Category Archives: outsourcing

Siemens given extra £265m on passport contract

By Tony Collins

Changing the culture of the Home Office will be quite a challenge – but not an impossible one.

The immigration minister Damian Green has revealed in a Parliamentary reply that Siemens received at least £265m more than expected on a contract to build and run passport IT systems.

The extra money to Siemens was funded by the fees charged to passport applicants. The Home Office requires that the Identity and Passport Service covers its costs from passport fees – which have more than trebled since the start of the contract.

In September 1999, the fee payable by a member of the public making a postal application for a standard 10-year passport was:

– £21 for a standard passport

– £31 for passports issued over-the-counter.

Today a passport costs:

– £77.50 for a standard passport

– £129.50 for one over-the-counter.

Campaign4Change asked the Home Office for an explanation of the extra payments to Siemens. Its spokesman gave only a general account which answered none of our specific questions.  

When we expressed gratitude to Andrew Bell in the Home Office’s press office for his quick response to our questions and pointed out that he hadn’t answered any of them he replied: “We have nothing to add”.

What’s clear is that the Home Office may be under new coalition management but its culture of non-accountability and secrecy haven’t changed.

It’s also clear that, with Gateway reviews remaining secret, Parliament has no certain way of knowing when any large IT-enabled change contract is deviating substantially from the contract in time, scope or costs.

In 2009 the Home Office replaced Siemens with CSC as the main passport IT supplier contract. Have extra payments been made to CSC under its £385m 10-year passport contract? Parliament has no idea, and neither do we.

Damian Green reveals extra payments to Siemens

This was Damian Green’s reply to a question by SNP MP Dr Eilidh Whiteford.

Dr Whiteford: To ask the Secretary of State for the Home Department what the original estimate, at current prices, was for the cost to the public purse of the Siemens IT system for the Passport Agency; what the final cost, at current prices, was at the time of completion; and whether additional costs have been incurred since completion.

Damian Green: At the time of contract award, the anticipated contract value was between £80 to £100m over a 10-year period. The contract duration extended to 11 years at a total cost of approximately £365m.”

Green added: “The increase in costs over the term of the Siemens contract can be attributed to numerous factors including additional demand for passports, enhancements of the IT infrastructure and business processes to accommodate changes in policy, response to changes in security threats and customer service improvements.”

How well did Siemens perform on its £365m passport contract?

Siemens had mixed success on its passport contract. It helped introduce the new  Passport Application Support System [PASS] in 1999 which failed badly, in part because of errors in scanning forms; and nobody realised until too late that extra processing time on applications was slowing down the issuing of passports.

The result was that  hundreds of passport applicants had to cancel their holidays or change their travel dates. A national roll-out of PASS was delayed, and the new work processes and system eventually stabilised.

When the contract finished in 2009, CSC was appointed to build and run new IT systems under a £385m 10-year contract which included replacing  the PASS. An  upgrade of PASS in 2007 destabilised the system temporarily.

The incident made staff at the Identity and Passport Service realise that they could not  subject the PASS system to further major changes without risking disruption to internal operations.

A year earlier,  in 2006, the Identity and Passport Service had a failure with its introduction of an electronic passport application system EPA2. To its credit the Service later published the lessons from the project. This decision on openness came from managers at the passport service,  rather than from within the Home Office HQ.

Home Office culture of secrecy remains

To see if anything has changed on openness and accountability since the last administration we asked the Home Office the following:

a)       Does the Home Office consider the contract with Siemens to have been value for money?

b)       Has, or will, the Home Office publish any information on the contract to justify or explain the extra spend, such as Gateway reviews?

c)       Any comment please on a suggestion that Parliament should be kept informed of such increases.

d)       Are there any plans to explain or tell Parliament about any increases in the cost of the [replacement] contract with CSC?

This was the reply of the Home Office’s spokesman Andrew Bell:

“The parliamentary answer – enclosed below – covers some of this.

“In addition, to note that Siemens contract was for developing and maintaining the IT infrastructure for IPS  [Identity and Passport Service] to issue passports. It also included support for processing applications such as the scanning of the documents required for passports.

“The Identity and Passport Service awarded this new contract for providing this service to Computer Sciences Corporation (CSC) in October 2009.”

