The UK’s tax assortment company has awarded Amazon Web Services – the one remaining bidder – a contract value practically £500 million to migrate companies from three Fujitsu-run datacenters and host them for up to a decade.
His Majesty’s Revenue and Customs (HMRC) mentioned the British department of AWS’s Luxembourg-based subsidiary submitted the one tender it acquired and assessed for the deal in a contract award notice published on March 23.
UK govt workplace admits means to negotiate billions in cloud spending curbed by vendor lock-in
The settlement, priced at £472.8 million together with VAT, is scheduled to run for no less than seven years from April 2026 with an possibility to lengthen it to ten years. HMRC will pay for extras together with enterprise companies transformation, migration of companies not run from the three Fujitsu datacenters, and utility modernization.
The “Procurement for the provision of Hyperscaler Services to enable Data Centre Exit” contract is meant to let the tax collector finish its use of three datacenters managed by Fujitsu by June 2028. As the undertaking’s title suggests, the tender was aimed on the largest cloud suppliers.
In its preliminary March 2025 contract notice, the entire monetary worth was estimated at £500 million together with VAT. HMRC mentioned it “anticipated that the appointment will be limited to a single Hyperscaler” in a position to migrate companies and infrastructure from the Fujitsu-run bit barns – which use a couple of dozen working methods together with HP’s Unix, IBM’s AIX, and Sun’s Solaris – to UK-based cloud internet hosting.
When it published the tender in June, HMRC added “Hyperscaler services” to the title and mentioned “modern hyperscaler cloud technologies would be the preferred solution.”
The discover said that 70 % of the contract choice can be based mostly on high quality, with simply 20 % on worth and 10 % on social worth, with the complete checklist of standards offered to shortlisted suppliers.
Sources shut to the bidding course of advised The Register in October that HMRC unofficially shortlisted AWS, Google, and IBM. Microsoft, the one different provider of the same scale to AWS, was not within the working. One insider recommended the tender had been written in order that solely AWS or Microsoft might realistically win it.
“[It was all about] ability to execute, a proven history of working with departments like this – seven-year track record of hosting massive hyperscaler-type services. It could only be AWS or Microsoft.”
HMRC specified it didn’t need hybrid cloud companies so IBM determined not to bid additional, an individual accustomed to the matter added. Google additionally determined to drop out. Bidding for contracts is an costly train.
“There was only one company capable of bidding [at that point],” he added. “AWS was going into a tender negotiation knowing the value of the contract, and there was zero power for government to negotiate.”
“This is hugely political,” a well-placed supply mentioned. “Politicians stand up and talk about standardizing frameworks for procurement to get better discounts and value for money… sometimes it appears contracts are already locked down.”
In January 2025, the Competition and Markets Authority (CMA) mentioned it deliberate to take a look at how AWS and Microsoft dominate the UK marketplace for cloud companies, saying that “competition is not working as well as it could.” The pair account for up to 80 % of cloud companies market in Britain.
Earlier this month, in a parliamentary written query, Conservative MP Julia Lopez requested the Department for Science, Innovation and Technology how a lot this restricted competitors was costing public sector our bodies.
Minister Kanishka Narayan said the CMA’s investigation had “identified a number of potential competition concerns with clear negative impacts for UK businesses, consumers and the public sector” with out offering a price. Previously, the CMA estimated companies and the general public sector had been paying round £500 million extra yearly for cloud companies than they need to.
Narayan identified that the CMA had beneficial its board prioritize a strategic market standing investigation into this back in July, however because it was unbiased of presidency, this was up to the authority.
Kip Meeks, former cloud inquiry lead on the CMA, quit the agency in January over the slow rate of progress amid questions concerning the regulator’s independence.
In an article for The Register earlier this week, former Irish authorities chief info officer Bill McCluggage wrote: “If the UK is serious about digital sovereignty, fiscal responsibility, and fostering innovation and economic growth, then the CMA must act swiftly. Because the longer this drags on, the more expensive the outcome becomes for the UK taxpayer.”
The UK authorities is to draft an outage blueprint following the large AWS outage in October that knocked out companies at a number of departments, together with HMRC. Clearly that did not deter the most recent contract award heading within the course of Amazon. ®
