Environment Agency dumps Fujitsu as Post Office scandal takes its toll

The Department for Environment, Food and Rural Affairs (Defra) has ended Fujitsu’s role in providing a flood warning system to the UK, two months after signing an extension of up to 12 months. 

The move comes with Fujitsu under high levels of scrutiny in the UK, due to its role in the Post Office Horizon scandal, and ends a ten-year relationship with the Environment Agency.

In December, Fujitsu was awarded an extension to the £17.5m contract, which began in 2015, for up to 12 months while a long-term supplier was chosen, with Fujitsu among the shortlisted bidders. The Environment Agency – the part of Defra responsible for flood alerts – has now appointed Leidos Innovations UK to run the service as part of a six-year deal worth about £24m.

Fujitsu’s loss of the contract comes after the Post Office Horizon scandal hit national media headlines. When the extension was signed at the end of last year, Fujitsu’s role in the scandal was being examined as part of the public inquiry, but the TV drama Mr Bates vs the Post Office had not been broadcast. The nationwide furore that followed the series led to the Environment Agency facing questions about its choice of supplier.

The Leidos deal includes the delivery of a software package and information systems, communication software, telephone and data transmission services, IT services and systems and technical consultancy services. The tender award notice said the current system has remained largely unchanged for many years.

“This is a complex technology estate, and includes telemetry systems, forecasting systems and services all feeding into messages being issued from the flood warning system,” it said.

Although Fujitsu announced a pause in bidding for government contracts, as a concession amid fury over the Post Office scandal after the TV drama, this does not include work with existing customers. Fujitsu bid for the new contract as well as Accenture and IBM, which also lost out.

Fujitsu’s reputation has taken a huge hit since the broadcast of ITV’s drama about the Post Office, which told the stories of subpostmasters who became victims of the scandal, triggered by Fujitsu’s error-prone Horizon software. The Japanese supplier’s UK operation is under intense scrutiny and there is pressure on it to cease bidding for all government contracts. It has already agreed to pay towards the huge costs of compensation, estimated to be well over £1bn, and announced it would pause bidding for government contracts until after the current statutory public inquiry.

But it is yet to agree how much it will pay and its self-imposed pause on bidding for government contracts has done little to quench its appetite for UK public sector work. Computer Weekly has seen leaked Fujitsu internal communications which reveal the supplier is targeting £1.3bn in UK government business in the next 12 months and has a backlog of about £650m in contracts to fulfil.

Further 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.

According to data shared with Computer Weekly by procurement experts Tussell, Fujitsu has only won one government contract so far in 2024, down from six at the same point last year.

The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered as a result of 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 

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