The Post Office has awarded an additional 12-month contract to Fujitsu to extend the bridge between the Japanese supplier and a replacement taking over the controversial Horizon service.

The Post Office does not expect to find a supplier to take over the running of Horizon before July next year, which means its £40m December 2024 contract, which extended the agreement with Fujitsu until March 2026, is inadequate.

Fujitsu will be paid another £41m to continue to supply and support the software at the centre of the Post Office scandal until at least March 2027. But that will not be the end of Horizon itself, which will be used until a replacement is developed by a yet-to-be contracted supplier.

“Post Office has agreed with Fujitsu a one-year bridging extension to the Horizon contract for the period 1 April 2026 to 31 March 2027,” said a Post Office spokesperson. “We are committed to moving away from Fujitsu and off the Horizon system as soon as possible. We are bringing in a different supplier to take over Horizon while a new system is developed, and this process is well underway.”

Attempts to replace the Horizon system have already seen multiple extensions and a major in-house project scrapped after a government report last year found that budgets ballooned from £180m to £1.1bn.

A government contract tender published in May offered £323m to a “replacement services provider” to take over the existing Horizon services. The second part of the contract, worth £169m, was for a commercial off-the shelf electronic point of sale software provider to provide Horizon’s replacement.

The Post Office requested a four-year extension of the Horizon contract in November 2024, as the IT supplier’s European boss arrived to give evidence at the Post Office scandal public inquiry. Paul Patterson, Fujitsu’s head of Europe, told the public inquiry that any Horizon contract extension must be as short as possible and said that he did not trust the Post Office.

It was April 2021, following damning findings regarding Horizon in the High Court, when the Post Office announced that it was preparing for the end of the Horizon agreement with Fujitsu, adding an extra year to support its transition to a new system. Then, in May 2023, it set 2025 as the target date for the completion of the project. But in April 2024, Computer Weekly revealed that a further extension of the Horizon contract was inevitable.

During his appearance at the public inquiry, Fujitsu’s Patterson said he had major concerns about the continued use of the Horizon system, which has reached its “end of life”, adding that long extensions might not be possible. He said that some parts of Horizon are so old that Fujitsu doesn’t want to turn them off as it is uncertain what would happen if it did.

Horizon continues to produce erratic figures in branch accounts, which the Post Office can’t explain, with millions of pounds being written off. According to a freedom of information response to Computer Weekly from the Post Office, in the past two years, subpostmasters identified more than 16,000 discrepancies, including both account shortfalls and surpluses.

The taxpayer-owned business wrote off £11.6m in unidentified shortfalls, subsequently recorded on the Horizon system as a loss, in its most recent financial year. In the previous year, it wrote off £10.4m as losses for the same reason.

There is anger among the public and politicians over the Post Office and government’s reliance on Fujitsu for IT services in light of the suppliers role in the Post Office scandal.

Peer James Arbuthnot recently questioned the government’s reliance on Fujitsu: “Are we so dependent on them? What does that say about our bargaining power, or about our resilience?”

A government spokesperson said: “We are working as quickly as possible to ensure the Post Office has the technology it needs, including replacing Horizon, as a vital part of the company’s wider transformation.

“The fact they still use the Horizon system indicates past under-investment, which can’t be rectified overnight, so we need to ensure postmasters have the tools they need to continue serving their customers in the interim.”

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).

Read more: Fujitsu’s role in the Post Office scandal: Everything you need to know and everything you need to know about the Post Office scandal.

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