**

Campaign4Change has given details of the Home Office’s replies to us to a campaigning MP.

We are grateful to publicservice.co.uk for its article which drew our attention to Damian Green’s reply.

Link:

MP asks NAO to consider an inquiry after our article on the Siemens passport contract.

Did officials tell MPs the whole truth on NPfIT payments to CSC?

By Tony Collins

Conservative MP Richard Bacon wrote to the NHS Chief Executive Sir David Nicholson yesterday warning that a failure to disclose information to the Public Accounts Committee was a “very serious matter”.

Bacon, a long-standing member of the Public Accounts Committee, wrote to Nicholson about advance payments to CSC under the NHS National Programme for IT.

The MP is concerned that the Department of Health did not mention a £200m advance payment to CSC at a hearing of the Public Accounts Committee on the NPfIT detailed care records systems on 23 May 2011; and the payment wasn’t mentioned in the Department’s subsequent memo to the committee.

Said Bacon in his letter:

“I understand that the advance payment of £200m to CSC was made in April 2011 but the Department of Health’s memo of 7 June 2011 doesn’t mention it. 

“The failure to disclose to the PAC an advance payment of £200m is a very serious matter.  The fact that the payment appears to have happened after 31 March 2011 is scarcely the point.

“What is going on? … 

CSC declared the £200m advance payment in regulatory announcement

CSC has told regulatory authorities in the US that on 1 April 2011, pursuant to the NPfIT contract, the “NHS made an advance payment to the Company of £200 million ($320 million) related to the forecasted charges expected by the Company during fiscal year 2012”.

The payment was reported by E-health Insider last month.

It appears that the Department decided to give the committee details of advance payments to CSC up until 31 March 2011. The undisclosed £200m payment to CSC was made the next day, 1 April.

As the Department of Health wrote to the committee on 7 June there is no clear reason for its choice of 31 March as the cut-off date for informing MPs of advance payments to CSC.

It would not be the first time the Department has withheld the latest information on the NPfIT from what it regards as outsiders, such as Parliament and the media.

When the National Audit Office was investigating the NPfIT several years ago it was not told of the latest Ipsos MORI survey on NHS perceptions of the National Programme.

The Department instead gave the NAO an older and more positive Ipsos MORI survey. The NAO confirmed to me it had not seen the latest survey [which had some negative findings on the NPfIT].  

Today some in the Cabinet Office are exasperated at the disdain with which some officials at the Department of Health – not all – treat outside supervisory organisations such as the NAO, the Public Accounts Committee and the Cabinet Office.

It appears that some in the Department regard these organisations as necessary by-products of democracy that must be tolerated but not encouraged.

Comment:

Major change is unlikely to happen in Whitehall or at least within the Department of Health and NHS Connecting for Health if officials are allowed, with ease, to dismiss their scrutineers with a wave of their hand.

The culture of allowing the DH to withhold the truth about the NPfIT needs tackling. All credit to Bacon and the Cabinet Office for trying to do just that. It’s likely that Katie Davis, the interim health CIO, will also seek to make the DH less introspective and defensive, at least in terms of the NPfIT and health informatics generally.   

**

Bacon’s letter to Sir David Nicholson

This is Bacon’s letter dated 14 July2011 to Nicholson, copied to the head of the National Audit Office Amyas Morse, the chair of the Public Accounts Committee Margaret Hodge, and the Cabinet Office. 

Dear Sir David

NATIONAL PROGRAMME FOR IT IN THE NATIONAL HEALTH SERVICE

I do not seem to have received a reply to my email of 27 June below.

Making advance payments of any kind at all is wholly at variance with the Department of Health’s long-stated boast that the NPfIT contracts “only pay for delivery”, but let us leave aside this basic point for the moment.

I understand that the advance payment of £200 million to CSC was made in April 2011 but the Department of Health’s memo of 7 June 2011 doesn’t mention it.  The failure to disclose to the PAC an advanced payment of £200 million is a very serious matter.  The fact that the payment appears to have happened after 31 March 2011 is scarcely the point.

What is going on?  Please reply to my email below with its various questions without further delay.

