Highland Council to decide on troubled Fujitsu £70m IT services contract

Scotland's Highland Council is to decide on the future of a £70m IT services contract with Fujitsu that repeatedly failed to deliver on targets

A £70m IT services contract, signed by the Highland Council in Scotland with Fujitsu, is causing friction as the sitting council and the opposition unite in protest at the contract's failure to meet targets.

But a termination, although legal at this point, is unlikely, as it would leave the situation worse, said one councillor.

Fujitsu has succeeded in delivering ICT to schools in the region, but it has not fully implemented the council’s internal systems. The problems have been dragging on for over a year.

Second chance

Last year, the Highland Council told Computer Weekly it had taken legal advice on a deal with Fujitsu which had missed service delivery regrets.

The two parties met and Fujitsu was given a second chance.

But the contract is again in doubt and a council meeting will be held tomorrow to discuss the contract.

Councillor Carolyn Wilson, head of the resources committee at the Highland Council, said the contract has now passed the point where the council can withdraw from the deal.

“Since the discussions with Fujitsu last year, things have got better in some areas but in other areas it has still not delivered. It focused on the high-profile parts of the contract, such as delivering new ICT equipment to schools, but the nuts and bolts – such as internal systems – have not yet been delivered.”

Wilson said there is cross-party agreement that Fujitsu must do more, but she added that pulling out of the contract would leave the council in a worse situation. “Fujitsu probably realises this, but you think it would do more to protect its reputation.”

A Fujitsu spokesman said the schools part of the contract is due to be completed today (20 March 2012) while the corporate part, which includes internal systems, is expected to be completed next month.

But Wilson said there are lots of projects running late. "There are still hundreds of computers to go in at schools, for example."

Renegotiating the Fujitsu deal

Fujitsu and the Highland Council are due to meet later today.

Mark Lewis, partner and head of outsourcing at law firm Berwin Leighton Paisner, said the council needs to weigh up the costs associated with exiting the contract against the costs of remaining in.

He says there is an opportunity to get around the table and renegotiate, based on any losses that have been incurred due to delays. He said it is possible for Fujitsu to offer sweeteners.

“But it all comes down to how strong is the council’s case against Fujitsu? If it thinks it has a good case, it has the opportunity to renegotiate.”

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