4.2 While managing its services and projects, HMRC began its fourth major contract renegotiation with Capgemini in 2011-12 (Figure 8 on page 27). There were three main reasons for change:
• Reducing costs
HMRC wanted to reduce the cost of Aspire. The Cabinet Office's review of HMRC's business case for a new VAT registration system challenged HMRC to reduce price and streamline the governance process. The Cabinet Office included these conditions in its approval of the business case and they contributed to HMRC's case to negotiate cost savings.
• Strategy, priorities, innovation
Aspire no longer met HMRC's strategy and business priorities and HMRC considered it was holding back innovation in its business operations. HMRC maintains that it was difficult to get direction or control of its ICT; there was little flexibility to get things done with the right supplier quickly or make greater use of cross-government shared infrastructure and services. Also, exclusivity clauses prevented competition and stifled new ideas.
• Government strategy
The Cabinet Office expected HMRC to reform Aspire to make it consistent with the 2011 government ICT strategy. The government strategy sought to end large technology contracts and introduce smaller and shorter contracts.
4.3 HMRC spent £4.6 million in 2012 and 2013 negotiating with the Aspire suppliers and implementing the reforms required. In the negotiations, HMRC raised with Capgemini several claimed contract breaches for Capgemini's performance and overall responsiveness. These issues were not covered by performance measures or contractual targets, nor were they the results of HMRC's satisfaction surveys. However, they helped HMRC to conclude negotiations with Capgemini. As a result, both parties signed a memorandum of agreement in January 2012.
4.4 The changes sought through this memorandum included the following:
• Making at least £202 million in savings between 2011-12 and 2016-17.
• A target of up to £152 million in extra savings, subject to opening more work up to competition, applying more streamlined and agile ways to develop new projects, and managing supplier relationships better.
• The ability to open up more work to competition outside of Aspire and the novation of Capgemini's contracts with Accenture and Fujitsu, so each would contract directly with HMRC. This would allow HMRC to manage Fujitsu and Accenture directly and reintroduce the ability to compete ICT services.
• Designing and implementing a new operating model and governance processes for commissioning services and projects through Aspire.
• A programme to develop the skills within HMRC to carry out the new operating model. Aspire has been managed by a relatively stable HMRC team. Understandably, the skill profile, roles and responsibilities of this contract management team had become streamlined to manage the relationship with a single supplier.
• Communicating the changes and their implications to HMRC staff.