BDUK Blacklist No More – Government Lose £900m IT Case vs Fujitsu UK

Reports indicate that the Japanese technology and telecoms giant Fujitsu UK has won its case against the 2008 dismissal of their £900m contract for providing the NHS with new IT services. Crucially this is also part of the reason why Fujitsu ended up being classified as “high risk” by the Government for other IT projects, such as the Broadband Delivery UK programme.

A little over two years ago it was revealed that Fujitsu UK, which alongside BT was at the time one of only two telecoms operators bidding for major national superfast broadband deployment contracts via the BDUK programme, was now classified as “high risk” for Government IT contracts (here) and thus subject to additional scrutiny (in the eyes of most people this was effectively a blacklist).

At the time the Department for Culture, Media and Sport (DCMS) confirmed that BDUK would also be affected by the classification and that “any supplier identified as high risk will be scrutinised particularly carefully before the award of further work“. Shortly after that, during early 2013, Fujitsu UK confirmed a truth that many had suspected for some time by withdrawing from all remaining bids for BDUK contracts (here).

Backed by Virgin Media, TalkTalk and Cisco, the Japanese firm had originally (2011) proposed building an ultrafast 1000Mbps capable Fibre-to-the-Home (FTTH) style broadband network, using BT’s own cable ducts (Physical Infrastructure Access), which could have reached millions of UK premises by 2016 (here and here).

Fujitsu’s idea was good but the execution poor and public funding requirements unattractive. As a result the company spent much of the next two years announcing its withdrawal from various related BDUK tenders, often while highlighting reasons of economic unviability. As a result of all this their decision to quit BDUK did not come as a huge shock, although being marked as “high risk” for IT contracts at the end of 2012 was perhaps the final nail in their coffin.

But a new report in The Telegraph, which was similarly picked up on by the BBC, suggests that the Government might have been wrong to black list Fujitsu after the original 2008 dismissal of their NHS IT contract, which first began all the way back in 2003 and by 2008 had spent £150m of the planned total. Fujitsu and the Government traded blame over the contract’s dismissal until it eventually went to arbitration.

At the time of writing both the Government’s Cabinet Office and Fujitsu UK are refusing to comment on reports that the case has ruled in favour of Fujitsu, which means the two sides are left to squabble over the level of damages (plus legal fees of around £40m) and this could potentially run into a huge amount of money given the total value of their original contract (up to £700m but probably less). Fujitsu might also rightly expect their “high risk” status to be revoked, although regardless of the outcome it’s presently unclear whether or not that will happen.

None of this has any impact on today’s Broadband Delivery UK programme, which is now and perhaps always has been dominated by BT. Fujitsu’s alternative simply couldn’t compete with an established infrastructure and the comparative cheapness of a slower hybrid-fibre solution that could cover considerably more people and in a much shorter space of time (favourable given the original 2015 target for 90% UK coverage and a low definition of “superfast” broadband [24Mbps+]).

The story might well have been different had Fujitsu been willing to invest more of its own money and build out some of their proposed network to a wider scale first before becoming reliant on government subsidies. In reality all they ended up doing was helping BDUK to offer the illusion of a “competitive” tender process, at least for a little while.