1 Year Extension of the Horizon Services Agreement

Concepts

• information technology
• horizon services agreement
• application and service management
• an existing software and it services agreement
• year
• horizon
• fsl obligations
• suitable work orders
• multiple channels
• better management

Location

London

Description

1 year extension of the Horizon Services agreement from 1st April 2026 to the 31st of March 2027. This Notice relates to a Modification to a Contract in accordance with Regulation 72(1)(b) of the Public Contracts Regulations 2015. Post Office Limited ("Post Office" or "the Authority") entered into an agreement with Fujitsu Services Limited ("FSL") dated 28th July 1999 ("Horizon Agreement") for the provision of certain services, including Services in respect of the HNG-X system ("Services"). The Horizon Agreement is due to expire on the 31st March 2026. In order to allow for continuity whilst we complete the procurement exercise and to begin the transition process away from FSL, an extension of an additional one year to 31st March 2027 is required. However, based on the transition plan from replacement supplier further extension of 6-12 months may be required. The contract modification addressed by this Notice is for the continued provision of application and service management, maintenance, development and support services under an existing software and IT services agreement relating to Point of Sale/Service ('POS') customer facing transactions across multiple channels. For a number of significant technical and economic reasons, a change of contractor would cause significant inconvenience and substantial duplication of costs for the Authority. The estimated value of the additional services under the modification is £41,000,000 GBP excl. VAT. Additional upgrades to address legacy End of Service Life components is estimated at £3,000,000 is also included in the modification value. NB: Any investment will be subject to POL agreeing suitable work orders with FSL.

Ammendments to Previous Notice

Award Detail

CPV Codes

• 72000000 - IT services: consulting, software development, Internet and support

Indicators

• Contract modified due to additional needs.

Legal Justification

This notice relates to the modification of an existing contract under regulation 72(1)(b) of the Public Contracts Regulations 2015 ("PCR"). Post Office Limited ("POL") requires a 12-month extension to its contract with Fujitsu Services Limited ("FSL") for the provision of its core trading platform Horizon (the "Contract"), from 01 April 2026 to 31 March 2027. The modification has become necessary because POL is in the process of procuring a replacement service provider ("Replacement Provider") to manage Horizon (the "Procurement") and that procurement activity and the mobilisation of the Replacement Provider will not be complete by 31 March 2026 when the Contract expires by effluxion of time. POL commenced the Procurement in the summer of 2025 and has been conducting the procedure at pace. POL expects that the Procurement will conclude and a new contract with the Replacement Provider put in place in Summer 2026 with transition activity commencing upon execution. It is necessary, therefore, to extend the Contract by 12 months to 31 March 2027. It would not have been possible for POL to have competed the opportunity to support Horizon during this period as any alternative tendered solution would not have been mobilised and transitioned to prior to 31st March 2026. A change of contractor cannot be made for technical reasons. The existing Horizon system is a highly complex legacy platform, written in outdated versions of software languages, and incorporates five 'systems' in one (i.e., financial services, banking, government services, mails, and retail). Horizon is an aging platform and has an inflexible monolithic architecture that makes technology change difficult. It would not be possible to simply hand this system over to another supplier. A change of contractor would result in disproportionate technical difficulties in implementation as well as operation and maintenance. Furthermore, while there are other similar systems to Horizon available on the market, there are no alternative systems that currently meet all of Post Office's business needs without significant development or customisation. It would not, therefore, be technically possible to mobilise a replacement system before 31 March 2026. On that basis, there are technical reasons why a change of contractor cannot be made. Changing contractor would cause significant inconvenience and duplication of costs. It would cause service disruption, cause significant data migration issues, require substantial business change at short notice, threaten continuity of service and create risk in the transfer of know-how. Furthermore, changing contractor would result in sunk costs, including an increase in run costs, dual running costs, and additional exit/transition costs. The modification is less than 50% of the original contract value. The Horizon support agreement was originally valued at approximately £846,700,000. The maximum value of the extension, if all options are called on during its term is approximately £41,000,000. The increase is, therefore, approximately 4.8% of the original contract value. In summary, a change of contractor cannot be made for technical or economic reasons and would cause substantial inconvenience and duplication of costs for the Post Office. The value of the extension is substantially less than 50% of the original contract value. Accordingly, Post Office is satisfied that the modification can be made under regulation 72(1)(b) of the PCR.