HMRC signs reworked, three-year public cloud deal with AWS worth £94m

HM Revenue & Customs (HMRC) has scrapped a £40m cloud deal with Amazon Web Services (AWS) that was set to run until August 2022, and replaced it with a three-year deal worth £94m with the supplier, Computer Weekly has learned.

The reworked deal is understood to have commenced at the start of April 2021, is set to run for a total of 36 months, and includes a commitment from HMRC to spend a minimum of approximately £29m a year on AWS services.

A redacted copy of the call-off contract for the deal, seen by Computer Weekly, confirms the contract has been arranged through the G-Cloud 12 procurement framework and permits HMRC to take advantage of the discounted pricing offered on AWS services via the One Government Value Arrangement (OGVA).

Introduced in November 2020, the OGVA enables UK government and public sector bodies to be treated like a single client by AWS so they can benefit from cost savings on its portfolio of public cloud services.

The £40m deal between HMRC and AWS this contract replaces was signed before the OGVA came into force and will enable the department to access discounted AWS services that were off-limits to it under the previous deal, HMRC confirmed.

In a statement to Computer Weekly, an HMRC spokesperson said making use of public cloud services is an important part of the department’s overall digital transformation strategy.

“Taking advantage of public cloud is helping us transform how we operate, enabling us to build and run more resilient services, update them easily where we need to, and scale up quickly to meet peaks in demand,” the spokesperson said.

Dale Peters, research director at IT analyst house TechMarketView, told Computer Weekly that the contract is a big deal for both parties.

“This is an important deal for both AWS and HMRC. The department was its largest public sector customer in the UK in 2020, with spend of £42.7m,” he said.

“Under the terms of the OGVA, HMRC will receive a discount on AWS’s service charges. Hence, AWS extends its partnership with its biggest customer and HMRC should get better value for money.”

As previously reported by Computer Weekly, HMRC has come under pressure in recent months to rejig its IT investment priorities, after a Public Accounts Committee (PAC) report concluded the department was spending too much money on maintaining legacy systems and not enough on modernising its IT systems for the future.

HMRC is known to be pursuing a cloud-first strategy, in line with the government’s guidance on the matter, that will see it move most of its platforms and services to multiple hyperscale cloud hosting providers in the coming years.

At the same time, the department is in the midst of a multi-year digital transformation push, as it pursues its goal to become the most digitally advanced tax administration in the world.