By Tony Collins
A Conservative MP has sent detailed suggestions to the Cabinet Office and No.10 on what should happen with the NHS contracts, mainly CSC’s.
Richard Bacon, a member of the Public Accounts Committee, has proved to be an important influence in the Parliamentary debate over the future of the NPfIT. He has now sent to the Cabinet Office and Downing Street a recommendation that CSC’s NPfIT contracts should be cancelled and trusts left to buy systems of choice with a small amount of central subsidy.
His email reveals that NHS Connecting for Health, which is a part of the Department of Health that is responsible for delivering the NPfIT, is rehiring contractors and that the arbitration proceedings between the DH and Fujitsu over the supplier’s £700m legal claim are scheduled to continue until the end of next year. He also says that the DH failed to minute all meetings correctly, which could put the Department at a disadvantage in any legal action against CSC.
It’s possible that Bacon’s suggestions on CSC’s contracts will be considered by David Cameron who may be asked to intervene in any disagreement between the Cabinet Office’s Major Projects Authority and the Department of Health.
The DH’s position is clear. The Health Secretary Andrew Lansley and the NHS’s Chief Executive Sir David Nicholson are on record as expressing support for continuing CSC’s NHS IT contracts, although in a revised form.
The Cabinet Office’s Major Projects Authority under David Pitchford appears not to share the DH’s equanimity over CSC’s contracts. The recommendations of the Major Projects Authority have now gone to Downing Street.
Into the melting pot will go Bacon’s email to Pitchford, copied to No. 10, which is as follows:
Subject: Dealing with NHS IT’s Local Service Providers
“… As discussed, here are some comments on a possible way forward in dealing with Local Service Providers within the National Programme for IT in the NHS.
The LSP contracts have failed to deliver. Fujitsu has been terminated. The CSC contract needs to be terminated. The BT contract has been renegotiated by reducing its delivery requirement by over 50% in return for a reduction in price of less than 10% (though it’s probably not worth terminating this now).
This would leave half of London acute Trusts, all but 11 Trusts in the South, and all Trusts in the North, Midlands and East outside of the Programme.
The simple answer is to have systems of choice for Trusts with small amounts of central subsidy. Trusts would select and procure whatever system they wanted. The NHS would make a contribution of, say, £2 million for every acute Trust purchasing a system within, say, 4 years (total cost for 166 Trusts is £332 million). In return, the Trusts would allow regular reviews of progress and lessons-learned. This is what the NHS did with primary care over ten years ago and it resulted in virtually all GP Practices computerising over that period.
GETTING OUT OF THE CONTRACTS
All Local Service Providers clearly failed to do what they promised:
All acute Trusts were to have Patient Administration Systems in place by 2006.
All clinical systems were to have been completed at all Trusts by 2010.
Lorenzo was supposed to ship in 2004.
The interim systems were not supposed to happen at all.
The problem is that in a legal dispute over something this complex, lawyers will be able to claim mitigating circumstances of every type and the NHS is likely to end up paying severance, even when terminating for clear non-delivery. Problems for the NHS include:
CONTRACTS: The contracts and deliveries are very complex. It is easy to drown in the detail – i.e. we couldn’t deliver ‘x’ because of ‘y’. One could be arguing for ever.
MANAGEMENT: CfH managed badly. Records of Correspondence are poor. Many meetings were not minuted correctly. Governance was unclear.
PEOPLE: Lots of different NHS people and contractors worked on the programme and many have since left. The NHS made CfH fire the majority of its contractors in April 2010. CfH has been reduced to writing to ex-employees and contractors and asking them if they will come in for interview.
CHANGE: The NHS has been in constant change with the introduction of major initiatives such as 18 week wait and the current restructuring. The LSPs will claim ‘moving targets’.
In truth, the LSPs have been paid a lot and delivered little. The factors above are convenient mitigation for them, but made no difference to whether or not they delivered. iSoft (now CSC) is supposed to have delivered Lorenzo in every year for the last decade and even claimed to have done so in annual reports when it was a public company. However, in 2006 a joint report by CSC and Accenture stated that there was “no believable plan” for delivery and in 2011 we still only have one large acute Trust using it.
The Fujitsu case is in arbitration and this is due to run until the end of 2012. At the end of that period, the waters will have been so muddied that – although they didn’t deliver – it will be obvious that there were many “mitigating” circumstances and the final compromise will end up with the NHS paying half of what Fujitsu is demanding – say £300 million, plus enormous legal fees.
The same scenario will apply to CSC if the NHS tries to terminate them. CSC’s defence is very well organised. Morally, the NHS is completely in the right – i.e. there has not been “delivery” – but no matter how clear cut the moral case, it will not be so clear cut legally speaking; the contracts won’t really help the NHS “win” convincingly because it is so complex. We shouldn’t spend more than a year and a lot more taxpayers’ money fannying around with this. It will just end up with arbitration followed by some sort of 50 per cent deal plus £100 million to the lawyers. The only way of avoiding this is getting the right people in a room and applying a big stick. In my view, the only way to terminate is to use the line from the PAC report i.e. :
You haven’t delivered. We know that this is so complex and badly documented that we could end up paying you for that non-delivery. We want to can the arbitration, and save the legal fees and settle. We are prepared to pay something. But be aware that the outcome of this settlement and how you behave will have a direct impact on all other business you do now or in the future with the UK government.
The Cabinet Office’s emphasis on a Whole-of-Relationship-with-the-Crown approach to suppliers is vital here.
Avoid being over a barrel by including as part of the settlement a two or three year contract to CSC for the ongoing maintenance of the interim systems already installed (at Acute Trusts and also the others), so that the NHS does not end up in the position that the South ended up in when Fujitsu was terminated (i.e. paying hundreds of millions to maintain a handful of systems). This will give Trusts the time to make and implement alternative plans.
You could take the same approach in order to can the Fujitsu arbitration.”