HM Revenue & Customs (HMRC) is getting ready to spend £500 million on a contract for a hyperscale cloud provider to manage a decade-long data center exit and cloud migration project. However, many in the UK cloud community are raising concerns that this tender may be anti-competitive and contradictory.
As the deadline for bids approaches on May 23, 2025, industry insiders are scrutinizing the planning notice. They argue that HMRC’s decision to focus solely on a hyperscale provider limits competition and excludes many capable companies.
Mark Boost, CEO of Civo, points out the risks of locking into a single provider for ten years, especially in today’s unpredictable geopolitical climate. “Ten years is a long time in tech. Recent months have shown just how quickly things can change,” he said. He stresses that relying on one supplier could increase risk and dependency, which goes against the need for resilience through diversification.
Owen Sayers, an enterprise architect with extensive experience in national policing systems, echoed similar sentiments. He questioned the wisdom of a lengthy contract, saying it seems rigid in a fast-moving tech landscape. “Contracts this long were already seen as excessive not too long ago,” he noted.
HMRC aims to transition its on-premise servers from three Fujitsu data centers to the cloud through this project, set to kick off on April 1, 2026, and run until March 31, 2036. The plan anticipates appointing one specific hyperscaler but acknowledges this choice will be evaluated during procurement.
However, a former government IT advisor expressed concern that the notice’s language might lead to legal challenges. “HMRC could be setting itself up for issues since ‘hyperscaler’ often points to US giants,” they remarked, warning this could waste taxpayer money.
The contract notice also states that HMRC’s server inventory includes technology from multiple vendors and emphasizes the need for UK-based hosting due to sensitive data. However, Boost highlighted a contradiction: the demand for a hyperscaler while also requiring the data to stay within the UK borders raises potential issues.
He referenced Microsoft’s recent actions related to US sanctions as a cautionary tale. “This shows how political decisions abroad can affect critical institutions here,” he argued.
Nicky Stewart from the Open Cloud Coalition added that the wording of the planning notice could limit the variety of suppliers interested in the contract. She believes that keeping the process open to innovative challenger companies would enhance competition, driving down costs and improving value for public services.
Sayers warned that HMRC’s high requirements may be unattainable for UK companies. He noted that making a hyperscaler also guarantee local data handling would be nearly impossible. Even major players like Microsoft wouldn’t be able to meet those terms since they can’t promise complete data sovereignty in the UK.
As the debate continues, Boost stressed the importance of the contract’s implications for UK digital sovereignty and compliance with procurement regulations. He called for policies that genuinely support local tech and ensure the UK retains control over its critical infrastructure.
When asked about the possibility of Microsoft bidding for the contract, HMRC didn’t provide a direct answer but reiterated commitment to following government procurement rules.