Yours sincerely

Richard Bacon MP for South Norfolk, Member of the Public Accounts Committee

Bacon’s earlier letter to Nicholson, dated 27 June 2011

Dear Sir David

NATIONAL PROGRAMME FOR IT IN THE NATIONAL HEALTH SERVICE

I am writing following the hearing of the Public Accounts Committee on Monday 23 May 2011, to follow up on two important issues that were raised during your evidence:

1.       ADVANCE PAYMENTS TO SUPPLIERS

In your supplementary memorandum to the PAC following the hearing you gave a total of advance payments made up to 31 March 2011, in respect of all contracts over the whole period of the Programme, of £2,532m of which suppliers have retained £1,328m. You also identified a further £119 million of advance payments to be earned or refunded.  Since the memorandum was received by the PAC, it has been reported that the NHS made an advance payment of £200 million to CSC in April 2011. http://www.ehi.co.uk/news/acute-care/6971/nhs-made-£200m-april-advance-to-csc

I should be most grateful if you would let me know the answers to the following questions:

1.       Is this report accurate?

2.       Why was this payment was not reported to the PAC, either during the hearing or in the subsequent memorandum?

3.       What was the justification for this payment and what value does it represent to the NHS?

4.       What will happen in respect of this payment if a new memorandum of understanding is not in fact signed with CSC?

5.       I would also be grateful if you would comment on the CSC filing with the US Security and Exchange Commission, which states that in the opinion of the company, if the NHS were to terminate the current contract “for convenience” it would owe fees totalling less than the $1 billion asset value CSC now has on its books for the contract.   How is this consistent with the claim at the PAC  hearing by Ms Connelly that the cost of terminating the CSC deal could “potentially leave us exposed to a higher cost than if we completed as it stands today”?

2. THE COST OF DEPLOYING CERNER MILLENNIUM AT NORTH BRISTOL

Second, I would be grateful if you could comment on the cost of deploying Cerner Millennium at North Bristol, reported in your memorandum as £21 million, including service for 56 months, and on the current expected go-live date.  Specifically:

6.       Can you explain why the delivery date agreed with BT at the contract “reset” was 4th June 2011?

7.       Why it was then revised to 2nd July 2011?

8.       And why it now appears that there is no agreed delivery date at all?

9.       Can you also give your best comparison of the cost of deploying the Cerner Millennium system at North Bristol, with the cost to University Hospitals Bristol of deploying the System C Healthcare Medway system outside the National Programme?  It would appear from media reports that this latter contract includes deployment of functionality including PAS, Accident and Emergency, maternity, theatres, clinical data collection, and a data warehouse and reporting system, as well as integration of third party and current Trust applications.  According to the National Audit Office, the average cost for each new site under the BT South contract is £28.3 million, but the cost of the Medway system to UHB has been reported as £8.2 million over seven years. (http://www.guardian.co.uk/healthcare-network/2011/may/19/university-hospitals-bristol-foundation-trust-awards-e-patient-contract)   What is the justification for this apparent difference?

10.   As the Senior Responsible Owner for the National Programme, can you give your explicit undertaking that the North Bristol contract represents value for money for taxpayers?

I look forward to receiving your reply.

With many thanks

Yours sincerely

Richard Bacon

Employee-led mutuals: should the public services white paper have gone further?

By David Bicknell

Some commentators believe that the Government could and should have gone further with the publication of the Open Public Services White Paper.

Writing in the Guardian, Colin Cram, the former chief executive of the North West Centre of Excellence, makes some constructive suggestions. He argues that publishing the white paper is “a bold step. It is an attempt to create a coherent and different approach to providing public services. My feeling is that the consultation will be genuine, which will provide an opportunity for criticisms to be addressed and the government to back off from impracticable ideas or change its approach. The risks for the government are that the rhetoric looks likely to exceed the scale of delivery and it could be easy for the parliamentary opposition and the electorate to hold it to account.

Under the sub-heading ‘Making a Change’, Cram makes the following points:

“The white paper places much emphasis on consultation and facilitating change rather than directing. A weakness is that many proposals are projects or programmes and should be subject to the established public sector controls such as “starting gate” and “gateway”. These are not bureaucratic, help identify what should not go ahead, whether the necessary success factors are in place at each stage of the project and whether there need to be changes. These robust approaches save time and money and greatly increase chances of success. The white paper should have provided assurance about applying these disciplines.

