NAO slams HMRC for IT project blunder

 In Blunder, HMRC Investigation

The taxman has been censured for “unacceptably poor” management after an IT project spiralled out of control to cost the taxpayer more than £10 billion.

HM Revenue & Customs showed a “lack of rigour” in handling a contract for processing millions of tax returns, the spending watchdog said yesterday. The Aspire deal was costed at £4.1 billion in 2004 but it is predicted that the figure will have more than doubled to £10.4 billion by the time the contract runs out in 2017.

In a highly critical report, the National Audit Office (NAO) also disclosed that Capgemini, the contractor, and Fujitsu, its subcontractor, have already reaped profits of at least £1.2 billion on the deal, or more than double the £500 million forecast.

The NAO revealed that the original contract gave HMRC some of the profits from the scheme, but this right was given away when the deal was renegotiated in 2012. Profits received have only been worth £16 million instead of £71 million.

The contract, which provides 650 IT systems for collecting income tax and national insurance, now costs the taxpayer about £813 million every year and no longer provides value for money, the NAO said. However, time is running out for a replacement contract, which could put tax collection “at risk”.

Aspire is the latest in a string of troubled Whitehall IT projects. The Department for Work and Pensions has written off part of its computer program for universal credit and the Home Office scrapped a £347 million immigration IT project last August.

Margaret Hodge, chairwoman of the Public Accounts Committee, said HMRC’s management of the contract had been “unacceptably poor” and questioned its ability to replace it successfully. She also claimed that more than £5 billion of the total had been spent without checks being made on whether others could provide the service more cheaply.

“It is deeply depressing that once again a government contract has proved better value for the private companies involved than for the taxpayer, with Capgemini and Fujitsu pocketing an incredible £1.2 billion in combined profits — more than twice the profit HMRC expected,” said Mrs Hodge. The department’s lack of skills meant that it was over-reliant on the contractors’ expertise, she added.

“HMRC is planning to replace the Aspire contract in 2017, but its new project is half-baked, with no business case and no idea of the skills or resources needed to make it work. All this gives me little confidence that HMRC’s senior team has the capability to manage large and complex contracts.”

Source The Times, click here for more.

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