How deeply is Fujitsu embedded in Government and could it lose its contracts?

Fujitsu has found itself in the firing line after faults with the Horizon system it provided to the Post Office led to scores of sub-postmasters being wrongly prosecuted and convicted for fraud.

Ministers have suggested that the company should pay at least some of the compensation awarded to those sub-postmasters, while others have called for Fujitsu to have its existing Government contracts cancelled or paused in light of the Horizon failures.

Downing Street said on Tuesday morning that Fujitsu would be “held accountable” legally or financially if a public inquiry finds it blundered in the Horizon scandal.

But the Prime Minister’s spokesman did not say the Government would stop awarding contracts to the company if it was found to be at fault, saying only that companies’ conduct was “in general” considered as part of the procurement process.

Below, the PA news agency looks at how far Fujitsu is embedded in the Government, and whether it could really lose its contracts.

– How much business does the Government do with Fujitsu?

The scale of the Government’s involvement with Fujitsu is significant. Since 2012, the public sector as a whole has awarded the company almost 200 contracts worth a combined total of £6.8 billion, according to analysts Tussell.

Around 43 of those contracts are still in operation, worth a total of £3.6 billion, including the contract for the Post Office Horizon system.

According to Tussell, in the 2022/23 financial year, Fujistu’s revenue from its public sector contracts totalled £427 million – a significant chunk of its total UK revenues.

– What does Fujitsu do for the Government?

In addition to Horizon, Fujistu provides IT services to multiple Government departments including the Home Office, the Foreign Office, Defra and the Ministry of Defence.

These services include providing the Police National Computer, which stores individuals’ criminal records, the Government’s flood warning system, and the national emergency alerts system launched in March 2023.

Fujitsu does significant work with HMRC, with contracts worth more than £1 billion including a deal awarded in February 2022 to provide desktop services worth up to £500 million over five years.

The company also has contracts with devolved and local government, including a £25 million deal with Bristol City Council to transform its digital services and, most recently, a £485 million contract with Northern Ireland’s education authority for a “school management system” awarded in December 2023.

– Could the Government get rid of Fujitsu?

It would be extremely challenging for the Government to completely end its involvement with Fujitsu.

Partly, this is due to the legal risk of ending contracts with major suppliers, who have previously sued the Government successfully after deals were terminated.

For example, Fujitsu was involved with the £12 billion NHS national programme for IT (NPfIT) that was largely abandoned in 2011 amid spiralling costs, technical difficulties, delays and contractual disputes.

Prior to that, the Government had terminated Fujitsu’s contract to digitise patient records in the South of England in 2008 after a dispute over changes.

Fujitsu then sued the Government for £700 million, leading to a long-running lawsuit, arbitration and a significant award to the company in 2018, although the total amount remains confidential.

But even without the risk of a lawsuit, there remain considerable problems with replacing suppliers of major IT systems.

For example, when challenged over the award of a further £48 million contract to Fujitsu for the Police National Computer in 2022, Home Office minister Lord Sharpe said there were “no viable alternative solutions” for replacing the Fujitsu hardware that had hosted the system for 30 years.

If replacing an IT provider requires replacing an entire IT system as well, the cost of getting rid of Fujitsu’s services may end up being prohibitive.