CSC And NHS Reach £900m IT Service Compromise

The NHS and IT provider CSC have reached a compromise that frees the NHS from a binding contract, and allows CSC to continue to pitch for work, despite the failure of the £12.7 billion  National Programme for IT (NPfIT).

Computer Sciences Corporation (CSC) has signed a “non binding letter” with the NHS that could still see it supply up to £900 million worth of services, despite September’s announcement that  the government would scrap the NPfIT.

The government attributed significant blame to contractors such as CSC for the programme’s failure, but the American company believed that it was still entitled to £2 billion under the terms of its contract. This new deal, which is expected to be finalised by the end of March, is likely to end the threat of legal action against the NHS.

Unworkable solution

The £12.7 billion NPfIT was set up by the previous Labour government in 2002 with the stated aim of providing petter communications across the NHS infrastructure based around a central database for patients’ medical records, scans and X-rays. However it failed to deliver, and was “urgently dismantled” by the coalition in September last year, allowing local health trusts to choose their own systems.

Despite being the subject of stinging criticism from the government for delivering an “unworkable” solution, CSC believed that it was entitled to receive another £2 billion from the government under the terms of its contract. It threatened legal action, but later that month its stance appeared to have softened when it admitted that it may have to write off the entire value of its £943 million investment and revealed to TechWeekEurope that 500 jobs were at risk.

A new approach

The two sides now appear to have reached a compromise and CSC says it will deliver the Lorenzo system originally planned for NPfIT to hospitals in the north, midlands and east of England beyond the ten it has already installed – but the system is now optional as NHS trusts can pick which IT system they want.

CSC said that the new agreement “defines a way forward for CSC to deliver healthcare solutions and services, primarily across the North, the Midlands and East of England, in support of the NHS’ reform agenda. “

“The Letter of Intent reflects a new approach, moving toward a construct of more localised initiatives, reflecting the shift to more devolved decision-making and budgetary control within the NHS,” it added. “Beyond Lorenzo, CSC provides a wide range of other solutions and services to the NHS, including General Practitioner, ambulance, and community systems, and digital imaging, and these services will continue.”

Doomed from the start

Joe Dignan, chief analyst, European public sector has said that the deal represents a victory for the government.

“CSC picked up the work and by any standards have failed to deliver,” commented Dignan. “The question is whether they knew it would be undeliverable but made the calculated risk of assuming the government would just keep paying as there was no alternative. I think the government has made a brave decision.”

However others have suggested that CSC and the government had no option other than to persevere with their unhappy marriage and that the project was doomed from the start.

“Such massive projects should not be allowed to happen any longer,” said analyst Clive Longbottom of Quocrica. “CSC should have pointed this out right back at the beginning and broken the project down into manageable lumps. “

“Again, as with so many public sector projects, the cost of just getting rid of CSC and burying the NHS projects was higher than the cost of continuing, but CSC had lost its appetite and was under pressure from the shareholders to come up with something that worked for them,” he continued. “Walking away was not an option, being sacked wasn’t either.  The new agreement looks like it is doing what should have been done right back at the beginning – it is giving the NHS the capability to work with CSC at a more granular level, while allowing CSC to work against smaller, more manageable projects.”