Cost of HMRC projects and services

2.12 Although Aspire has a very broad scope, around 85 per cent of spend was on projects and four main services (Figure 6).

2.13 Excluding projects, HMRC has spent £5 billion on maintaining and running technology services and managing the contract. HMRC monitors this cost, recording costs by service and by each major supplier for each year of the contract. These costs are consolidated with other information to produce an annual 'key messages' document which is used to review cost performance. Part Three discusses HMRC's response when actual service costs substantially vary from expected service costs.

Figure 6 The projects and services provided through Aspire Eighty-five per cent of HMRC's spend under Aspire was on development projects and the four largest services
	Total spend July 2004 to March 2014 (£m)	Average annual spend (£m)	Percentage of total (%)
Projects
Design, build and test of new software. Integrate new software and hardware into the existing HMRC estate. Large-scale moves and changes within the estate	2,954.3	303.0	37
Four main services
Data Centres Support, maintain and replace hardware used to store and process data	1,825.8	187.3	23
Desktop support Support, maintain and replace laptops, desktops, office printers and mobile devices	883.8	90.7	11
Application support Support and maintain large-scale software used by HMRC	655.5	67.2	8
Management of the agreement Indirect supplier costs involved in managing the HMRC agreement including senior management, back-office services (human resources, finances, etc.) and accommodation	411.4	42.2	5
Subtotal	6,730.8	690.3	85
Other Services
Telephones Transmitting calls including video and audio conferencing and contact centre support	333.2	34.2	4
Networks Wide area networks between HMRC's offices	251.7	25.8	3
Large-scale printing and distribution Paper documents for taxpayers, e.g. forms, reminder letters, etc.	250.2	25.7	3
Automated data capture Scanning of documents and forms submitted on paper and support of some electronic data transfer between HMRC and taxpayer agents	152.5	15.6	2
Other Examples include small-scale moves within the HMRC estate, disaster recovery, analysis, secure document distribution, cloud services and business processing support	203.7	20.9	3
Total	7,922.2	812.5	100
Notes 1 Amounts have been adjusted to 2013-14 values using the GDP deflator. 2 Numbers may not add due to rounding. Source: National Audit Office analysis of data provided by suppliers to HM Revenue & Customs

2.14 HMRC has spent nearly £3 billion on projects (Figure 6):

• About 50 per cent has been on major change projects to develop and integrate new pieces of software and capability in its systems. These major change projects are subject to highly structured and formal governance processes.

• About 25 per cent has been on minor change projects to enhance existing software. These typically have a budget of less than £250,000 and may be a response to changes announced by ministers, or simply required to keep systems working well. They are governed by an annual bidding and prioritisation process.

• The remaining 25 per cent is on a range of other services including integration and testing done outside a major project (10 per cent), a standing charge agreed in 2009 (3 per cent) and occasional consultancy work to help business units within HMRC consider future ICT development.

2.15 After a project budget has been approved, HMRC frequently changes individual budgets through an extensive governance process. HMRC manages its annual project budget as a whole, responding tactically to any potential overspending by re-prioritising, cancelling or de-scoping projects. However, HMRC does not analyse, on a supplier basis, how agreed budgets have changed. This makes it difficult to hold the Aspire suppliers to account for their performance across the portfolio of projects.

2.16 HMRC has been unable to robustly match budgeted and actual spend across a sample of projects due to data limitations. However, we found that since April 2006 additional spend beyond the original budget had been agreed in at least 22 out of 33 projects we examined.