By Tony Collins
When the National Audit Office published a largely-positive report on HMRC and its online filing systems last month, the department received some justifiably good media coverage.
What was little noticed was that auditors were unable to get a breakdown of what HMRC is paying its “Aspire” systems suppliers Capgemini and Fujitsu for online filing.
Collect your car after a service and your bill has a breakdown of the parts used, their cost, and the cost of labour. But when HMRC pays around £8bn to Capgemini for its Aspire IT service, a clear breakdown of costs is not provided.
Says the NAO report: HM Revenue & Customs – The expansion of online filing of tax returns:
“HMRC has a high-level view of the overall costs of ICT provision through the ASPIRE contract. It has been taking steps to improve that information and achieve cost savings. It does not yet have a detailed breakdown of the costs of online filing services, so it cannot benchmark those costs to assess their value for money.
“HMRC is currently negotiating with the ASPIRE contractors to obtain a clearer breakdown of the costs of ICT services provided.”
In case you think the NAO has made a mistake, and that HMRC must surely have a breakdown of the costs of Capgemini’s services, the NAO makes it completely clear that the Department has no such breakdown.
“The ASPIRE contract includes a rolling programme of benchmarking the prices HMRC pays for the various contracted services, including those relevant to online filing … Since 2010, HMRC has introduced new processes to improve information on the cost and use of ICT and benchmarking of key ICT service lines. These processes cannot yet provide information in sufficient detail to benchmark and challenge the cost of individual online filing services…”
Unfortunately for taxpayers it is not unusual for a department to pay its main IT supplier without having a full breakdown of the bills.
Several years ago the Conservative MP Richard Bacon asked criminal justice officials for a breakdown of costs on the “Libra” contract for magistrates’ courts IT. The Department didn’t know. So it referred Bacon to Fujitsu, Libra’s main supplier.
Fujitsu eventually provided a breakdown so vague – with high-level categories such as “network services” – that Bacon had little choice but to ask the same questions repeatedly to find out how public funds were being spent with Fujitsu.
In the end Bacon failed – and he had little support from departmental officials.
Now, about 10 years on, Capgemini is keeping HMRC in a similar level of ignorance.
Can any department be trusted with the public funds to pay its IT suppliers billions of pounds without a clear and unambiguous breakdown of what it is paying for?
A supplier’s reluctance to supply a breakdown of costs is understandable. A clear breakdown could clear a path through the fog of supplier pricing, so it could make price comparisons easier.
It is up to HMRC to insist on a breakdown. Its IT services have been outsourced since 1994. Shouldn’t it know exactly what it is paying billions for by now?
Chris Chant, an Executive Director in the Cabinet Office, has deplored the high costs of locked-in long-term contracts with out-of-season monolithic suppliers. Does the Aspire contract alone make a good case for the reform of central government?