Fujitsu is targeting a lucrative contract renewal with HMRC worth over £200m despite reports that the government department planned to replace the scandal-tainted IT supplier, leaked details of an internal meeting have revealed.
During the meeting, staff at the Japanese supplier’s UK operation were told by the company’s public sector lead that reports it was being replaced on the HMRC Trader Support Services (TSS) contract were inaccurate.
HMRC recently extended its TSS contract with Fujitsu for £67m. According to reports, the extension is for one year until Fujitsu is replaced.
The TSS is a free support service for businesses moving goods between Great Britain and Northern Ireland. Fujitsu’s head of UK public sector, Dave Riley, confidently told staff at an internal meeting that the supplier intended to bid for the TSS contract and would be “bidding to win”. There is a great deal of public anger at the government for continuing to award contracts to Fujitsu despite its involvement in the Post Office scandal.
In September 2024, HMRC announced a competitive procurement exercise for the next phase of TSS, which will run from 2026. According to sources, Fujitsu staff were told that reports that the supplier was being replaced on the TSS project were inaccurate. The contract was worth £241m when it was originally signed in 2020, and Riley is said to have emphasised Fujitsu’s advantage as the incumbent supplier.
The broadcast of ITV’s dramatisation of the Post Office scandal in January 2024 drew attention to Fujitsu’s role in the scandal, after which the supplier promised not to bid for new government contracts as an olive branch. However, it has controversially continued to win contracts worth hundreds of millions of pounds of taxpayer money.
Fujitsu bidding to win
Describing reports that HMRC was planning to replace Fujitsu on the contract, Riley told Fujitsu staff: “The quote in the article that HMRC allegedly made is a slight misquote. So, what they have said is they have promised to run a competitive tender to replace the current TSS contract and Fujitsu have been invited to partake in that.
“Government are aware that we are going to bid for this work, and I think we have a unique point of view, given that we’re the current incumbent, in how we approach the next generation.”
Computer Weekly asked HMRC whether Fujitsu could bid for the next phase of the TSS contract, but it had not responded by the time this article was published.
Sources told Computer Weekly that HMRC is also due to sign off another contract with Fujitsu as part of an arrangement known internally as North Star. The contract – worth hundreds of millions of pounds with no competitive tender – includes hardware and cloud procurement.
When Computer Weekly asked HMRC for details of the North Star deal, a spokesperson at the government department said: “We follow government procurement rules when awarding contracts and, once contracts are approved, we publish details on Contracts Finder irrespective of the award route or supplier.”
According to government figures on spending, which take into account all deals worth over £25,000, HMRC spent over £240m with Fujitsu in 2024.
This could be much higher and even exceed £500m in 2025, according to sources, with a potential TSS renewal, an extension to the Computer Environment for Self Assessment (CESA) service and the North Star deal.
Fujitsu had not responded to a request for comment about the North Star deal when this article was published.
Separately, hundreds of Fujitsu staff working on the HMRC contract went on strike at the end of last month in a dispute over pay. Staff employed by HMRC, but doing similar jobs to Fujitsu colleagues working alongside them as part of an outsourcing deal, received a much larger pay rise, according to the union representing the Fujitsu employees.
In January last year, Fujitsu’s head of Europe, Paul Patterson, promised to pause bidding for government work until after the completion of the statutory public inquiry into the Post Office scandal.
During questioning by MPs at a business and trade select committee hearing in January, Patterson acknowledged Fujitsu’s part in the scandal, telling MPs and victims: “We were involved from the start; we did have bugs and errors in the system, and we did help the Post Office in their prosecutions of subpostmasters. For that, we are truly sorry.”
But the bidding pause, described as “hollow” by former MP, now peer Kevan Jones, did not include deals with existing customers in the public sector, of which there are many. Last March, Computer Weekly revealed leaked internal communications that showed Fujitsu was still targeting about £1.3bn worth of UK government contracts over 12 months. Further leaked documents revealed that Fujitsu instructed staff how to get around its self-imposed ban.