Giant NHS Project NPfIT Lives Beyond The Grave

Despite announcing it would dismantle the giant NHS Programme for IT (NPfIT) in 2011, it looks as if IT services company CSC will be signing contracts to provide a large part of it as the Government seeks a way out of the giant contract without legal action.

Negotiations to deploy the Lorenzo electronic patients’ records system (part of the NPfIT) to the NHS are “continuing positively”, according to American IT service provider CSC, even though the plan to impose a one-size-fits-all record system on the NHS has been abandoned as “unworkable”.

An initiative launched by the Labour government, NPfIT was called “the biggest public sector IT project in the world”, but turned out to be overly costly and severely delayed, before Health Secretary Andrew Lansley and Francis Maude, the Minister for the Cabinet Office announced its demise last year.

Despite the overall failure of the NPfIT, parts of it could still be implemented in some form, in order to cut losses and avoid costly litigation.

Paved with good intentions

Devised in 2002, NPfIT was originally estimated to cost £2.4 billion, but after almost a decade, and with little to demonstrate significant progress, the costs had ballooned to £12.7 billion.

The high-profile initiative had never delivered its key objective of giving doctors instant access to the medical records of any patient they have to treat, despite spending so much of the taxpayers’ money.

In 2011, The National Audit Office concluded that NPfIT was unlikely to be finished by the end of the contract term in 2016. It also pointed out that reductions in the scale of the project had not resulted in any cost reductions.

By August 2011, CSC had delivered just 10 out of 166 Lorenzo clinical information systems scheduled for the North,Midlands and East region HNS trusts, and had implemented a patchwork of interim systems instead. BT, another NPfIT partner, was also criticised for failing to deliver on its obligations.

Even though the Department of Health (DH) wasn’t satisfied with the progress, it understood that it might be more expensive to terminate the contract than to complete it. In case of termination, CSC and BT could sue the NHS, the same way Fujitsu did when it was dropped from the project in 2008.

Despite the risks, in September 2011 the UK government announced that the £12.7 billion scheme will be “urgently dismantled”, giving local health trusts the power to choose their own systems. CSC admitted that it faced a $1.5 billion (£956m) write-down of its costs associated with the NPfIT.

It should be mentioned that in the face of heavy criticism, the programme had still achieved some positive results, such as the implementation of the Spine, N3 Network, NHSmail, Choose and Book, Secondary Uses Service and Picture Archiving and Communications Service.

Uneasy compromise

In March this year, CSC had signed a “non binding letter of intent” with the NHS that could see it supply up to £900 million worth of services, despite the unsatisfactory performance in the past.

According to the agreement, CSC can still deliver the Lorenzo system to hospitals. However, this time participation is optional as NHS trusts can pick whatever IT provider they want. The deal was likely designed to end the threat of legal action against the NHS.

In May, CSC and the NHS extended the Lorenzo-related standstill agreement to 31 August 2012. CSC says that it can convince a number of NHS trusts to take Lorenzo, and is expected to name them in six months. The DH would still have to pay for the system. However, in contrast with the previous arrangement, the government would give CSC a structured set of payments following certain product deliveries.

According to Campaign4Change blogger and long-term government-watcher Tony Collins, this situation can have one of three outcomes. If the government does not sign a new deal, and allows CSC’s existing contracts to expire formally in 2015, this could keep further NPfIT-related costs to the taxpayer to a minimum. In this case, the DH risks legal action from CSC.

If the government terminates CSC’s contracts for its own convenience (as opposed to alleged breach of contract) it would have to pay CSC a termination fee capped at £329 million. CSC would also be entitled to compensation for the profit it would have earned for the 12 months after the contract was terminated.

If the contract is not terminated, a new deal not signed, and no legal action is taken by either side, the amounts the UK government would have to pay CSC are likely to be minimised.

“If a new deal is signed – and CSC indicates that an agreement is likely – the government may face accusations that it has broken its undertaking to dismantle the NPfIT,” says Collins.

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