UK gov't could bill Fujitsu for leaving contract

The government could demand Fujitsu pay half a billion pounds following the supplier's sudden exit from the National Programme for IT in May.

Fujitsu faces liabilities of up to £500 million after the department of health terminated Fujitsu's contract as local service provider to the NHS NPfIT in the south of England in May, health minister Ben Bradshaw told MPs.

"Fujitsu's liability to the Department [of Health] is capped at £100 million per contract year, and an aggregate total of £500 million," Bradshaw revealed in parliamentary answers. The government also faced potential liabilities to Fujitsu, he added, capped at £50 million per contract year.

The liabilities, he said, "will ultimately be determined by agreement between the parties, or failing that by arbitration, or by a court".

He added that, for both parties, the liabilities could be calculated from the last contract reset date on September 2005.

The revelation comes days after Fujitsu submitted a compensation claim to the NHS, seeking to recoup £700 million. The claim, known as a procedure initiation notice, can be a precursor to legal action and is a process within the supplier's contract to resolve disputes.

Fujitsu was only four years into a ten year, £1.182 billion contract when it left the program. Fujitsu has only been paid a small amount of this total because of delays in deliveries and acceptance of systems.

The supplier quit the program after the two sides failed to agree on fresh terms for the contract. Fujitsu told MPs in June that it was being asked to change the systems substantially for local needs and was unable to agree on terms. The supplier said local trusts had "withheld payment" in order to force it to make changes to the system beyond the contractual agreement.

Fujitsu, Connecting for Health, which manages the £12.7 billion NHS National Programme for IT, and the Department of Health all declined to comment. The supplier and the department are locked in talks to negotiate a settlement.

On NPFIT's progress, the government said 138 NHS hospitals across the country have deployed patient administration systems. But ministers would not estimate the delay resulting from Fujitsu's exit. "It is not yet possible accurately to predict the consequential impact on deployments as a result of the termination of the contract," Bradshaw stated to MPs.

Trusts in the south of England are currently considering proposals from the two remaining key suppliers BT and CSC.