The public corporation announces the latest expansion of the deal for its core retail IT platform, and indicates that the engagement, which is now worth £3bn, could run until 2028
The Post Office has spent almost £50m a one-year contract extension for the provision of Fujitsu’s Horizon services – and has warned that a further 12-month term may be required, potentially taking the deal’s end date to 2028.
The Horizon engagement – first signed in July 1999 – is currently due to expire on 31 March 2026. A newly published commercial notice from the Post Office reveals that “in order to allow for continuity whilst we complete the procurement exercise and to begin the transition process away from FSL (Fujitsu Services Limited), an extension of an additional one year to 31st March 2027 is required”.
The document adds: “However, based on the transition plan from replacement supplier further extension of 6-12 months may be required.”
As of this summer, Post Office Limited (POL) is engaged in a procurement process to appoint a new supplier to replace Fujitsu and its Horizon platform.
“POL expects that the procurement will conclude and a new contract with the replacement provider put in place in summer 2026 with transition activity commencing upon execution,” the extension notice says. “It is necessary, therefore, to extend the contract by 12 months to 31 March 2027. It would not have been possible for POL to have competed the opportunity to support Horizon during this period as any alternative tendered solution would not have been mobilised and transitioned to prior to 31st March 2026.”
The additional year will be worth £49.2m to Fujitsu, inclusive of VAT. This additional spending takes the total value of the Horizon engagement over its near-30-year lifespan to just under £3bn. This is compared with an initial projected value of just over £1bn.
The previous 12-month extension, which was announced in late 2024, was initially valued at £40m – a figure which was subsequently raised to £75m.
Included within the latest expansion is about £3.6m set aside to be spent “to address legacy end-of-service-life components”.
Alongside these upgrades, Fujitsu is also contracted “for the continued provision of application and service management, maintenance, development and support services… relating to point-of-sale/service customer-facing transactions across multiple channels”, according to the notice.
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The procurement document adds that it was necessary for the Post Office to retain Fujitsu to deliver these services because “for a number of significant technical and economic reasons, a change of contractor would cause significant inconvenience and substantial duplication of costs”.
“The existing Horizon system is a highly complex legacy platform, written in outdated versions of software languages, and incorporates five ‘systems’ in one: financial services; banking; government services; mails; and retail,” the notice says. “Horizon is an aging platform and has an inflexible monolithic architecture that makes technology change difficult. It would not be possible to simply hand this system over to another supplier. A change of contractor would result in disproportionate technical difficulties in implementation as well as operation and maintenance. Furthermore, while there are other similar systems to Horizon available on the market, there are no alternative systems that currently meet all of Post Office’s business needs without significant development or customisation.”
It adds: “Changing contractor would cause significant inconvenience and duplication of costs. It would cause service disruption, cause significant data migration issues, require substantial business change at short notice, threaten continuity of service and create risk in the transfer of know-how. Furthermore, changing contractor would result in sunk costs, including an increase in run costs, dual running costs, and additional exit/transition costs.”
Published in May, the Post Office’s tender for suppliers to replace Fujitsu set out plans to put in place a two-lot framework worth £500m and lasting for up to 12 years.
In the past couple of years, following a televised TV drama about scandal, there has been increased scrutiny on spending via the Horizon agreement – and on Fujitsu’s significant role in supplying the public sector more broadly.
Typically characterised as the UK’s biggest ever miscarriage of justice, flaws in the IT system led to more than 700 subpostmasters being wrongly convicted of offences including theft and fraud. Some 236 people were imprisoned and 13 are understood to have died by suicide as a result of the scandal.
