Flaws in authorities procurement present in HMRC £473m AWS award
Amazon Net Providers (AWS) has been awarded a 10-year £473m contract with HMRC regardless of being the one bidder within the course of. The award has induced widespread consternation amongst these with an curiosity in public sector procurement, being lambasted as anti-competitive, and prone to result in lock-in, rising prices and a lack of leverage for the federal government buyer.
Critics have argued that authorities IT contracts ought to be reformed to make them extra modular and shorter, and to deal with exit as severely as entry. In addition they known as for an unbiased physique to be shaped that may ship oversight, experience and resolution powers to risk-averse and time-crunched civil servants.
Key criticisms of the HMRC/AWS tender and award
HMRC introduced in 2025 that it wanted a supplier to handle the migration of three Fujitsu datacentres to the cloud, with motion of information from current OS and storage environments together with Home windows, numerous Linuxes, HP-Unix, IBM AIX and Solar Solaris, VMware virtualisation, plus storage from NetApp Ontap.
The award and the method that led to it has been harshly criticised for a number of causes. First, the tender was explicitly labelled “for hyperscaler solely” when, it’s argued, a number of smaller – and UK-based firms – may have made appropriate bids. Second, the method was quickly decreased to 1 candidate, and so authorities “will lose leverage” in its dealings with the provider. Third, the substitute of 1 advanced legacy atmosphere will probably end in a unique – albeit cloud – atmosphere that’s equally tough to exit.
AWS emerges as the one hyperscaler possibility
In June 2025 AWS, Google, IBM, Microsoft and Oracle have been all approached to take part within the request for data (RFI) portion of the tender course of. Within the following months, Oracle and Microsoft exited the method, with AWS, Google and IBM provisionally shortlisted. IBM and Google later pulled out.
The HMRC’s UK3 procurement discover specified that “the authority is looking for to nominate a hyperscaler to handle the migration of servers from the present on-premise answer to the hyperscaler’s cloud atmosphere”. The truth that the tender was framed as “for hyperscalers solely” and that AWS was quickly the one supplier within the operating provoked criticism amongst these with an curiosity in public sector procurement.
In response to remark this week, an HMRC spokesperson mentioned: “We comply with authorities procurement guidelines when awarding contracts, guaranteeing worth for cash for taxpayers. We’ll publish closing particulars of this contract on Contracts Finder sooner or later.”
The hyperscaler was awarded the contract regardless of the HMRC admitting in a June 2025 tender discover that it had lacked the time to hold out a full market testing course of.
In a piece entitled ‘Justification for not publishing a preliminary market engagement discover’, the doc mentioned: “On account of tight timescales for the event of the Define Enterprise Case, the authority was unable to publish a discover or interact in a full market testing train on this event. Restricted high-level engagement was carried out with AWS, Google, IBM, Microsoft and Oracle…This took the type of an RFI pack being despatched to every, a two-hour dialog with every and a written response.”
Amazon Net Providers is the fourth largest tech provider to HMRC, with £93m of direct income from the division in 2024-25, based on figures from analysts Tussell. HMRC’s largest tech spend in that 12 months was with Capgemini, which is a reseller for AWS, Google Cloud and Microsoft Azure. The subsequent largest tech recipients of HMRC finances in that 12 months have been Fujitsu (£315m) and Accenture (£149m – additionally a reseller of all three hyperscalers).
A danger of swapping one provider lock-in for one more?
Considerations about the best way the contract has been awarded embrace that the tender circumstances excluded many different suppliers, whereas the awarding of a 10-year contract indicators to many who it is a authorities division swapping one provider lock-in for one more.
That’s the view of Nicky Stewart, senior adviser to the Open Cloud Coalition. She identified that sure contracts may be “reserved” however just for sure forms of suppliers – notably small and medium-sized enterprises (SMEs) and social enterprises.
“However this doesn’t cease some consumers from bending or flouting the principles, resulting in the power lack of competitors already acknowledged by the CMA, which, paradoxically, does nothing to reveal worth for cash for taxpayers,” she added.
“HMRC is susceptible to swapping out the dangers and prices of ageing legacy {hardware} and software program with the seller lock-in entice, doubtlessly committing authorities and taxpayer alike to an association that would prolong effectively past the utmost 10-year contract time period.”
No one ever acquired fired for getting
It was mentioned that no one ever acquired fired for getting IBM. It’s doable there’s a component of this mantra in public sector procurement, as demonstrated by this case.
Invoice McLuggage was director of IT technique and coverage within the Cupboard Workplace and deputy authorities CIO from 2009 to 2012. He recommended a component of comfort for civil servants in specifying and fascinating with a hyperscaler for presidency contracts.
