Leaked memo confirms Fujitsu “keen” to settle NHS IT dispute

By Tony Collins

On 5 May I wrote on Campaign4Change that 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.

Now a leaked Cabinet Office memo confirms that the Cabinet Office minister Francis Maude has met a representative of Fujitsu who is “keen to find a way through this issue [a dispute over its NHS IT contract] outside the legal/arbitration route currently being pursued”.

The memo says the when the Cabinet Office agreed a pan-Government memorandum of understanding with major suppliers including Fujitsu “it became apparent that the [NHS IT] dispute is material to:

– the quality of the relationship between central government, now acting as a single customer, and the company; and

– the financial and operational health of Fujitsu UK, which affects its ability to fulfil a number of business-critical contracts across central government.

The memo says that a Fujitsu representative had indicated to the Cabinet Office that the company wanted to improve its overall relationship with government.

To see whether a resolution to the NHS dispute could be reached, Fujitsu executives were willing to meet a group of officials.

The memo makes the point that relationships between suppliers and the government have changed. Coalition reforms of central government mean that the Cabinet Office is managing the Crown relationships with 19 strategic suppliers including CSC and Fujitsu. So a dispute with one department may affect a supplier’s relationship with the government in general.

HM Treasury has issued “delegated authority” letters that  give the Cabinet Office the ability to be involved and, if appropriate, lead the resolution of legal disputes within departments. The aim of this, says the memo, is to “provide objectivity and seek an optimum outcome for Government”.

The memo is also revelatory in suggesting that the Department of Health is not cooperating with the Cabinet Office over dispute resolution.

When a contract for Fujitsu to supply desktops at the Department for Work and Pensions ran into trouble, the DWP “actively” sought support from the Cabinet Office, given the Crown initiative to see contracts in the round.  In contrast, says the memo, the Department of Health has not involved the Cabinet Office.

The memo also refers to the dispute between the DH and CSC.

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