Investors’ writ against CSC on NHS contracts – more detail

By Tony Collins

The Guardian has published the 123-page writ against CSC by lawyers acting behalf of some of the supplier’s investors. The writ contains many allegations against CSC and named directors. The company’s response is that it is corporate policy not to discuss litigation.

The legal action appears to have been based, in part, on CSC’s poor share price, which is today near a five-year low, and the supplier’s repeated positive statements and assurances on the performance of its NHS IT contracts and its iSoft Lorenzo software

These are some of the claims made in the document:

– Lorenzo was originally designed by iSoft as a one-size-fits-all software for use in local medical practices. “However, the UK healthcare system is highly diverse, ranging from large university hospitals to small private medical practices to prison medical facilities. Thus, according to the Deputy Head of Testing for Lorenzo, Lorenzo was never the correct software for the job. Lorenzo therefore required significant development before it could be deployed throughout the UK’s healthcare system.”

– In September 2008, after years of delays in Lorenzo’s development [CSC] sent a Delivery Assurance Review Team to England to assess the development and testing of Lorenzo. In mid-September, the Testing Review Team met with the Deputy Head of Testing for Lorenzo, a CSC employee from December 2007 until April 2011. The Deputy Head of Testing told the Testing Review Team that the level of testing and test results for Lorenzo was “abysmal,” and that the various releases on which the project was based could not be delivered on time. Subsequently [a CSC employee] told the Deputy Head of Testing to “shut up,” which he took to mean that he should not further criticise the quality of the testing nor the testing results.

– The Deputy Head of Testing claimed that the Lorenzo software was rife with severe defects that were unacceptable under the NHS Contract. The Deputy Head of Testing said that the software defects were subject to the following ratings: Severity Level I: the defect cause important part of the Lorenzo system to fail. Severity Level II: similar to Severity I, but the defect has a workaround. Severity Level III: the defect is an important defect, but one that would not stop the system from functioning. Severity Level IV: defect is a minor defect and would not impact the Lorenzo system’s function, but would be a nuisance to a software user.

– According to the Deputy Head of Testing, throughout 2008 and 2009, the level of Severity I and II defects in every release of Lorenzo was “high and grossly beyond” what the NHS would accept. According to the Deputy Head of Testing, while CSC publicly reported that it had met certain delivery milestones and therefore could recognize revenue, CSC’s statements in this respect were misleading in view of the software defects detailed above.

– CSC said in November 12, 2008, when analysts asked about missed deadlines, that “Our confidence continues to build on the program. We are pleased with our progress.”

–  In financial statements CSC continued to assert that the NHS contract was profitable and the Company expected to recover its investment.

– Shortly before the Deputy Head of Testing retired from CSC in early April 2011, he sent an email directly to a CSC director, copying several other CSC executives, in which he said ‘You hope that you will succeed by August 2011. I do too but you won’t. The project is on a death-march where almost as many defects are being introduced as are being fixed.”

–  by 2006 CSC had determined that it had no believable plan for delivering on the NHS Contract and should not have booked revenue under the contract from that point forward.

– The significance of the NHS Contract to CSC “placed the project squarely in the spotlight of Wall Street analysts”.

–  CSC “continuously denied media reports critical of CSC’s performance of the contract”

CSC is expected to file its response to the allegations in due course.

CSC sued on losses over disastrous NHS contracts – Observer

CSC class action – document in full on Guardian’s website

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5 responses to “Investors’ writ against CSC on NHS contracts – more detail

  1. Bloomberg has quite a lot of CSC news:

    • They’re being paid $86 million to work their magic at the US Department of Homeland Security.

    • As part of the N*Star joint venture, they’re in line to get part of $1.5 billion helping the US Navy to find its way around.

    • Bloomberg have picked up on the £170 million CSC have to give back to the NHS. And the £24 million the NHS are giving CSC.

    • CSC are going to help customers of Google work in the cloud. Apparently it’s their agile development methods which particularly qualify them for the role. (Is there anyone left who isn’t an expert in “agile” and who hasn’t always been a believer?)

    • The company is pleased to announce that it has once again exceeded all its corporate responsibility targets.

    • CSC triumphantly announces that the regrettable misunderstanding between the company and the Armed Services Board of Contract Appeals has been resolved entirely in its favour. Its 2nd quarter earnings will now be reduced by $250 million. A triumph.

    Bloomberg don’t seem to have caught up with the class action against CSC yet. They will.

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  2. The problems with NHS were known at the highest levels withing CSC long before the 2008 problems reports. Death Watch, sorry Delivery Assurance, teams were holding monthly and quarterly reviews and investigations. Those reviews had Red Flags all over them.

    The User, in government, also knew and chose to sweep the issues under the carpet. Indeed they indulged in theatricals to ‘prove’ the system was working in 2005 so that Tony Blair could boast in Parliament about it. This was all reported to Andrew Lansley, then shadow health minister. He ignored the warnings and seems to done little to bring CSC and the whole NHS IT programme under control.

    Thus, and sadly for the tax payer and patients, successive governments and civil servants are culpable. [edited]

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  3. CSC acknowledge internally that “Lorenzo was never the correct software for the job” and “the level of testing and test results for Lorenzo was ‘abysmal’ …” and “the Lorenzo software was rife with severe defects that were unacceptable under the NHS Contract” and “the level of Severity I and II defects in every release of Lorenzo was “high and grossly beyond” what the NHS would accept” and “the project is on a death-march”.

    Meanwhile what do the NHS say?

    QUOTE
    Despite warnings the system was far from ready, a series of software experts and NHS executives lined up to give their backing to Lorenzo. Three years ago the NHS chief executive David Nicholson told the Public Accounts Committee: “We are in a position now where Lorenzo actually has a product and it would be ridiculous now to just dump that”.
    UNQUOTE

    (Guardian, 26 September 2011, http://www.guardian.co.uk/business/2011/sep/26/nhs-software-provider-csc-lifeline)

    Sir Anthony Blunt is famous for having declared that a painting was by Poussin when it blatantly wasn’t. Sir David Nicholson appears to be indulging in an equally baffling charade, declaring that Lorenzo now works when even CSC admit that it doesn’t. Sir Anthony was ultimately stripped of his knighthood. And his good reputation. Does the same fate await Sir David?

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  4. A classic case of the “unintelligent buyer” – truly shocking. The one size fits all cheap sales talk that dumb buyers just can’t respond to…..and some are still saying this! I saw Lorenzo some years ago it was not difficult to realise it was not going to deliver. Government must put becoming the intelligent buyer asking the right questions of vendors and getting honest answers as a priority or it will happen again and again…….

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  5. Astonishing!

    Yet throughout the DOH/CfH persisted in their head in the sand approach and handed over £200million pre PAC meeting in May 2011.

    How much of this was know by those in non-control of NPfIT?
    Is it any wonder that Morecombe Bay gave up?
    What exactly is live at the existing Lorenzo sites ?
    How does that functionality compare to what is / was available outside the LSP contracts.
    What else is in this kind of mess?
    Questions questions and as the Ballet from Spandau state ‘Give me no answers’, well its about time that answers were given.

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