Government could still replace Fujitsu in key nuclear contract

Fujitsu’s controversial contract with the National Nuclear Laboratory (NNL) was renewed because there were no other suppliers that could meet the regulatory duties required, but the service could be taken in-house next year.

Following the announcement of Fujitsu’s first government contract of the year and a subsequent public backlash, the government has been quick to stress that all options to replace the supplier’s £155,000 software support contract with the NNL, including moving the service in-house, are being considered.

Reacting to criticism for awarding the contract to Fujitsu, which is under intense scrutiny over its role in the Post Office scandal, the Department for Energy Security & Net Zero outlined the reason for Fujitsu’s new deal. “NNL requires bespoke software to ensure its work remains compliant with operationally critical regulations. There are currently no other suitable suppliers and without re-awarding this contract, the NNL would be unable to fulfil its regulatory duties,” said a spokesperson.

But the department added that, “The NNL will consider all options once the contract comes to an end in March 2025, including exploring in-house solutions.”

Fujitsu’s huge UK government business is under pressure following public anger at the IT giant’s role as supplier of the Horizon system at the heart of the Post Office scandal. The company has already seen a reduction in public sector contracts this year.

By April 2023, Fujitsu had signed a £25m deal with Bristol City Council, a £16m contract with the Post Office, a deal worth £13m with Northern Ireland Water, an £8m deal with the Ministry of Defence, two deals with the Department for Education totalling £3m, and a contract with Leeds City Council worth up to £100,000. This year the NNL is its sole government contract announced so far.

In another sign of possible reputational damage, earlier this month the Department for Environment, Food and Rural Affairs ended Fujitsu’s role in providing a flood warning system for the UK, two months after signing an extension of up to 12 months. 

Fujitsu’s head of Europe, Paul Patterson, promised to pause bidding for government work until after the completion of the statutory public inquiry into the Post Office scandal, following the broadcast of the ITV drama, Mr Bates vs the Post Office, at the beginning of the year. 

During questioning by MPs at a business and trade select committee hearing in January, Patterson acknowledged Fujitsu’s part in the scandal, telling MPs and victims: “We were involved from the start; we did have bugs and errors in the system, and we did help the Post Office in their prosecutions of subpostmasters. For that, we are truly sorry.”

But the bidding pause, described as “hollow” by MP Kevan Jones, does not include deals with existing customers in the public sector, of which there are many. Last month, Computer Weekly revealed leaked internal communications that showed Fujitsu is still targeting about £1.3bn worth of UK government contracts over the next 12 months. Further leaked documents revealed that Fujitsu created a spreadsheet instructing staff how to get around its self-imposed ban.

Internal communications seen by Computer Weekly also revealed that Fujitsu is spending heavily on managing the current scandal fallout. It has sought external support in a project known as Holly, where it has engaged PR, ethical business experts and lawyers, at a cost of £27m so far.

The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to the accounting software (see timeline of Computer Weekly articles about the scandal below).

• Also read: What you need to know about the Horizon scandal

• Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story