Post Office spending £80,000+ a week on engineers who can’t work, as IT project burns cash

Progress report

According to an internal Post Office NBIT progress update, under the heading “high level issues”, tech engineers from IT supplier DXC, who were contracted in mid-June, have no work to do due to the issues with power supply units. The engineers will have to wait 16 to 20 weeks before replacement units are available, allowing them to complete the work they were contracted to do.

In the document, the Post Office suggests it could redeploy the engineers on other projects, such as surveying branches or installing HP point-of-sale equipment as part of NBIT.

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.  

Project leaders also face challenges understanding how many units of PIN pad and card terminals (PEDs) are required. There are also issues with the contracts signed with IT suppliers DXC and SCC, which are currently insufficient for the extra work required.

A Post Office spokesperson told Computer Weekly the organisation has now redeployed these engineering resources to carry out branch site surveys. “To date, engineers from DXC have surveyed 775 branches, which covers 2,150 counters providing us valuable insights into the estate that will enable us to successfully roll out the new HP devices and PEDs starting later this year.”

High level risks

These problems and costs could deepen, with numerous “high level risks” also identified by the Post Office.

One such risk, as Computer Weekly revealed last month, is NBIT hardware not being ergonomically appropriate for branches, meaning redesigns are needed, with delays and subpostmaster dissatisfaction.

Another risk is the lack of certainty of the number of HP point-of-sale, PIN pad and card terminals needed in total, which is preventing project managers from understanding how much funding is required.

“Programme funding Branch Technology Refresh Programme” is also listed in the “high level risk” category.

In mitigation, the Post Office document states that it could reduce the number of counter terminals and PEDs in some branches, which would be unpopular with subpostmasters. The Post Office told Computer Weekly: “We constantly review the usage of branch devices and will be discussing unused or underused devices with individual branches. This is a normal part of managing the assets across the network to ensure we control our costs.”

The Post Office progress update said: “There is a risk the project will need to rationalise PEDs and counter terminal replacement as part of the implementation which could lead to an impact of additional funding being required as no funding was included in the pad replacement business case or any DXC costs to remove but not replace pads.”

Costs out of control

The cost of the NBIT project to taxpayers has risen dramatically, and its challenges have featured heavily in the current phase of the Post Office scandal statutory public inquiry.

During her questioning at the inquiry last week, Amanda Burton, a non-executive director at the Post Office, put blame on the IT department for the NBIT delays and cost increases.

Asked by public inquiry barrister Julian Blake who she considered has ultimate responsibility for the delay and cost increases of NBIT, Burton admitted “ultimate responsibility is with the board”, but added: “I think we were not given the right information in terms of the complexity of some of the issues facing NBIT, and therefore the knock-on consequences of time and money.”

She said it was people in the IT team who didn’t provide the right information and, although admitting she is not familiar with the IT team, Burton identified former chief digital and information officer Zdravko Mlandenov, who left the Post Office in April, as one of the individuals responsible for the lack of information.

In a later public inquiry hearing this week, former Post Office chairman Henry Staunton was asked about his concerns around governance and cost overruns of the NBIT project.

He explained that the executive committee overseeing the project had previously been shut down: “The executive committee was abolished in about November [2022].” Staunton said recently departed Post Office CFO Alisdair Cameron had felt this was “reckless”.

“I was getting feedback that costs were out of control. In June [2023], we were informed as a board that the project, instead of costing £330m, was going to cost £840m. That is an indication of how staggeringly out of control this project was,” said Staunton.

Public inquiry barrister Blake asked Staunton if there was something intentional about the lack of information provided to the board. Staunton said: “That would be what was happening within the IT department – I think there probably was an intention for the picture not to emerge. I have no evidence of that, but it’s my gut feel. You can’t have a project go from over £300m to over £800m without some intention to hold back that information.”

Former Post Office CFO Cameron agreed there was a serious governance problem at the Post Office. “The steering group governance of NBIT wasn’t working particularly well and the project wasn’t getting the input from operations,” he said.

By 2022, Cameron was chair of the steering group and he decided the governance needed fundamentally reworking, but he was asked to stand it down by CEO Nick Read, because he had other ideas.

According to the Post Office internal progress report, the Branch Technology Refresh Programme is out of governance because of its risk profile. “The new programme is still to go through formal governance to update scope funding and timelines to delivery,” it stated.

Cameron also revealed that the Post Office is stuck with Fujitsu until a time when it has a replacement of Horizon ready to go. He said: “Although it was discussed over the years, it was very hard to conceive that anyone other than Fujitsu could manage Horizon, so you would only end the relationship with Fujitsu when you were really confident that [a new system] was going to go in on a certain date and was expected to work. That was never visible when I stopped working at the Post Office.”

There is still no end in sight. In March, Computer weekly revealed that Fujitsu is set to receive a further £180m in taxpayers’ cash to extend its contract to run the controversial Horizon system for a further five years.

The millions of pounds being wasted by the Post Office’s mismanagement of NBIT adds to the huge costs associated with the Post Office’s malicious bullying of subpostmasters in the Horizon scandal, which is set to cost billions of pounds.

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 •