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Post Office IT procurement mess saw £35m spent on air conditioner, says board member

Post Office IT procurement mistakes have wasted millions of pounds of taxpayers money, non-executive board member tells public inquiry

Karl Flinders, Chief reporter and senior editor EMEA

Published: 25 Sep 2024 9:30

Mistakes made by the Post Office’s IT procurement team have cost taxpayers millions of pounds, the Horizon scandal public inquiry has been told.

The latest Post Office scandal inquiry hearing heard that a procurement blunder at the Post Office meant a major planned migration to the cloud, part of the Post Office’s New Branch IT (NBIT) project, was cancelled after millions was spent.

Saf Ismail, subpostmaster and non-executive director at the Post Office, told the public inquiry: “Procurement currently is a bit of a mess at the Post Office.”

He said £35m was spent on an abandoned plan to migrate from its datacentre in Northern Ireland to the cloud, which left the Post Office with the sole gain of a new air conditioning system.

The planned cloud migration in Belfast was halted due to complexity and instead funding was approved for the fortification of the datacentre at a board meeting, Ismail said in his witness statement to the inquiry.

He said the Post Office Business Plan for the financial year 2024/25 suggests that the cost of the Belfast Exit programme was £19.7m in 2021/22 and £15.1 in 2022/2023, adding: “That project was abandoned after considerable amount of wasted time and costs, and the Post Office’s datacentres are still physically based in Belfast to this day.

“What a disaster that was. The business wasted just under £35m on the NBIT journey to move onto a cloud-based system, being told constantly, ‘We have got to do this’, and then being told by Amazon that we can’t do this.

“The only thing we got from the money spent on the project, abandoned in January 2013, was a new air conditioning system for our Belfast datacentre. This was extremely disappointing and showing lack of accountability.”

The Post Office said: "It has been our long-stated intent to replace Horizon with a new cloud-based system. We previously undertook a programme of work to migrate the existing Horizon platform to the cloud, however the age of Horizon and the complexity involved meant that particular programme proved to technically challenging and costly. A decision was taken in November 2022 to discontinue this particular programme." It added that the loss was £31m, rather than almost £35m.

The procurement team also made mistakes when buying hardware, as revealed by Computer Weekly earlier this month. The Post Office acquired hardware to support NBIT early, which has left it with millions of units sitting unused in warehouses and unlikely to be needed for years.

Much of the hardware is not fit for purpose, will require unplanned renovations in branches to fit them, and could be out of date before it can be used. Evidence in the public inquiry this week confirmed that the mistakes were made because the procurement teams rushed to do the deal and seal a 5% discount.

Ismail also said the procurement team was attempting to agree 10-year contracts, which is not the norm, to “avoid having to do procurement again”.

“It’s a procurement-led kind of approach which is not helpful, and not a commercial, common sense approach. This is creating wasted funds for the taxpayers’ money on numerous occasions, unfortunately,” Ismail told the public inquiry.

The NBIT project, which was set to replace Horizon in 2025, was announced in May 2022 but, as revealed by Computer Weekly in May this year, the project hit major problems, and the Post Office has requested £1bn of extra public funding from HM Treasury to get it back on track.

When Computer Weekly questioned the Post Office this week about its botched hardware procurement, a spokesperson said: “Post Office declines to comment on the points raised. Individuals such as [Post Office IT staff] Simon Oldnall and Chris Brocklesby will shortly be giving evidence to the inquiry and that is the appropriate forum for some of the issues raised to be responded to.”

The Post Office scandal was first exposed by Computer Weekly in 2009, revealing the stories of seven subpostmasters and the problems they suffered due to Horizon accounting software, which led to the most widespread miscarriage of justice in British history (see below timeline of Computer Weekly articles about the scandal since 2009).

• Also read: What you need to know about the Horizon scandal •

• Also watch: ITV’s documentary – Mr Bates vs The Post Office: The real story •

• Also read: Post Office and Fujitsu malevolence and incompetence means huge taxpayers’ bill •

Post Office IT procurement mess saw £35m spent on air conditioner, says board member

Post Office IT procurement mistakes have wasted millions of pounds of taxpayers money, non-executive board member tells public inquiry

Timeline: Computer Weekly articles about the scandal since 2009

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