Government 'loses £700m legal battle with Fujitsu' over failed NHS IT project

2008 sacking from NPfIT could leave NHS with biggest payout in its 60-year history

Taxpayers may have to foot a £700m bill after the government reportedly failed in its legal battle with Fujitsu over the firing of the Japanese IT company from the NHS's disastrous National Programme for IT (NPfIT).

The NPfIT was a £12.7bn catastrophe that was abandoned at a cost of at least £2.7bn to the taxpayer, according to the National Audit Office.

Fujitsu was one of three key suppliers for the project, and was responsible for digitising patient records in the southern area of the scheme - but it was fired by the NHS in 2008 after 10 months of contract re-negotiations broke down.

At the time, it was suggested that the NHS was demanding more flexibility in Fujitsu's services - but that Fujitsu wanted more money to provide this flexibility. Other changes such as an electronic display and data storage for x-rays were also disputed by both organisations.

After it was fired, Fujitsu then announced that it intended to sue the Department of Health for £700m - more than two-thirds of the £896m it would have received for completing the entire project.

Although the government tried to broker a deal, the organisations ended up in arbitration. Now, the NHS could face a payout which would be the biggest in its 60-year history, according to the Daily Telegraph.

When Fujitsu was fired back in 2008, NHS Connecting for Health (CFH), which ran the NPfIT, insisted the move was in the best interests of the taxpayer.

"Regrettably and despite best efforts by all parties, it has not been possible to reach an agreement on the core Fujitsu contract that is acceptable to all parties," a spokesperson told Computing.

"NHS CFH has to continue to protect the interests of the taxpayer and preserve the basis of the contracts which ensure payment on delivery," the spokesperson added.

Fujitsu and the Cabinet Office declined to respond to the reports, leaving Margaret Hodge, chair of the Public Accounts Committee, flabbergasted.

"The Cabinet Office is supposed to be leading the transformation of government culture on transparency," she told the Telegraph.

"If the reports about Fujitsu are true and if the taxpayer is to lose a great deal of money, then the taxpayer has a right to know," she added.

The suggested legal cost to taxpayers follows several other damning reports of IT failures and lack of control over costs within government. Last week, the Home Office was criticised for "poor IT" after writing off its £347m IT system, while the Department for Work and Pensions extended French IT services firm Atos' multi-million pound deal to handle disability reassessments, despite the company wanting to walk away from the contract in February after being criticised for its declining standards of service.