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Multi-billion pound govt IT contract 'out of control' – report

Published time: July 23, 2014 17:17
AFP Photo/Jonathan Nackstrand

AFP Photo/Jonathan Nackstrand

A £10.4 billion government IT contract has spiralled “out of control,” with private contractors reaping more than £1 billion in profits at the behest of British taxpayers.

In a highly critical report, the National Audit Office (NAO) said that the Aspire contract, designed to streamline government IT services, went drastically over budget after civil servants commissioned more work than expected.

The contract – led by services conglomerate Capgemini, along with IT firms such as Fujitsu – has now cost the government double the amount it originally expected, jumping from £4.1 billion (US$6.9 billion) to £10.4 billion ($17.7 billion) since it began in 2004.

According to the latest figures produced by NAO, the Aspire program accounts for 84 percent of HMRC’s spending on IT.

Due to the structure of the deal, where HMRC relinquished its right to the program’s profits, Fujitsu has reaped at least £1.2 billion ($2 billion) since the initiative began.

"HMRC faces a considerable challenge to reform the Aspire contract while evolving a new approach to its technology suitable for its planned move to digital services. HMRC now has minimal time contingency to do this before the Aspire contract ends in June 2017" the NAO warned.

Aspire, the latest in a series of troubled Whitehall technology projects, provides around 650 IT systems in order to collect income tax and national insurance, costing taxpayers £813 million ($1.3 billion) every year.

The program will expire in 2017, following new government rules stating that departments should not be dependent on a small number of IT companies when outsourcing work.

At an inquiry held on Tuesday, Margaret Hodge, chairwoman of the Public Accounts Committee, said that HMRC’s management of the contract was “unacceptably poor,” claiming that £5 billion ($8.5 billion) had been spent recklessly.

“It is deeply depressing that once again a government contract has proved better value for the private companies involved than for the taxpayer,” she said.

She added that the department’s “lack of skills” meant it was too heavily dependent on contractors to conduct its work.

“All this gives me little confidence that HMRC’s senior team has the capability to manage large and complex contracts,” Hodge stated.

However, HMRC has hit back at Hodge’s claims, stating that the extra costs were incurred because of the government’s reforms to welfare and child benefits, which require the use of real time information.

An HMRC spokesman said the department will “continue to improve the performance of the contract over the next three years.”