Amazon Web Services has secured a ten-year, £473 million contract to migrate HM Revenue & Customs off its ageing Fujitsu-run data centres but the deal has drawn scrutiny after every other major cloud provider withdrew from the running.
HMRC confirmed AWS as the winner of the contract, first teased in a March 2025 tender notice, which set the total estimated value at £500 million including VAT.
The deal tasks AWS with moving HMRC’s services and infrastructure out of three managed data centres currently hosting a sprawl of legacy systems running on HP Unix, IBM AIX, Sun Solaris, VMware ESXi, and Windows and into UK-based cloud hosting.
The goal is to complete the data centre exit by June 2028, when HMRC’s extended contract with Fujitsu is due to expire.
A tender with no real competition
What makes the award unusual is how it unfolded. HMRC approached five suppliers in June 2025 AWS, Google, IBM, Microsoft, and Oracle to participate in the initial request for information stage.
According to sources cited by The Stack, Oracle and Microsoft withdrew first, followed later by Google and IBM.
By the time the contract notice was published on 23 March 2026, AWS was the only company that had submitted a tender.
One senior government technology leader told The Stack the situation was telling: the rest of the market appeared to conclude the process was written in a way that favoured AWS from the outset.
HMRC pushed back on supplier suggestions to adopt a hybrid cloud approach, reportedly because of the sheer volume of legacy infrastructure involved.
AWS declined to comment and referred press enquiries to HMRC. Other cloud providers also declined to comment.
HMRC defended the process.
A spokesperson said: “We follow government procurement rules when awarding contracts, ensuring a competitive and fair tender process, and value for money for taxpayers.
Once contracts are approved, we publish the details on Contracts Finder for transparency.”
The contract award is expected to be formally announced in late April 2026.
Legacy systems and a history of delays
HMRC’s push to exit its Fujitsu data centres is not new.
The department previously contracted IBM for a similar migration project, with a target exit date of June 2022. That effort failed.
In June 2025, HMRC was forced to sign a £220.3 million extension with Fujitsu to keep the lights on while the new procurement ran its course describing it as a contingency measure on “limited time and strict terms.”
The tender documents describe the scale of the challenge bluntly.
HMRC’s objective is to “exit all services from three managed datacentres and decommission any remaining infrastructure within the current contract period,” while supporting the department’s strategic goals “without affecting business continuity or incurring an unaffordable cost of change.”
Questions about resilience and dependency
The deal arrives at a sensitive moment for HMRC’s relationship with AWS.
On 20 October 2025, a 14-hour outage at an AWS data centre in the United States disrupted HMRC’s operations, alongside those of Lloyds Banking Group and other UK organisations.
The incident prompted MPs on the Treasury Select Committee to question what the government was doing to protect public sector bodies from downtime at major cloud suppliers.
The UK Competition and Markets Authority (CMA) has also been watching closely.
In January 2025, the regulator said it planned to examine how AWS and Microsoft dominate the UK cloud market; the two providers account for up to 80% of cloud services spending in Britain.
By July 2025, the CMA had concluded its investigation, finding that both companies were behaving in ways that harmed competition.
It recommended “targeted and bespoke” interventions, with a final decision expected in early 2026.
Conservative MP Julia Lopez raised the issue in a parliamentary written question, asking how limited competition in the cloud market was affecting costs for public sector bodies.
Minister Kanishka Narayan acknowledged the CMA had “identified a number of potential competition concerns with clear negative impacts for UK businesses, consumers and the public sector.”
AWS’s grip on UK government cloud
The HMRC contract deepens what is already a substantial foothold for AWS in UK public sector IT.
According to government Digital Marketplace figures, AWS accounts for nearly half 45% of the £811 million in cloud services sold through the G-Cloud procurement framework.
Industry analysts note that AWS continues to lead in large-scale enterprise cloud deployments, supported by a broad service portfolio.
But critics argue the concentration of government infrastructure with a single US-based provider creates long-term risks around sovereignty, resilience, and cost control concerns that are likely to follow this contract closely throughout its ten-year lifespan.
