Both Channel 4 News and the BBC were among the outlets to produce news items this week about a 2006 contract between Fujitsu and the Post Office, which saw Fujitsu agreeing to fines if it couldn't properly reconcile financial information generated by the Horizon IT system.
The document was only published on the Inquiry website this month. It was spotted by Stuart Goodwillie, who alerted Paul Marshall and Ron Warmington.
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| Front page of Fujitsu contract 31 August 2006 |
In short:
On 31 August 2006, Post Office and Fujitsu Services signed a 26-page contractual document that would prove devastating if disclosed to the hundreds of postmasters subsequently prosecuted based on Horizon data. The "Reconciliation Service: Service Description" wasn't a technical manual buried in an archive. It was a formal contract, reviewed by both parties' commercial and operations teams, signed by senior executives, and marked "CONTRACT CONTROLLED."
When postmasters reported discrepancies, they were prosecuted for theft and false accounting. When the same discrepancies appeared in this 2006 contract, they were called "Exceptions," "Errors," and "System Incidents" — with detailed provisions for how Fujitsu would pay Post Office to resolve them.
The postmasters weren't lying about system problems. They were experiencing exactly what the 2006 contract said would happen regularly.
You can read the full 26-page contract here and a good summary (from which the above quote is taken) by Brian Rogers here. (It's on Linkedin but that shouldn't present any problems.)
Another quote:
The contract establishes detailed financial penalties for system failures — proving both parties knew these failures would occur regularly enough to require standard commercial terms:
"Where an Exception or an Error at a Branch affects the reconciliation within the POL FS System, Fujitsu Services may be liable to pay liquidated damages to Post Office in lieu of any financial cost that Post Office may incur to resolve the Exception or Error either internally within the POL FS System or as part of a settlement adjustment with Clients."
The contractually established amounts:
- Transaction that cannot be delivered electronically - £100 per transaction
- Transaction that cannot be re-delivered after rejection - £150 per transaction
- Debit card exception requiring manual settlement - £353.47
- Processing costs per exception - £125.06
Why establish liquidated damages if you believe the system is reliable?
These aren't provisions for rare, catastrophic failures. These are standard commercial terms for managing expected regular failures at scale.
The "100+ errors per month" assumption
Buried in this section is perhaps the most remarkable admission:
"The Parties acknowledge that the fundamental commercial assumptions underlying the provisions of this section 2.3.4.11 are that (i) the total number of Debit Card Exceptions or Errors in any calendar month shall not exceed 100 and (ii) the total number of Debit Card Exception or Error Reimbursements in any calendar month shall not exceed 20."
Read that again carefully:
- Both parties contractually assumed at least 100 debit card exceptions per month
- This was just for one transaction type (debit cards)
- This was the baseline commercial assumption for normal operations
- The contract requires renegotiation if actual numbers exceed this baseline
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Remote data correction without branch knowledge
Perhaps the most disturbing provision authorises Fujitsu to modify transaction data without branch knowledge or involvement:
"Where there is a need to correct Exceptions or Errors, the Reconciliation Service may make corrective assumptions, based upon the format and content of previous valid records of the same type, if no other detail is available."
The contract explicitly authorises:
- Identification of errors in centrally held transaction data
- Making "corrective assumptions" about what data should contain
- Basing corrections on "previous valid records" rather than actual events
- Modifying transaction records without branch involvement
The contract specifies:
"In such cases, the Reconciliation Service will promptly inform Post Office of the assumption within the Working Day that the assumption has been made."
Post Office would be informed. Postmasters would not.
Once this was published another LinkedIn member pointed out that another evidence document on the Inquiry website shows that this 31 August 2006 document was a renamed version of an earlier document dated December 2021!
If you are remotely interested I suggest you read Brian Rogers' summary in its entirety.
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