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October 8, 2020updated 31 Mar 2023 10:25am

HMRC tears up IT procurement strategy for £900m of spending

Radical rethink planned over "risks to service continuity" posed by bigger contracts.

By Ed Targett

HMRC – which runs an infrastructure stack that supports collection of over £600bn in UK taxes annually – is radically overhauling how it manages £900m in annual IT spending, in a bid to drive down costs and tackle technical debt

A new Technology Sourcing Programme (TSP) will be the locus of changes — to be formally introduced to IT suppliers on 12 October — and comes as the authority pursues an ambition to be one of the world’s most digitally advanced tax administration.

In charge of delivering the HMRC IT procurement shift is chief digital and information officer (CDIO) Daljit Rehal, who was appointed to one of Whitehall’s most senior digital roles in September 2020, taking over from interim leader Mark Denney.

Denney led the department’s technology delivery of the Coronavirus Job Retention Scheme, a lauded UK government IT success story that processed furlough requests on behalf of millions of workers — and was recently recognised in Tech Monitor‘s Technology Leaders Index.

The experienced former head of digital at energy utility Centrica, Rehal told Tech Monitor: “We’re moving away from bigger contracts that carry risks to service continuity when they end.

“Instead, we’ll continuously test the market to drive improvement and ensure we’re getting the best deals and utilising the latest technology. And we’ll work with more providers, giving us greater access to innovation in the marketplace.”

Former government CDO Christina Hammond-Aziz told Tech Monitor: “For too long, some of our most important central government departments have enabled the status quo of monolithic, inflexible, multi-year contracts with large suppliers. Effectively locking out SME innovation, risking service continuity and not always ensuring best value for taxpayer’s money.”

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She added: “I fully support what Daljit is doing. HMRC sets the tone for so much of what we do in large central government departments. It is absolutely right that they are leading the way in showing others how to finally unlock the innovation and energy that smaller, more agile, suppliers inevitably bring.”

Rehal’s snapshot of HMRC’s vision came as the UK’s tax, payments, and customs authority told suppliers in a public information notice that the TSP aims to deliver a “step change in how HMRC delivers IT, works with IT suppliers to procure and utilise technology and how we work more broadly as an organisation”.

The programme will address HMRC’s “entire IT run and change spend” and represents a “major opportunity” within the public sector IT space”, it added.

Rehal told Tech Monitor: “We are a huge 24/7 operation that services 50 million customers, supports 60,000 colleagues and handles more than two billion transactions a year. Powering all of this requires one of the largest IT estates in the UK, as well as one of the country’s biggest data repositories.

“To keep pace with the changing needs and expectations of our customers, we need to make the most of every ounce of our technology and have access to the very latest innovation. We know we can’t do that on our own. To be the best at what we do, we need to work with the best technology partners — big, small and everything in between. And it’s not just who we partner with but how that matters.

“In 2019, we began taking stock of our IT requirements right across our estate. From there, we’ve developed a plan for how to break those up into the right packages of work, and the order in which to take them to market.

He added: “Delivering the Covid relief schemes in the nation’s hour of need has provided a glimpse of what government is capable of and we’re excited about the future. We know that operating on this scale might daunt some.

“But, for potential partners who are up for the challenge of using technology at scale in new and different ways, we have some fantastic opportunities to work with us as we continue to change public service delivery for the better.”

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