Post Office IT firm granted VIP access to government contracts worth £700m
The IT firm at the centre of the Post Office scandal was granted access to priority lanes to win hundreds of millions of pounds in Government contracts despite concerns over its Horizon software, i can reveal.
Fujitsu, a Japanese tech giant, was handed the contracts through so-called “framework agreements” which allow the Government to make deals with lists of preferred VIP suppliers.
The repeated use of Fujitsu as a Government contractor has comes under close scrutiny following the airing of ITV’s primetime drama about the Post Office Horizon scandal, Mr Bates vs The Post Office.
More than 700 Post Office managers were convicted between 1999 and 2015 after the IT firm’s faulty accounting software Horizon made it look like money was missing from their sites.
Ex-Cabinet Office minister Nadhim Zahawi, who led a parliamentary grilling of Post Office executives depicted in the show, told i Fujitsu should be suspended from the priority access scheme.
According to data shared with i by analytics firm Tussell, Fujitsu has won nearly £700m worth of contracts using the priority procurement system since 2015, including one with HMRC that was valued at £500m. Some of the deals were extended as recently as a few months ago.
Campaigners and experts told i that the firm should be excluded from the Government’s lists of preferred suppliers.
Former subpostmaster Lee Castleton, 55, who is portrayed in the ITV programme by actor Will Mellor, said he felt “very let down” after learning that Fujitsu had been given contracts through priority access lanes.
The framework system was central to the Government’s plans to combat the coronavirus pandemic and was used to secure services linked to the Test and Trace scheme. However, it has faced criticism for a lack of oversight and competition. This is separate to the VIP lane used in the PPE scandal.
Priority access is given to “pre-approved” suppliers which the Government says have “agreed to provide goods and services to a certain standard”. The procurement process is shortened as suppliers have agreed certain terms and conditions and legal protections in advance.
Fujitsu is considered to be a preferred supplier in areas where the Government regularly needs external support, such as data and analytics systems and software design.
Via the framework system, the Department for Education awarded Fujitsu a £9.5m contract to provide IT services; the Home Office employed it to send advanced messages to travellers for £7.5m; and the Ministry of Defence paid it £200,000 to be a partner on a military project.
All of Fujitsu’s framework agreements have been signed or extended since then-PM Boris Johnson pledged in February 2020 to hold a public inquiry into the Horizon scandal, which is looking at the performance and behaviour of the IT firm.
The Government is facing pressure from MPs to stop handing out contracts to the company due to its involvement in the Post Office scandal.
Rishi Sunak’s official spokesman has said it will wait until “the full facts have been established” by the ongoing statutory public inquiry before “further judgements” are made about whether it will continue to do deals with Fujitsu.
Ministers are also considering whether to demand the tech firm pay out millions of pounds in compensation for sub-postmasters who were wrongly accused.
Around £138m has been paid to victims so far, with the bill covered by the taxpayer. Hundreds of others are still waiting.
Nick Davies, an expert in public services and outsourcing at the Institute for Government, told i that ministers should look again at Fujitsu’s contracts and access to the priority procurement system.
He said: “Framework agreements allow government to quickly buy common goods and services from a pre-approved list of suppliers.
“They usually run for between one and four years, with a maximum amount that can be spent through the agreement. New suppliers are able to join frameworks if and when they are retendered.
“Given Fujitsu’s role in the Horizon scandal, the Government will want to assure itself that the company is able to deliver the services that it has contracts for.”
Ex-chancellor Nadhim Zahawi – who appeared as himself in the ITV drama – told i: “They should definitely be removed until remedy is achieved. Fujitsu has not been properly held to account for this major scandal. They need to bear their part of the responsibility for this debacle.”
Sir Robert Buckland, a former justice secretary, added: “While we wait for the conclusion of the inquiry, there is a lot of emerging evidence that is loud and clear. The Government could have a temporary moratorium on giving new contracts to Fujitsu.”
Labour MP Kate Osborne has said it is “astounding that the Government is continuing to award them billions of pounds worth of contracts” and it was a “kick in the teeth” to Post Office managers.
