Fujitsu banned from Whitehall contracts?

By Tony Collins

The FT reports today that Fujitsu has been deemed for the time being too high risk to take on new public sector deals, along with another unnamed IT services contractor.

The newspaper quotes “people close to the situation”.

It’s likely the article is correct in naming Fujitsu as a supplier that is deemed by the Cabinet Office to be high risk. It is unclear, though, whether being categorised as “high risk” by the Cabinet Office amounts to a ban for the time being on future government contracts.

The FT says that Fujitsu has “in essence” been blacklisted.  “The Cabinet Office refused to confirm the identities of either of the companies that have in effect been blacklisted,” says the FT.

It is also unclear whether the Cabinet Office could exclude a supplier from shortlists even if it wanted to. The Cabinet Office awards few large IT contracts of its own; contracts are awarded by departments, and the Cabinet Office has no unambiguous power to exclude particular suppliers from shortlists drawn up by autonomous departments that take their own decisions on which companies to award contracts to.

Mega-contracts to be awarded by central departments must, however, must go to the Cabinet Office’s Major Projects Authority for approval.  The Authority could in theory require that Fujitsu be excluded from a shortlist before it gives approval.  This blacklisting would require Francis Maude, the Cabinet Office minister, and the minister signing the mega-contract to be in agreement.

If a departmental minister refused to exclude  a supplier from a bid or shortlist because of its past performance what could the Cabinet Office do, especially if the minister argued that the supplier’s continued work , in the form of a renewed contract, was not just desirable but essential?

The FT says that the latest initiative to ban companies with troubled histories in government from new contracts is being spearheaded by Bill Crothers, formerly of Accenture.

He was appointed as chief procurement officer two months ago to inject private sector rigour into Whitehall’s contracting system. He is quoted in the FT as saying that his new approach would allow past performance to be taken into account for the first time when a company is bidding for a fresh tender.

Comment

The idea of a blacklist is a good one; indeed it would be the most important innovation in government IT since the general election. For decades MPs and others have said that under-performing suppliers should not be awarded new contracts. Now at last that may be happening.

After Fujitsu sued the Department for Health for about £700m over the NPfIT a settlement has been elusive, despite the intervention of the Cabinet Office. It is likely that Fujitsu UK’s hands will have been controlled by its parent in Japan.

Fujitsu’s performance on the “Libra” contract for IT in magistrates’ courts was strongly criticised by MPs and the National Audit Office which exposed repeated threats by the supplier to withdraw from the contract unless its terms were met.

Fujitsu could circumvent any blacklisting by becoming a subcontractor on a mega-contract, as it is at HMRC on the “ASPIRE” contract and at the DWP where its hardware runs benefit systems. Or a department could ignore the Cabinet Office and award non mega-contracts to Fujitsu.

We hope the Cabinet Office finds a way to make its blacklist – if that is what it is – stick. A  private sector company would not award a new contract to a supplier that had bitten in the past. Why would the public sector?

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5 responses to “Fujitsu banned from Whitehall contracts?

  1. It is Maude trying to bully Fujitsu into settling the NPfIT case – they must be worried they are going to lose. Call me a cynic but Maude plus Collins does not an objective view of Fujitsu make. Fujitsu on the whole has at least as good a delivery record as any of the other usual suspects.

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  2. “The Brussels contingent” are interested in ensuring that all suppliers have a fair crack of the whip, hence some of the constraints around OJEU, like explicitly stating evaluation criteria up front so a client can’t fix a race to ensure their favourite wins. It should be relatively straightforward for MPA and Govt Depts to incorporate something about credibility/ capability/ pedigree into the evaluation process – a blacklist by any other name.

    There are also Crown something-or-others assigned to each of the big suppliers and responsible for maintaining an overall view of their contractual commitments, performance, etc across the Government patch; these folk would be ideally placed to establish some sort of overall risk rating per supplier which could be fed into the evaluation process.

    So the components of a blacklist are basically there and may even be being applied as we speak. But you won’t find anyone in Government willing to put their head above the parapet and trumpet this just so that interested journals and journalists can sell their wares with “UK defies Brussels with supplier blacklist” headlines…

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  3. Chris Newby-Robson

    I am no expert in these matter….. However could past failures in a large part be due to poor supplier management by the client. UK government IT contracts seem to have been beset by issues whoever the supplier!

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    • That’s true. National Audit Office reports on IT contract failures usually find as much, if not more fault, on the part of the government department; but it is never black and white. On the NPfIT the Department of Health entered into contracts that committed the NHS to systems many trusts did not particularly want, and when the chosen software did not arrive or was not fit for purpose trusts found good reasons to criticise the NPfIT. But still trusts are taking NPfIT-selected software with the promise of central subsidies. If all goes wrong is that the fault of the supplier for promising too much and not warning enough about the risks of deployment, or the fault of the customer for being over-enthusiastic, making light of the risks to patients and ticking boxes to take account of what has gone wrong at other trusts?
      Because of the absence of individual responsibility, central government is, arguably, congenitally ill-suited to big IT contracts. An effective blacklist would make suppliers think twice about the promises and commitments they make. What will happen with Universal Credit we wonder?

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  4. I am no Fujitsu fan nor am I a fan of any company who fails to deliver yet still wins contracts (CSC for example after being late for 7 years still gets a deal!). I would welcome the idea of a blacklist and the rules about how a company gets put on it. My fear is that the Brussels contingent may have something to say about it and European procurement rules being ignored.

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