The UK Department for Work and Pensions has confirmed it has cancelled a £330 million (NZ$722 million), six year desktop services deal with Fujitsu, that was signed only one year ago.
In the short term, the department will rehire HP, which had been thrown off the deal in favour of Fujitsu.
The reasons for the termination remain unclear, and all the parties involved declined to comment. It is expected that the contract will go back to tender in the coming months.
HP will "continue to run the service" in the short term, a spokesperson at the DWP said, although the supplier declined to provide further detail.
A Fujitsu spokesperson said in a statement that the company had "received notification from the DWP that they wish to bring the desktop contract, awarded in February 2010, to an end".
Work had been due to start on September 1, although none of the parties described what had been achieved so far.
When the deal was signed in February 2010, it was billed as the UK's largest desktop and thin client outsourcing arrangement, aimed at significantly reducing the management costs of the DWP's 140,000 PCs in 1,000 locations. The DWP had expected to save "tens of millions of pounds" in energy savings too. Technology was set to be supplied by Fujitsu Siemens Computers, the Japanese company's hardware arm, as well as EMC, Citrix, Microsoft and Appsense.
Fujitsu had planned to implement thin clients as "more efficient and flexible" technology than the standard HP desktop PCs in place at the DWP. There has been no announcement, since the termination of Fujitsu, on what infrastructure will be used in the future.