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HM Revenue & Customs (HMRC) replaced an approximately £40m AWS agreement with a 36-month, £94m call-off contract that began in April 2021. The change was intended to give the tax authority access to discounts under AWS’s One Government Value Arrangement (OGVA), not simply to buy more capacity. The deal’s longer-term significance is clearer now: in 2026, AWS was also reported to have won HMRC’s separate data-centre-exit programme, valued at about £394m excluding VAT (approximately £473m including VAT).
What HMRC signed in 2021
Computer Weekly reported on 8 April 2021 that HMRC cancelled an existing AWS agreement worth about £40m and replaced it with a three-year (36-month) contract worth £94m. The replacement started at the beginning of April 2021 and included an approximate minimum AWS spend of £29m a year. The report is available at Computer Weekly.
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| Element | Reported detail |
|---|---|
| Agreement replaced | Existing AWS contract worth approximately £40m |
| Replacement term | 36 months, beginning in April 2021 |
| Headline value | £94m |
| Minimum commitment | Approximately £29m per year |
| Procurement route | G-Cloud 12 call-off |
| Scope | AWS public-cloud services, rather than one named application or a single migration project |
“£94m” should be read as the reported contract value, not proof that HMRC paid or consumed exactly that amount. Cloud expenditure varies with compute, storage, networking, support, licences and data transfer, while the payment and variation terms determine how much is ultimately drawn down.
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Why replace a contract that was already in place?
The predecessor agreement was signed before AWS introduced OGVA in November 2020. HMRC said the replacement allowed it to use discounted AWS pricing that was unavailable under the old terms.
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The commercial comparison is therefore not simply £40m versus £94m. A larger commitment can produce lower unit prices if expected consumption, discount rates and service mix change. A proper value-for-money assessment would also examine the minimum-spend obligation, termination and variation provisions, transition costs and actual usage.
G-Cloud 12 and OGVA were different things
- G-Cloud 12 was the government procurement framework used for the call-off contract.
- OGVA was AWS’s government-wide pricing arrangement, treating UK public-sector demand more like one large customer to unlock discounts across its public-cloud portfolio.
OGVA was not a separate cloud platform and was not itself the procurement framework; it supplied the pricing mechanism attached to the call-off.
What HMRC said public cloud would deliver
HMRC linked public cloud with its digital-transformation plans. It said cloud services would help it build and run more resilient services, update systems more easily and scale quickly when demand peaked. Those are HMRC’s stated benefits, not independently verified savings or performance results.
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The contract fitted a wider cloud-first effort to modernise a large, ageing estate. HMRC had faced criticism over the cost of maintaining legacy systems and its ambition was to become one of the world’s most digitally advanced tax administrations. Computer Weekly, citing TechMarketView, reported that AWS was HMRC’s largest UK public-sector cloud supplier in 2020, with spending of £42.7m; that figure is an analyst attribution rather than an HMRC-published total.
What the 2021 announcement did—and did not—establish
- It established a replacement AWS call-off, its term, reported value and approximate annual minimum.
- It did not establish that HMRC realised a particular saving under OGVA.
- It did not show that £94m was actually spent.
- It did not identify every HMRC workload running on AWS or prove that all HMRC infrastructure moved to public cloud.
- It did not provide a full comparison with on-premises hosting or explain HMRC’s eventual balance between AWS and other providers.
The £29m annual minimum also creates an under-utilisation risk if demand falls. Conversely, the £94m headline should not be treated as guaranteed cash expenditure without the contract’s payment schedule.
What happened next: HMRC’s data-centre-exit award
The 2021 deal was not HMRC’s last major AWS commitment. HMRC later procured a programme to move in-scope services from three managed or Fujitsu-hosted data centres to public cloud. The planned scope included legacy operating systems, storage environments and virtualisation technologies.
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In March 2026, Computer Weekly reported AWS as the successful supplier for a separate, 10-year data-centre-exit contract. The reported value was approximately £394m excluding VAT—about £472.8m including VAT, commonly rounded to £473m. Procurement records and reporting are available through Computer Weekly, Bidstats and the Find a Tender award notice.
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1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsEarlier planning material described a potential value of up to £416.7m excluding VAT (£500m including VAT), which is an estimate rather than the later award value. The 2026 contract is distinct from the 2021 £94m AWS agreement.
Why the later award raised procurement concerns
Computer Weekly reported that AWS was the only bidder remaining by the time of award, prompting criticism of the “hyperscaler only” approach and the resulting competition. Those criticisms are not a court or regulator finding that the procurement was unlawful.
The main risks critics identify
- A hyperscaler-only specification can exclude smaller UK cloud and managed-service providers.
- One remaining bidder reduces HMRC’s negotiating leverage.
- Using proprietary AWS services for legacy workloads can make a later exit expensive.
- A decade-long arrangement may exchange dependence on managed data centres for dependence on one hyperscaler.
- Contract values can grow through changes, extensions and additional service adoption.
A public-cloud contract is not automatically a multi-cloud strategy. Portability depends on architecture, data formats, operational skills, contract rights and the cost of moving data and applications.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.The wider UK cloud-market context
The Competition and Markets Authority’s cloud investigation identified data-egress fees, interoperability barriers and difficulty switching providers as obstacles to multi-cloud deployment. On 31 March 2026, the CMA said Amazon and Microsoft had committed to actions concerning egress fees and interoperability, while warning that further work was needed to help customers multi-home and switch. See the CMA announcement.
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That context matters for HMRC: a government discount can improve near-term unit economics while a highly concentrated architecture still creates long-term switching, resilience and negotiating risks.
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AWS’s “critical third party” designation is separate
HM Treasury designated AWS, Microsoft, Google Cloud and Oracle as Critical Third Parties to the UK financial sector, effective 13 July 2026. The regime gives financial regulators oversight of systemic technology services supplied to financial-sector firms. It does not directly regulate AWS’s wider HMRC operations, and the designation was not caused by HMRC’s contracts. HM Treasury’s explanation is at gov.uk.
How to judge the value of the 2021 deal
The strongest reading is that HMRC used a contract replacement to reprice and expand an existing AWS relationship after OGVA became available. Whether that was good value cannot be answered from the £94m headline alone. Buyers would need the discount schedule, consumption forecasts, minimum commitments, exit terms, realised spend and the cost of alternatives.
The later data-centre-exit award changes the strategic question. HMRC was not merely buying discounted cloud capacity; it was progressively placing more of its estate within a long-term hyperscaler relationship. That may support resilience and faster modernisation, while making competition, portability and exit planning central governance issues.
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