Why did HMRC dump a UK cloud SME for AWS?

Exclusive from IT news site raises troubling questions about procurement priorities at the heart of Whitehall – especially around how serious mandarins are about working with SMEs

Posted 25 October 2017 by

IT news site The Register claims to have details of a decision by HMRC that ended the days of a UK cloud SME that, if true, raise troubling questions about central government’s IT priorities.

The essence of the charge: that the Department switched from a local small business to that of US web giant Amazon, which the site reminds us all is a company recently accused by MPs of tax avoidance – and even worse, did so despite sourcing the work from The Digital Marketplace, the government’s allegedly favoured way for civil servants to procure IT nowadays.

The UK firm in question was a Manchester-based operation, DataCentred.

It is said in the story to have “gone under” after HMRC – its largest customer – “pulled the plug on a services contract in favour of a deal with Amazon”.

DataCentred won the business two years ago via the G-Cloud framework, with its OpenStack infrastructure claimed to have been picked to support “a significant critical system within the tax department”, a contract that accounted for 85% of DataCentred’s annual revenue.

But, the site says, six months ago the company was informed by HMRC it would no longer use its services, as it had revamped policy from being “cloud agnostic” to favouring AWS, Amazon’s public cloud.

As a direct result of losing this big part of its business so suddenly, it’s alleged, the firm “was plunged into the red after losing the HMRC contract” and subsequently went into administration in August.

The site also claims that DataCentred is not the only small UK cloud provider to have lost business with HMRC following the policy shift: “We are aware of at least two others, although DataCentred appears to be the first direct casualty.”

Journalists at the service, which has a strong global developer readership attracted to its irreverent headline-hard-hitting news approach, also claim that they have also “seen evidence” that the Department now “has a policy to only procure public cloud services from Amazon, Google, or Microsoft”.

If so, it notes, “Such a move also appears to make the IaaS part of G-Cloud redundant, which was set up to provide small cloud providers in the UK with a level playing field to compete for shorter-term government contracts.”

The story quotes HMRC as telling its editors that it makes decisions on its suppliers through “a fair and open process, and in line with Civil Service rules”.

It also quotes a spokesperson as telling it that, “We have been in discussions about our longer-term plans for cloud provision and what’s in the best interests of our customers.

“Hyperscale cloud technology is newly available in the UK and the larger cloud capability offers more resilient services at a significantly lower cost to the taxpayer.”