HM Revenue and Customs has defended the tripling in costs of its Aspire IT contract - now set to hit £8.5 billion (US$16.7 billion) - and said it would "endeavour to drive similar efficiency savings" from the deal.
The escalating costs of the 10-year IT contract - which has tripled in value from the successful bid price of £2.83 billion in 2003 - were sharply criticised by the powerful Commons public accounts committee in a new report.
The MPs' inquiry into the re-tendering of the contract found that the main transition from original supplier EDS to current provider Capgemini had been "completed successfully and on time," with no major disruptions to services.
But the parliamentary committee criticised the increase in costs, saying HMRC "should have foreseen" that its IT needs could change over the term of the contract, and highlighted the four-fold increase in Capgemini's expected profits to £1.1 billion.
The committee also criticised the amounts handed out by HMRC to meet the supplier's bidding costs and the "transition payments," which included a sum of £5.7 million paid to Accenture - the original contractor on the NIRS2 National Insurance Recording System - to meet transition costs, noting that the IT services firm was later re-hired.
An HMRC spokesperson welcomed the committee's findings that the transition was handled successfully.
Pressed on the rising costs of the scheme, she said Aspire had originally been valued at between £3 billion and £4 billion -- higher than the successful bid. "However that original estimate was made over five years ago before the integration of the two departments (Inland Revenue and HM Customs and Excise) to create HMRC," she said. "We are now delivering more services and building more systems to continue to improve our services to customers."
She added: "As we make efficiencies over the next few years, we will also endeavour to drive similar efficiency savings from the IT contract."
HMRC also recognised "the need to keep the contract under review," she said. "We regularly monitor our systems and a rolling program of internal benchmarking activity is under way."
But HMRC would not comment on the scale of Capgemini's expected profits. The spokesperson said: "We have to respond to parliament over the key recommendations first."
The department defended its transition payments, saying these were designed to "provide a level playing field for bidders". The National Audit Office - on whose report the MPs had based their inquiry - had "reported that compared to the total value of the contract the costs of procurement and transition were small," she said.
HMRC would not comment specifically on the payments made to Accenture.
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