16 The Aspire contract conflicts with current government policy on how departments should buy technology. In 2010, the Cabinet Office announced that long-term contracts with a prime supplier do not deliver optimal levels of innovation, value for money or pace of change. In 2014, the Cabinet Office announced new rules to limit the value, length and structure of ICT contracts. It introduced a presumption that departments do not just extend existing contracts (paragraphs 1.13 to 1.16 and 4.2).
17 Since 2011, HMRC has accepted the Cabinet Office's view that the Aspire contract was no longer a suitable vehicle to provide value for money and needed changes, but has had limited success in negotiating these with suppliers. HMRC identified three main points of renegotiation to start to break-up the contract (paragraphs 4.2 to 4.5):
• to agree a direct contract with Capgemini's main subcontractors, Fujitsu and Accenture. By July 2014, HMRC had not yet agreed a direct contract with either of Capgemini's main subcontractors, Fujitsu and Accenture;
• to change Capgemini's role to separate its responsibility for providing services and projects from its responsibility as an integrator of services and projects. Capgemini has created a separate unit to deliver integration but HMRC has yet to set out the full commercial arrangements for this change;
• to benefit from greater innovation, faster implementation and lower costs by introducing more competition. In 2012, HMRC took back responsibility for innovation in service delivery but since then has held competitions for just 14 contracts outside Aspire, with an annual value of £22 million or 3 per cent of the Aspire cost in 2013-14.
18 HMRC faces a considerable challenge to reform the contract while developing a new approach to technology which is suitable for digital services. HMRC has been slow to develop its approach to replacing the Aspire contract. It is now choosing to do this alongside negotiating further changes to the current contract. HMRC launched a programme in early 2014 to develop its future ICT capability, which it called the Aspire Replacement Programme. By July 2014, HMRC had produced limited information about the Aspire Replacement Programme. For example, it did not have a business case or full project plan and had yet to fully quantify the capability gaps it needs to bridge or the resources it needs. HMRC must now act quickly, to replace the Aspire contract by June 2017 (paragraph 4.6 to 4.9).
19 There are serious risks to HMRC's business if the Aspire Replacement Programme fails to meet its objectives by June 2017. These include (paragraph 4.14):
• HMRC extending the Aspire contract and continuing to pay more for technology than it needs because of no competitive pressures;
• severe impairment in HMRC's ability to modernise and digitise its tax collection processes and to overcome limitations of its legacy systems; and
• a fall in the quality of HMRC's service to taxpayers, putting the amount of tax collected at risk.