MPs flag HMRC’s £1.4bn active contracts with Fujitsuby
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.
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.