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MPs flag HMRC’s £1.4bn active contracts with Fujitsu

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A committee of MPs has published new data showing that HMRC holds eight active contracts with Fujitsu with a combined value of £1.4bn, all of which were awarded after a High Court verdict that ruled the developer’s software was responsible for misreported losses during the Post Office scandal.

10th Feb 2024
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Data from the Treasury Committee shows public organisations have held more than £3.4bn worth of contracts with Fujitsu since 2019 - the year a High Court ruling determined that there were defects in the developer’s Horizon software. Just over £2bn worth of contracts were agreed before the judge’s ruling and continued into the period following 2019, while around £1.4 bn was awarded after 2019.

Fujitsu’s Horizon software is at the heart of one of the biggest miscarriages of justice in British legal history, where 900 Post Office subpostmasters were prosecuted based on faulty evidence provided by the system, and backed up by court testimonies from Fujitsu experts. 

Despite the court ruling, and evidence that the company and its staff were complicit in covering up the scandal, Fujitsu continued to be listed as a preferred government supplier until 2022 when it was removed (but continued to win contracts through the regular procurement process). Following the public outcry generated by the ITV drama Mr Bates vs the Post Office, Fujitsu wrote to the government in January 2024 to confirm it would no longer tender for business.

HMRC’s active contracts

At the time of writing, HMRC holds eight active contracts with Fujitsu with a combined value of £1.39bn – the largest in terms of both value and number. Financial services watchdog the FCA maintains six contracts worth more than £9m. 

In a letter to the committee of MPs, HMRC chief executive Jim Harra outlined that Fujitsu currently provides a range of services and support to the tax authority, including managed workplace services for HMRC workplace devices worth £532m and the Trader Support Service worth £443m.

While several contracts were openly procured, others were accessed through pre-approved government frameworks run by the Crown Commercial Service and a number were also directly awarded to Fujitsu due to the vendor owning proprietary technology that other firms cannot supply.

Only the FCA told the committee they considered ending a contract with Fujitsu, but this was down to poor performance rather than the Horizon scandal, and ultimately the contract in question was retained. On HMRC’s performance scales, measured on agreed service targets, the tax authority stated that Fujitsu’s performance was ‘good ’through the last four quarters.

Harriett Baldwin, Chair of the Treasury Committee, stated that the group had unearthed information which goes beyond what is known by the Cabinet Office. 

“I hope this will aid transparency and scrutiny around the role of Fujitsu as a public sector supplier,” said Baldwin, who also welcomed the news that Fujitsu has agreed to contribute to the compensation of subpostmasters, once the current public inquiry into the scandal has concluded.

Government tech programmes ‘hobbled’

While the figures may generate plenty of noise from politicians and frustration from taxpayers, they are unlikely to result in meaningful change in the near future. 

There are few ‘strategic technology suppliers’ able to take on the complexity and scale of many of the projects undertaken by government departments – as underlined by the award of a £485m contract to Fujitsu for the Northern Irish Education Authority in December 2023, which received just one tender from the Japanese software house.

Critics have also pointed to a lack of technical and commercial skills in government to deal with the challenges – leaving them poorly positioned when it comes to digital transformation or re-procurement. 

In a report last year, Public Accounts Committee Chair Meg Hillier said the government's technology programmes are "hobbled by staff shortages, and a lack of support, accountability and focus from the top.

“The government talks of its ambitions for digital transformation and efficiency, while actively cutting the very roles which could help achieve them,” she added.

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Replies (18)

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By FactChecker
10th Feb 2024 23:24

"Fujitsu wrote to the government in January 2024 to confirm it would no longer tender for business"

I believe (and certainly the Fujitsu Chairman claims) that a key word has been omitted from that sentence ... the last 3 words should apparently read "for *new* business".
And (again according to Fujitsu) it refers to new bids, not to existing open tenders for which they'd already indicated a submission would be forthcoming!

Plus ça change, plus c'est la même chose.

Thanks (4)
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By FactChecker
10th Feb 2024 23:46

But we may never know the answer to the most important question (barely asked in all the reporting I've seen) ... which is obscured by headlines like "after a High Court verdict that ruled the developer’s software was responsible for misreported losses during the Post Office scandal."

It's a (very sad) fact of life that all software contains a mix of bugs and some elements of poor design (that failed to take account of unknown unknowns) ... many are never discovered, a few have visibly catastrophic consequences (exploding space rockets) - but most just plod along doing most of what is intended for most of the time.

Once upon a time, in a galaxy not far from here in distance or time, this was well understood and all software deemed to be critical had (a) a set of failsafe services (to capture and rectify errors as they are reported) and (b) a permanent review team (aka Change Management) who reviewed and prioritised these errors for fixing/testing and release in as quick and effective a manner as possible.

