UK Tax Agency Awards £473M Cloud Contract to AWS as Sole Bidder After Google and IBM Drop Out

The UK's HM Revenue & Customs (HMRC) has awarded a £473 million cloud migration contract to AWS — the only remaining bidder after Google and IBM withdrew from the process. The deal highlights concerns about government procurement and cloud market dominance.

The Deal

• Value: £472.8 million including VAT (~$600M USD)
• Duration: Minimum 7 years (April 2026), extendable to 10 years
• Scope: Migrate from three Fujitsu-run datacenters to UK-based AWS cloud
• Deadline: Exit Fujitsu datacenters by June 2028
• Extras: Business services transformation, additional migrations, application modernization

How AWS Won

1. HMRC initially estimated the contract at £500M and "anticipated" a single hyperscaler winner
2. Unofficially shortlisted: AWS, Google, IBM (Microsoft excluded)
3. HMRC specified no hybrid cloud → IBM withdrew
4. Google also withdrew (bidding is expensive)
5. AWS entered negotiation as sole bidder with zero government leverage

The Political Problem

"This is hugely political. 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."

One insider noted: "AWS was going into a tender negotiation knowing the value of the contract, and there was zero power for government to negotiate."

Market Dominance

• AWS and Microsoft control up to 80% of UK cloud services market
• CMA announced plans to investigate this dominance in January 2025
• The single-bidder outcome illustrates the challenge of meaningful competition

Source: The Register