said this will allow the department to use its compute power more efficiently and flexibly, moving between different providers' datacentres and increasing average utilisation rates from six percent closer to half.
Enormous and risky
Dearnley, who joined HMRC in August 2013 having previously served as CIO of Vodafone, told MPs he will stay in his post until Aspire has been successfully replaced.
Senior HMRC leaders have been working with government chief commercial officer Bill Crothers, who said commercial negotiations for replacement deals are already “in flight”.
However, he admitted: “This is enormous, risky and important, and that should guide what we do. Sitting behind this is getting better capability, being a better client and doing things in a phased way as much as possible...we should not be complacent.”
Richard Bacon MP struck another note of caution. He warned HMRC needs to have commercial arrangements in place about 12 months before Aspire expires in June 2017, meaning it has “effectively just 14 months left” to ready itself.
Phased replacement plan
HMRC permanent secretary Lin Homer insisted that the Aspire contract will not be extended beyond 2017. Rather than replacing Aspire in one go, the department has already started phasing out old services and introducing new ones, she said.
“We won't get to 2017 and just roll Aspire over...there's no question of having to extend the whole contract,” she said.
The business case for the replacement scheme has been signed off by Cabinet Office minister Francis Maude but is awaiting approval from chancellor George Osborne, she added.
HMRC recently opened two digital delivery centres employing about 500 staff: one in Newcastle and one on London's southbank.
The department plans to open another three centres: one in Telford, one in Worthing and a fifth centre that is “too early on in planning to talk about”, Dearnley said.
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