Britain has cancelled a major contract with Fujitsu that was part of its ambitious programme to computerise healthcare records in England, a government spokeswoman confirmed Thursday.
The 10-year, 896-million-pound (1.1-billion-euro, 1.8-billion-dollar) agreement was originally signed in January 2004 and had been set to run to 2013.
But a spokeswoman for the National Health Service's (NHS) Connecting for Health agency said a termination notice had been issued.
"Regrettably and despite best efforts by all parties, it has not been possible to reach an agreement on the core Fujitsu contract that is acceptable to all parties," she told AFP.
Negotiations on the matter had been going on since July 2007, she added.
"The NHS will therefore end the contract early by issuing a termination notice. Work has started immediately on planning the necessary arrangements."
Fujitsu was responsible for installing the new system in the south of England.
Thursday's edition of The Financial Times reported that the dispute centred around the government's demands for more flexibility in the IT system being installed, which would have cost more.
Fujitsu had requested either increased compensation or the continuation of the original requirements, said the report. A company spokesman confirmed to the FT that the talks had broken down.
The contract was part of the government's 12.4-billion-pound programme to computerise England's healthcare records, one of the most ambitious such programmes in the world.