By Tony Collins
The departure of Christine Connelly as health CIO at the end of this month will leave the NPfIT’s main civil service supporter, Sir David Nicholson, Chief Executive of the NHS and Senior Responsible Owner of the NHS IT scheme, more isolated.
That Nicholson is a supporter of the continuance of the NPfIT is not in doubt. He spoke about the NHS IT scheme last month in terms of life and death. At a hearing of the public accounts committee on 23 May 2011, Nicholson said:
“We spent about 20% of that resource [the £11.4bn projected total spend on the NPfIT] on the acute sector. The other 80% is providing services that literally mean life and death to patients today, and have done for the last period.
“So the Spine, and all those things, provides really, really important services for our patients. If you are going to talk about the totality of the [NPfIT] system … you have to accept that 80% of that programme has been delivered.”
But without Christine Connelly, who put detailed arguments in favour of continuing with iSoft’s Lorenzo, and who was solidly behind the costly implementations of Cerner by BT, Nicholson may not have the civil service backup he needs to promote the continuance of the NPfIT.
The Cabinet Office’s Major Projects Authority, under the directorship of the independently-minded David Pitchford, is now reviewing CSC’s £2.9bn worth of NPfIT contracts. It is known that the Authority regards the new proposals worked out between CSC and the Department of Health as poor value for money, even with CSC’s willingness to reduce the value of its contracts by £764m, to about £2.1bn.
That promised reduction comes at a cost. A leaked Cabinet office memo said that the CSC’s proposals would double the cost of each Lorenzo deployment.
The easiest thing for Nicholson and the Department of Health would be for the Major Projects Authority to approve the deal worked out between CSC and the Department of Health, and simply sign a new Memorandum of Understanding which would be, in part, legally binding.
Strong grounds for ending CSC’s NPfIT contracts
The more difficult but more practical alternative is for the Cabinet Office to require the Department of Health to end CSC’s NPfIT contracts, which would leave the NHS more able to decide its own IT-based future.
Indeed the signs are in some trusts that officials are not unhappy about Connelly’s departure in that they perceive it may weaken the centre’s control over NHS IT.
Legally it appears that an end to CSC’s contract would be feasible. The Department of Health has accused CSC of a breach of contract because of its failure to achieve a key milestone; the Department has also notified CSC of “various alleged events of default under the contract” which are “related to delays and other alleged operational issues”. The Department is considering its position on termination of all or parts of the contract.
But the Department has not taken its claims to arbitration; its allegations are only a formal legal manoeuvre at the moment.
CSC accuses NHS of failures and breaches of contract
CSC has reacted by accusing the NHS of a breach of contract. The company’s formal legal position is that it has cured or is preparing to cure the faults that led to the alleged breach; it says that failures and breaches of contract on the part of NHS have caused delays and issues.
The DH could end CSC’s contract for reasons of convenience which could trigger a request from CSC for a large sum in compensation. But the Department could give strong legal reasons for not paying. Although CSC could pursue its claim for compensation, it may be on soft ground because of its failures. Also, CSC, if it pursues any legal action, could jeopardise its other work for government: some of its other major contracts with the UK government are with the Identity and Passport Service, which is part of the Home Office.
The Coalition is now supervising its major suppliers, including CSC, in the round, which is reason enough for CSC to do all it can to maintain a good relationship with the Cabinet Office.
CSC would support NHS trusts even if its contracts ended
The Department of Health is concerned that if it ends the NPfIT contracts with CSC, the supplier may leave unsupported many trusts that have CSC’s iSoft software installed. That is highly unlikely, however, because CSC has a $1.03bn investment in the NPfIT contracts according to the regulatory reports to US authorities.
In the NHS CSC has a large customer base. Through its acquisition of iSoft, CSC will want to capitalise on its investment in iSoft’s Lorenzo software by selling it across the globe. That’s its stated plan. So CSC’s continued support for NHS trusts that have installed iSoft software is not in doubt.
What NHS Trusts want
The best outcome of the negotiations with CSC, for NHS trusts that have installed iSoft software, is that they have the:
-choice to continue with CSC if the price is right
– buy support elsewhere, or
– choose a different product.
Will CSC’s NPfIT contracts end by mutual agreement? – it’s possible
The question is: does the Cabinet Office have the courage to end CSC’s contract, freeing up billions of pounds that would otherwise have been spent on the NPfIT without a commensurate return for taxpayers, the NHS or patients?
It seems so, even if it means paying a relatively painless sum to CSC as compensation for termination.