Mr Castleton, who ran a Post Office in Bridlington, is one of hundreds of people who were taken to court over accounting errors linked to the Horizon IT system.
He refused to pay back shortfalls in his accounts that he believed were caused by Horizon and was pursued through the civil courts. Unable to afford a lawyer, he represented himself at the High Court in 2007, where the Post Office won the case and pursued him for costs of £321,000, which left him bankrupt.
Asked about the Government’s continued use of Fujitsu to provide public services, he told i: “On a personal level I feel very let down.
“The Government and how they work should never impact on me, whatever procurement, whatever system – you would hope it doesn’t impact the person on the other end.
“They could have intervened so many times and made things better for us and they didn’t. The whole corporate machine is so despicable.
“You look at Michael Keegan, the former Fujitsu CEO, his wife [Gillian] is the Education Secretary – it just stinks doesn’t it? On every level.”
Speaking about how Fujitsu had been given special treatment by the Government, Mr Castleton said: “It’s just people feeding people, there’s much of it.
“The public are no longer naive, there’s something very, very wrong”.
In 2023, the National Audit Office warned that over-reliance on framework agreements could lead to inflated prices from suppliers and limit competition.
According to a report by the public spending watchdog, Government procurement has become increasingly dependent on framework agreements, with 72 per cent of large contracts being secured through this system in 2021-22 compared to 43 per cent in 2019.
Last month, a cross-party group of MPs criticised the increased use of the agreements. The House of Commons public accounts committee warned that their “inappropriate” use may be limiting competition and failing to allow smaller suppliers to compete.
Liberal Democrat Treasury spokeswoman Sarah Olney told i: “The very least that Conservative ministers could do is commit to not providing any further contracts to Fujitsu until at least the public inquiry into the Horizon scandal has concluded.
“This Conservative government cannot be trusted to look after the public finances.”
Fujitsu and the Cabinet Office were approached for comment.
Fujitsu and its work for the Government
Fujitsu has continued to secure contracts to carry out work for the Government despite the firm being at the centre of the Horizon Post Office scandal, thought to be one of the most widespread miscarriages of justices in UK legal history.
On Monday, i revealed that the Environment Agency, a public body, extended the Japanese IT firm’s contract to provide England’s flood alerts system at the end of December. It has a £19.5 million deal to run the flood defence warnings system until September 2025.
Fujitsu has so far not faced any repercussions for its involvement in the scandal.
The Met Police is currently investigating two former Fujitsu experts, who were witnesses in trials of Post Office managers, for perjury and perverting the course of justice. The force said the investigation was launched in January 2020 and two people had been interviewed under caution. No arrests have been made.
Rishi Sunak’s Government has said it will wait until “the full facts have been established” by the ongoing public inquiry before further judgements are made about whether it will continue to do deals with the tech firm.
The Government previously said that all contracts given to Fujitsu have been awarded in line with regulations and transparency guidelines.
Fujitsu continues to hold contracts worth tens of millions of pounds with the Post Office to support the branch accounting system Horizon and datacentres.
The IT giant was also signed up to provide computer services for HS2 under a deal worth £1m last year. Fujitsu also has contracts with HMRC, the Home Office and other public bodies worth hundreds of millions of pounds.
Last year, peers branded “immoral” the Government’s decision to hand Fujitsu a contract to work on a new UK emergency alert system for mobile phones and tablets.
It was handed a contract worth £5m and running until October 2025 to carry out the work, and the system was tested in April.
At the time, Conservative peer Lord Arbuthnot, a longstanding campaigner for the victims of the Horizon scandal, questioned why Fujitsu had been granted the contract.
He said: “Fujitsu’s Horizon system caused sub-postmasters of this country to be shamefully accused of things they had not done.
“Some went to prison, some took their own lives, all those accused were humiliated in the eyes of their own communities.”
Lord Arbuthnot criticised Fujitsu for not offering “a single word of apology”.
The Japanese IT firmhas co-operated with the ongoing statutory public inquiry.
