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By Sally Watson, 7 November 2001 15:50

NEWS The winner of the Inland Revenue's ten year, £4bn outsourcing deal will face an even tougher task than beleaguered incumbents Accenture and EDS. As battle plans are drawn up to compete for one of the UK's most lucrative service contracts, John Yard, head of business services at the Revenue, challenged the industry to raise its game. Speaking to silicon.com, he said: "There are a number of players in the industry perfectly capable of managing and coping with the integration problems and infrastructure we've got. "I don't pretend this is going to be any easy task but it's certainly a task which is within the capabilities of the industry." The ten year deal signed in 1994 with EDS to manage the Revenue's mainframe-based PAYE system (Cop) has been dogged by administrative errors. The tax department ran into further problems when it merged with the Contributions Agency in 1999 and inherited a contract with Accenture to run the National Insurance database (Nirs2) based on a Unix client/server system. Missing records and integration problems between the two systems cause major headaches for the Revenue. Although the backlog of cases has forced the department to take on extra staff, both systems are now believed to be running well on a day-to-day basis. "Broadly speaking our contracts with Accenture and EDS worked well. They were pretty successful at delivering major IT change," said Yard. But he added that future requirements had changed: "The world is moving faster and we are looking for a partner that is able to work with us to cope with that." Legislative changes have widened the Inland Revenue's scope and the winning bidder will have to integrate new functionality into the system including tax credits, the administration of the national minimum wage and student loans. Both Accenture and EDS are anxious to renew their contracts, but face tough competition from the likes of CSC and IBM. "The incumbents have their pluses and minuses," said Yard. "They have knowledge of the existing systems but we know their weaknesses as well as their strengths." Accenture - the rebranded Andersen Consulting - has already put together a team to fight its corner. The contract is one of the largest government contracts for the consultancy anywhere in the world, and according to senior partner Peter Holmes, is important to the company. Holmes agreed that its position as an incumbent supplier has its disadvantages as well as its advantages. "They know us warts and all," he said.