But for the last 15 years (and No this isn't a party political broadcast), the big guns in the public sector have been hijacked by the sweet-talk of the major consultancies (abetted by a willing software sector) into believing idiotic things like 95% correct = A-OK.
So they cut corners (well smash them really) and put in no safety-nets or investigative teams, because they believe (they truly do) in phrases like 'agile' actually meaning something - and so rush to cut costs (i.e. reducing existing staff including the competent ones) before the ink's dry on the software development contract ... and way ahead of any putative efficiency gains that just might turn up in a decade or so.

Oh, that missing really important question?
What channels existed within Fujitsu to recognise/monitor/rectify errors that needed fixing - and to whom were these findings reported (at least for major contracts like the P.O.)?

Of course the same should be asked by replacing every instance of Fujitsu with Post Office - and their overview of Fujitsu's deliveries against standards (hopefully pre-set in the contract)?

If we knew the answers to those fairly simple questions, then we'd know where to train the big guns of retribution - which matters almost as much as ensuring restitution for the injured parties.

Thanks (14)
Replying to FactChecker:
By SteveHa
12th Feb 2024 09:59

In a previous life, long long ago, I was a programmer at British Aerospace.

We wrote the software, and once we (as programmers) believed we had it right, it went off to be thoroughly tested before being used in a production environment. Anything that didn't cut it was sent back to be fixed. Only when we were happy that it was 100% was it rolled out.

More sensible times.

Thanks (6)
Replying to SteveHa:
Tornado
By Tornado
12th Feb 2024 16:18

"More sensible times."

I think there is a lot more to it than that.

What you describe is essential and necessary to do the job properly. Any development work that does not follow these rules is not legitimate development work and should be condemned immediately as being unreliable and in some instances, downright dangerous.

Sensibility does not come into it.

I an no expert but as far as I can see, the MTD project does not follow any of the essential and necessary processes that are required to produce software that is 100% reliable and fit for purpose. I say dump it immediately.

Thanks (5)
Replying to FactChecker:
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By usedbyhmrc
12th Feb 2024 13:00

FactChecker wrote:

But we may never know the answer to the most important question (barely asked in all the reporting I've seen) ... which is obscured by headlines like "after a High Court verdict that ruled the developer’s software was responsible for misreported losses during the Post Office scandal."

It's a (very sad) fact of life that all software contains a mix of bugs and some elements of poor design (that failed to take account of unknown unknowns) ... many are never discovered, a few have visibly catastrophic consequences (exploding space rockets) - but most just plod along doing most of what is intended for most of the time.

Once upon a time, in a galaxy not far from here in distance or time, this was well understood and all software deemed to be critical had (a) a set of failsafe services (to capture and rectify errors as they are reported) and (b) a permanent review team (aka Change Management) who reviewed and prioritised these errors for fixing/testing and release in as quick and effective a manner as possible.

But for the last 15 years (and No this isn't a party political broadcast), the big guns in the public sector have been hijacked by the sweet-talk of the major consultancies (abetted by a willing software sector) into believing idiotic things like 95% correct = A-OK.
So they cut corners (well smash them really) and put in no safety-nets or investigative teams, because they believe (they truly do) in phrases like 'agile' actually meaning something - and so rush to cut costs (i.e. reducing existing staff including the competent ones) before the ink's dry on the software development contract ... and way ahead of any putative efficiency gains that just might turn up in a decade or so.

Oh, that missing really important question?
What channels existed within Fujitsu to recognise/monitor/rectify errors that needed fixing - and to whom were these findings reported (at least for major contracts like the P.O.)?

Of course the same should be asked by replacing every instance of Fujitsu with Post Office - and their overview of Fujitsu's deliveries against standards (hopefully pre-set in the contract)?

If we knew the answers to those fairly simple questions, then we'd know where to train the big guns of retribution - which matters almost as much as ensuring restitution for the injured parties.

Currently working for someone who has hired a bunch of consultants at great expense, to deliver "A Minimum Viable Product", needless to say after a year they have gone and all the things they brought in have been, or in the process of being dismantled to go virtually back to where we began.

Thanks (1)
Replying to usedbyhmrc:
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By FactChecker
12th Feb 2024 16:59

I've not personally encountered anyone trying to tell me that their focus is going to be on delivering to me "A Minimum Viable Product" ... but then again I've not been charged with GBH (possible correlation).
That phrase reeks of the thinking (by Consultants) behind the dreadful description of 'Agile Development' ... brief pause whilst I hiss and retch simultaneously.

