Fujitsu has been axed from a £896 million contract with the National Health Service after talks to resolve a contractual dispute broke down.

The dispute centred on the NHS's demand for more flexibility in providing electronic care records for patients across the south and west of England. Both Fujitsu and the NHS have confirmed the collapse of 10-month talks. The NHS’s £12.7bn programme to provide every patient in England with an electronic care record will suffer as a result of this news.

National Outsourcing Association (NOA) Comment: The NHS’s electronic patient record system has been dogged with problems. The Fujitsu retraction follows on from Accenture bowing out last year. This leaves the success of the NHS project on a knife edge, with literally billions of  pounds worth of tax payers’ money being wasted already with more likely to follow it down the drain.

The consortium approach was intended to be a safer bet than outsourcing on a grand scale to just one supplier. This has proved to be the case as the other main contenders involved in the consortia – BT and CSC – might step into the breach. However, the consortia was small by industry standards – the deal was split into a few behemoth deals with suppliers, whereas the NOA predicted back in 2006 that it would be a safer option to split the programme into a series of small bites rather than a few large ones.