“When a £500m contract finally ends up with a single bidder, it’s truthful to ask whether or not the procurement was ever really open,” mentioned McLuggage. “A hyperscaler-only final result could also be handy for civil service procurement professionals – and for his or her technical colleagues accountable for setting the technical necessities – nevertheless it narrows the sector and it sidelines various and home UK suppliers.”
McLuggage echoed issues concerning the issue of exit from such contracts: “When you’ve re-engineered legacy platforms right into a hyperscaler like AWS, you’re not only a buyer, you’re embedded and just about all of your leverage disappears. The technical and monetary limitations to leaving are so excessive that switching turns into unrealistic.”
He additionally identified that in a interval the place dangers round knowledge sovereignty are notably heightened, the larger difficulty is strategic, saying: “The UK is changing into more and more depending on a handful of US suppliers, whereas others in Europe are shifting in the other way, specializing in sovereignty and management.”
Is there an issue with the framing of tender notices?
Some imagine authorities consumers phrase tender notices to limit bids to sure forms of suppliers. That’s, they may lay out qualifying standards that subtly form these in a position to reply. That might embrace referencing particular capabilities they need to be capable to proof, references of particular prior contract values or buyer varieties, or monetary stability necessities.
Owen Sayers, an unbiased guide with many years of expertise in delivering public sector IT, mentioned: “There are a number of the explanation why a authorities purchaser could need to restrict a procurement to particular bidders or forms of bidder, and traditionally some frameworks have been created to deal with particular components of the provider market, together with hyperscalers. They’re hardly ever as instantly restrictive because the wording of this competitors discover, nevertheless.”
Concern surrounding authorities consumers’ experience
The assumption exists that authorities consumers usually don’t actually have the experience to most successfully procure providers they purchase. This might imply they don’t know what the frameworks and the processes to create them really present, or that they don’t perceive what the large cloud suppliers provide, or they haven’t correctly learn contract phrases or reconciled them with procurement guidelines.
The G-Cloud framework, for instance, doesn’t assure pre-assured safe suppliers. In the meantime, authorities departments might imagine they’ve contracts with suppliers that assure knowledge stays onshore – but when they settle for the usual phrases of service, additionally they contractually settle for offshoring.
In the meantime, the suppliers guarantee thorough data of this and use that data to achieve benefit, mentioned Sayers, including: “In reality, there may be nothing mistaken with the laws of the processes laid down based mostly on that laws. What could also be mistaken is that individuals operating authorities procurements within the UK don’t really comply with these processes notably effectively.
“Typically, UK authorities procurement does progress OK. They don’t give particularly good worth for cash, nevertheless, and that’s for just a few causes. First, the suppliers perceive how the method works loads higher than authorities, so that they sport the method to maximise business income. Additionally, suppliers love contract change, and a few have made a great enterprise out of bidding low to get authorities contracts after which creating wealth on the change processes.”
repair authorities procurement
Regardless of the cause for presidency contracts being awarded that seem unfair and detrimental to the general public purse and sovereignty, what may be achieved to make sure an efficient public sector procurement atmosphere?
The Open Cloud Coalition’s Stewart mentioned: “Competitors, alternative and worth for cash ought to be on the coronary heart of every little thing, and vendor lock-in shouldn’t be handled as an appropriate trade for comfort or familiarity.
“If the federal government continues to function with a ‘we have now no alternative’ mindset, it’s sending a horrible message to the broader cloud trade, impacting funding selections, home resilience and financial development.”
Solutions may embrace breaking apart mega contracts with lot-based bidding and necessary multi-supplier RFIs, in order that SMEs and UK suppliers will be capable to compete with hyperscalers. Exitability from contracts might be weighted standards, which may embrace no egress charges for presidency prospects, and use of open supply software program that would make exiting contracts non-cost prohibitive.
A necessity for unbiased overview of contracts
Sayers thinks authorities wants to understand it’s not excellent at shopping for advanced providers. And so, overview of contracts – earlier than they’re awarded – must be carried out by an unbiased and knowledgeable physique.
“We’d like a perform unbiased of supply that appears at contracts earlier than they are often issued,” he mentioned. “The most effective the Nationwide Audit Workplace can do is a retrospective or in-life overview of how badly issues are going. They arrive alongside after the battle and bayonet the wounded.”
For Sayers, meaning a physique in authorities able to giving correct contractual recommendation about normal provider phrases of service and what they imply.
“Right this moment, the duty to work this out has been shoved right down to the poor man on the division shopping for the providers,” he mentioned. “So, you’ve gotten a purchaser going through off towards a hyperscaler and below stress from his inside IT crew and seniors – who additionally don’t understand how the hyperscaler actually works – to only get the contract issued. He can’t do due diligence and he received’t be rewarded for locating points.”
It sounds loads like no one ever acquired fired for getting from a hyperscaler.
