Big IT buying change at HMRC

Huge HMRC IT contract to be split up – a real break with tradition?

Francis Maude, the minister in charge of Whitehall reform, has, with his team, achieved some success in cutting IT-related costs, changing buying habits, and holding big suppliers to account for failures.

The perception is that many of the achievements have been around the periphery of high-cost government IT: the number of government websites has been cut but mega IT contracts remain in place, particularly at the DWP and HMRC.

That may now change.

According to Government Computing, HMRC has decided against issuing an invitation to tender for the replacement of its key Customs Handling of Import & Export Freight (CHIEF) system. The system, supplied by BT and run on Fujitsu hardware, has cost hundreds of millions of pounds.

An ITT was expected to be issued this summer but Government Computing understoods that HMRC has decided against the plan and will now adopt a more flexible approach. Even so it is still planning to deliver the CHIEF replacement in 2017.

An HMRC spokesperson said: “Following discussions with stakeholders and market providers, HMRC has decided not to launch an invitation to tender at this time.

“Instead, we plan to develop a CHIEF replacement using a mix of internal development, commercial off the shelf (COTS) packages and external suppliers, as required…”

CHIEF automates the rules and processes for moving goods in and out of the UK. It allows importers, exporters and forwarders to meet their customs obligations with minimum manual intervention.

The system helps collect £34bn a year, and controls the import and export of restricted goods. It helps to detect smuggling.

Capgemini runs CHIEF as part of the Aspire IT services contract for HMRC, which expires in 2017. HMRC plans to bring the Capgemini element of the CHIEF contract in-house to ensure an uninterrupted service until the replacement is delivered. The Treasury and Cabinet Office have agreed the approach.

HMRC consulted the market about CHIEF in late 2013. Its officials  say they decided to build the replacement system on an incremental, modular basis, with frequent testing to ensure its components all work, both on their own and as a whole.

CHIEF was originally built by BT in 1989 and runs on Fujitsu’s Super Nova platform using the VME operating system. Capgemini took over the management of CHIEF from BT in January 2010 as part of Aspire.

A replacement for CHIEF is necessary because it’s based on ageing technology and within the next seven to 10 years the EU will make legislative changes to international trade processes, notably the Union Customs Code (UCC), part of the modernisation of customs which will serve as the new framework regulation on the rules and procedures for customs throughout the EU. UCC cannot be accommodated within the existing CHIEF service.

It’s unclear what HMRC will do with the Aspire contract as a whole when it expires in 2017.

Comment

It would be much easier for HMRC to bring in a new supplier for CHIEF, or give a new contract to Capgemini. But that would put the customs side of HMRC in the hands of one main supplier again. By relying on internal development, commercial off the shelf packages and a range of external suppliers, HMRC will have control of its IT and the costs of change and innovation.

Well done to HMRC for complying with the Cabinet Office’s “presumption” that no IT contract will cost more than £100m.

The replacement of CHIEF may not go smoothly – but it’s unlikely to go as badly as the introduction of CHIEF, for which importers and exporters bore the scars for years.

HMRC adopts a mixed approach to CHIEF replacement

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