A sign that Cabinet Office reforms will alter behaviour of major IT suppliers

 

By Tony Collins

There are signs that a long-running £700m dispute between Fujitsu and the Department of Health over the NHS IT programme will reach a settlement without a court hearing.

 A settlement, it should be said, will be due largely to reforms of central government initiated by the coalition and Francis Maude, Cabinet Office minister.

Maude’s reforms mean that major suppliers to the government are now managed centrally, at “Crown” level, not contract by contract. So a dispute with one department can affect a supplier’s relationship with government as a whole.

That didn’t happen before, when each department managed separately its relationships with major suppliers.

It’s likely now that Fujitsu will want to improve its relationships with government, particularly since the:

– Tsunami in Japan which has weakened the company’s operations.

– premature ending of Fujitsu’s £330m desktop contract with the Department for Work and Pensions.

The wish for improved relations with government makes it more likely it will reach a settlement over its withdrawal from the National Programme for IT in the NHS – NPfIT – in 2008. Fujitsu was said to have been seeking £700m after its departure. It’s now thought to be seeking a settlement without any formal proceedings.

Comment

It has long been obvious that government should be a “single customer” to its major IT suppliers. Only now is that happening, thanks to the coalition’s reforms. It means that, for the first time in living memory, it’s the government – the customer – that is in control of its major IT suppliers, and not the other way round. 

Few of the top 20 IT and services suppliers to government will now be willing to carry on a dispute with a department when it could cost lost contracts with other departments.

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