Exclusive: Government agrees multimillion settlement over IT contract row

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Government to pay hundreds of millions to settle National Programme for IT case with Fujitsu
Agreement in principle on terms a major step towards a final settlement
Final settlement contingent on resolving a separate dispute between Fujitsu and another NPfIT era supplier
Legal row has hung over the Department of Health and Social Care for 10 years

A decade-long, £700m contract dispute between the government and a major IT supplier has been resolved, HSJ can reveal.

An agreement in principle has been reached between Fujitsu and the Department of Health and Social Care over a legal dispute stretching back to the National Programme for IT.

HSJ has been told the terms of the settlement between the technology giant and DHSC have been agreed, but a final settlement has been held up by a related legal dispute between Fujitsu and another NPfIT era IT supplier.

The total sum that DHSC has agreed to pay Fujitsu as part of the agreement is in the hundreds of millions of pounds, HSJ has been told.

The programme was a £10bn push to digitise the NHS that failed to meet most of its aims. It was described by the public accounts committee in 2013 as “one of the worst and most expensive contracting fiascos in the history of the public sector”.

The news comes just days after new health and social care secretary, Matt Hancock, told an audience in Manchester on Thursday that the NHS would no longer enter into large, long term IT contracts and accused some suppliers of taking advantage of the service.

The parties have been in a legal dispute since 2008 after the DHSC terminated Fujitsu’s £896m contract to run a large chunk of the National Programme for IT, covering most of the south of England.

It has previously been reported that Fujitsu, which was only ever paid £151m under the original contract, was seeking £700m from the department.

In January, HSJ revealed that DHSC has already paid Fujitsu at least £65m as part of the settlement in October 2017. In addition, DHSC has also spent tens of millions of pounds on legal fees on the decade long dispute with Fujitsu.

DHSC public records have since been altered to remove references to payments to Fujitsu.

Fujitsu and DHSC declined to comment when approached by HSJ, both citing legal confidentiality.

Fujitsu’s group accounts for 2016-17, the last publicly available, said the company expected the dispute to be resolved by April 2018.

In addition to the Fujitsu legal dispute, DHSC is also paying another former major NPfIT contractor, CSC (now part of DXC Technologies), tens of millions of pounds a year as part of a deal struck in 2012 to extricate the government from the IT programme contracts.

In his speech on Thursday, Mr Hancock said that the IT programme has “failed pretty catastrophically, and millions of pounds were wasted” but the NHS should not “learn the wrong lessons” from the failure.