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The Post Office has paid over £600 million of public money to continue using the faulty Horizon IT system, despite deciding to move away from it more than a decade ago. Their ongoing reliance on Horizon appears…
United Kingdom
Intellectual Property
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The Post Office has paid over £600 million of public money
to continue using the faulty Horizon IT system, despite deciding to
move away from it more than a decade ago. Their ongoing reliance on
Horizon appears to stem from the fact that the original deal with
Fujitsu in 1999 did not give the Post Office ownership of the
intellectual property (IP) in the system’s software. Without
ownership of the code, the Post Office had no ability to inspect or
modify it, especially the part that processed financial
transactions. This meant that they had to rely on Fujitsu’s
assurances about the software’s functionality, which, as we now
know, was faulty and contributed to hundreds of wrongful
convictions of sub-postmasters.
Although the Post Office has tried to switch suppliers since
2012, the high cost of acquiring the software rights or building a
new system has kept them reliant on Fujitsu. In 2023, the Post
Office obtained rights related to the Horizon system, but it
remains unclear if these include the transaction processing
software. The current contract with Fujitsu is due to end in March
2026, but experts believe it will need to be extended beyond this
whilst the Post Office continues to find a replacement, perhaps
using these newly licensed rights, but at what further cost to the
taxpayer?
This matter highlights the critical importance of:
- Securing ownership of IP, especially in
technology and software contracts. Without it, a party may be left
in a vulnerable position if the supplier’s interests change or
if issues arise with the software. This can lead to long-term
dependence on the supplier, costly extensions, and an inability to
replace the faulty system. - Doing thorough due diligence before entering
into contracts. If the Post Office had better understood the
long-term implications of not owning the IP, they might have
negotiated a different deal or sought alternative solutions.
Ensuring that all potential risks are understood – including those
relating to intellectual property – is essential. - The need for flexibility in long-term
contracts with technology providers, especially when the software
or system is central to operations. This includes ensuring the
right to modify, inspect, and transfer the technology if needed.
The Post Office’s inability to transition to another provider
or fix flaws in the Horizon system shows how rigid contracts can
create legal and operational risks. - Transparency and accountability in technology
contracts. The Post Office had limited visibility into the Horizon
system and had to trust Fujitsu’s assurances that it was
functioning properly. Legal frameworks should ensure that parties
to a contract have the right to inspect and audit software and
technology, especially if it is responsible for critical operations
like financial transactions.
Because it did not own the code, the Post Office was also unable
to inspect the part of the software that processed transactions,
and had to rely on assurances from Fujitsu that it was functioning
correctly.
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