I tried explaining to senior members of HMRC nearly a decade ago (when they suddenly disappeared beneath a wave of exciting new terms like 'agile' and 'sandbox' etc) that they were being taken for fools.
Specifically - 'agile' provides a small benefit (sometimes) when applied to (a) development of a stand-alone app and (b) where it was only the prototyping that was being developed.
BUT if the development interfaces/integrates with multiple other (often quite elderly database) systems then all bets should be off the table. So, in terms of almost anything that HMRC could conceivably wish to develop, all that 'agile' does is to obscure the lack of a decent specification (relying instead on it 'evolving' during development - which might be OK for a retailer creating a coffee-ordering app but not something that is mission critical, where every little change spirals out across a spider's web of undocumented complexity).

Some day HMRC (and other 'ships of state' that interface with the general public such as DWP) will realise that you don't get to 'digital nirvana' by randomly sticking on bits of 'new stuff' (even if they 'work' which is seldom the case).
If you really want a new infrastructure you have to first do the unpretty but essential stuff like building new foundations - and then develop/test/add new components according to long-term plan for roll-out.
But that doesn't appeal to the typical 2-year timeframe within which politicians or mandarins view their personal 'opportunity', so we are walking downhill into chaos - which might just serve up the same end result (but only after revolution and the need to rebuild)!

Thanks (7)
Replying to FactChecker:
Tornado
By Tornado
12th Feb 2024 17:23

A Minimum Viable Product

This sounds like something that Del Boy would sell to you.

(Hums) .. No Income Tax or VAT, will ever work quite properly, no money back, no guarantee ..

Loverly Jubbly, Mange Tout Mange Tout

Thanks (2)
Replying to Tornado:
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By FactChecker
12th Feb 2024 18:17

I'm sure all the major Consultancies would be proud to be associated with the lyrics:
"No income tax, no V.A.T.,
No money back, no guarantee,
Black or white, rich or poor,
We'll cut prices at a stroke......
... C'est magnifique, Hooky Street"

Well they'd have to edit the 4th line (maybe change 'prices' to 'profits')?

Thanks (2)
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By justsotax
12th Feb 2024 12:47

Wonder how many ex Tory MPs will appear on their board or be consultants once they lose their seats......

Thanks (4)
Replying to justsotax:
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By johnjenkins
12th Feb 2024 15:49

It really is time that this country took a non political approach to Governing. Whether it be by an all party coalition (my preferred) or the reform party showing the way. We don't need a digital HMRC. We need them to keep their noses out of employment status, admin and just concentrate on investigation and collection and it wouldn't cost umpteen billions.

Thanks (4)
Replying to justsotax:
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By KenKLM
15th Feb 2024 10:49

You restrict this comment to Tories ? They are all at it and this is a very narrow and bigoted comment.

Thanks (1)
VAT
By Jason Croke
12th Feb 2024 16:08

The takeaway is you can't trust the computers to be always right and you can never trust that HMRC will be honest and admit to failings or errors.

Once MTD ITSA is in full swing, what protections are there that there will not be another post office, that is, where HMRC says the system is good and god is never wrong and the taxpayer is fined and prosecuted, much like the sub post masters were

I know IT and software fails, the problem is the human side of things, will HMRC ever admit to their software being wrong, in the same way post office could never admit there was problems as it would open the floodgates for all postmasters to commit fraud (according to post office bosses) rather than admit fault.

Thanks (6)
Replying to Jason Croke:
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By D V Fields
12th Feb 2024 20:04

Power tends to corrupt; absolute power corrupts absolutely.
Unless prison sentences are given to directors (and indeed the legal professionals) who are complicit in such abuse then it’s only a matter of time before it happens again.

Sir Wyn’s Inquiry is compelling viewing but sadly not mandatory.

Thanks (3)
Replying to Jason Croke:
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By KenKLM
15th Feb 2024 10:46

That is a very good point !

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By KenKLM
15th Feb 2024 10:44

How much U.K. tax does Fujitsu pay ? Not much according to some articles - £22m profit . Seems to demonstrate the double standard that politicians and HMRC apply. Besides this the facts are HMRC IT is renowned for how poor it is … one of the reasons maybe that the agent help-line now quotes 30 minutes before someone will pick up the call ? They have so many internal issues ? Services is awful these days and I do genuinely feel for the staff … unless they are still working from home with their slippers on!

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By tax91
16th Feb 2024 09:40

We do not know for certain exactly what programme within HMRC that Fujitsu has been involved in other than clearly MTD. I suspect that RTI is just one of those programmes, and MTD also. Does anyone know for certain what HMRC programmes were designed by Fujitsu?

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Replying to tax91:
Tornado
By Tornado
16th Feb 2024 10:38

Does anyone know for certain what HMRC programmes were designed by Fujitsu?

I love the idea that any of HMRC programs have actually been designed by anyone.

:-)

Thanks (1)
Replying to Tornado:
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By FactChecker
16th Feb 2024 19:37

Once upon a time ... there was no worse insult to the proud owner of a large complex software 'solution' than "it seems to have been designed by committee".

But you're right, HMRC have now broken that constraint ... by doing away with the committee!

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