HMRC ASPIRE replacement – the Times is not optimistic about the future procurement

The Times had a major feature last week, including a lead editorial, on the UK’s tax department (HMRC) and the “abject disrepair” around the major IT contract with Cap Gemini, known as Aspire. Costs have spiralled and profits of Cap itself and Fujitsu, their major subcontractor, are running at 16% margin according to the National Audit Office. But the feature then went on to cast doubt on the strategy for replacing the Aspire contract, which is due to finish in 2017.

Now, in line with the policy implemented by Francis Maude and the Cabinet Office, the idea is that the replacement for Aspire will be a whole series of smaller contracts. But the Times is not convinced that this will work, and questions whether government has the capability to manage the complexity of such an approach. Amazingly, the Times even suggests that maybe government needs some more consultants!

“The consultants were Whitehall’s experts in drawing up contracts. Without them, the government was forced to rely on civil servants who were simply out of their depth. As things stand, the coalition faces the grim prospect of leaving its IT contracts in the hands of inexperienced small firms and ambitious start-ups, under the supervision of inexpert civil servants. A new influx of experts is needed..”

So a few points on this.

I don’t believe anyone is suggesting, as the Times states, that there should be 100 different contracts. They are taking Maude’s “rule” that contracts should not be greater than £100 million and the overall value of the contract at £10 billion and doing the sums to get to 100 contracts. But “smaller contracts” in this context might mean 5 contracts of £2 billion each. I would put a lot of money on there being less than 100 anyway.

We’d also take issue with the suggestion that contracting and even contract management resource in government is quite as bad as the Times makes out – even if we would all acknowledge there isn’t always enough skilled resource. And the recent strengthening of Crown Commercial Service – including some serious recruitment from the private sector, and talented people from around the public sector, should put government in a better position to manage “son of Aspire”.

One point that the Times makes is spot on however. They highlight – as the NAO did – the lack of market testing within the Aspire contract. So once the contract was in place, far too much work was awarded to Cap Gemini without competition, which was one of the real drivers of the costs rising so fast.

I had some personal experience of that in the procurement space when I did a small amount of consulting work in the HMRC procurement area some time ago. Maybe we’ll come back to that story another day, but let’s just say it didn’t show a certain HMRC senior manager (who went on to bigger things) in a very good light, and there was simply far too much willingness to believe that Cap Gemini could do pretty much anything they said they could! So being able to keep the competitive pressure on suppliers through the contract period will be a fundamental requirement for the new HMRC arrangement(s) – and is important of course for pretty much any major contract.

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