“The paper argues that the public sector should be a commissioner of services rather than a provider, yet appears to run out of ideas on where this might operate, focusing mainly on social care and to a lesser degree the hackneyed “back office services”. The government is attracted by employee-led mutuals, but suggests that these will be created voluntarily.

“The potential contribution of the private sector to the diversity of service providers is scarcely mentioned. Lib Dems 3, Conservatives 0? However, local government will increasingly outsource front and back-office services, and we can expect the NHS to continue to do so.”

“Critics might argue that the white paper represents little more than bringing together government policy announcements in a coherent form: health and wellbeing boards, strengthening the powers of local government over the NHS, removing excessive monitoring and oversight by central government, community budgets and retention of business rates. However, it does provide a narrative and context.”

“Absent from the paper is how one might manage the anticipated increasing diversity of service providers. The wider public sector has not been good at this, hence the Southern Cross debacle. Integrated commercial management of markets and suppliers throughout the public sector is vital.

“New commercial models include incentivising suppliers to deliver successful outcomes and assigning the risk to them, though I would question whether payments to suppliers under the work programme will be “based primarily on the results they achieve” unless the bar is set very low. Risk sharing would rule out many social enterprises.”


Chinook crash – the 16-year campaign to right an injustice

By Tony Collins

Chinook ZD576

The day after the fatal crash of Chinook ZD576 on the Mull of Kintyre an RAF Board of Inquiry convened.

There was little to go on: what could be retrieved from the fire at the crash site, and records of recent trouble with the aircraft type, including difficulties with the Chinook Mk2’s software-controlled “Fadec” system.

There had been so much trouble with the Fadec, in fact, that test pilots had ceased flying the Mk2 the previous day. But operational flights continued.

The crash of ZD576 left no survivors: all 29 on board were killed. There was no cockpit voice recorder. No flight data recorder. Particularly for John Cook, the father of one of the pilots, the absence of black boxes compounded his grief.

While a Concorde pilot for British Airways, John Cook led successful negotiations with the Air Accidents Investigation Branch for the installation of cockpit voice recorders on large passenger aircraft.

He recognised the importance of flight data and cockpit voice recorders to investigators and the families of dead pilots because they could show how an aircraft was performing in the moments before it crashed. A cockpit voice recorder could record audible warnings, pilots expressing concern about a possible malfunction and any unusual noises.

Without black boxes it would be easy to blame dead pilots for a major, fatal accident.

Said John Cook in 1999: “I fought to have the recorders installed and then I lost a son in an aircraft which didn’t have one.”

The campaign begins

In crashes of civil airliners the data from the black boxes often gives the best clues as to the likely cause or causes. Even when the black box data is fully recovered the likely causes of an accident can elude investigators.

So how could anyone know what happened in the moments before the crash of ZD576? In 1995, nearly a year after the accident, the RAF Board of Inquiry produced its findings.

The campaign to restore the reputations of the two pilots of ZD576, Flight Lieutenants Jonathan Tapper and Rick Cook, began.

MoD  and RAF attack their own software experts

In some ways the investigation into the crash was exhaustive. In other ways it was limited. It reflected the mindset of the RAF at the time, which was that Chinooks were needed desperately, and, if possible, in greater numbers. The last thing the RAF hierarchy needed was credibility being given to the internal concerns about the helicopter’s Fadec system, in which software controlled fuel to the Chinook’s two jet engines.

Days after the crash on the Mull of Kintyre in June 1994, a senior RAF officer expressed his frustration at the internal concerns over the Fadec.

In a signed, draft memo, the RAF officer attacked the MoD’s own software experts at Boscombe Down. He said their “ongoing stance towards the Mk2 contrasts sharply with the considerable efforts being made by the front line to bring the aircraft into service and maintain a capability”.

Boscombe Down’s attitude, he said, “does nothing to engender aircrew confidence in the aircraft”.

It was beginning to look as if the RAF would not tolerate an investigation that concentrated too much on the integrity of the helicopter and its software. But, to its credit, the RAF brought in the civil Air Accidents Investigation Branch.

The AAIB did not have a free hand, however. The limits of its investigation were agreed with the RAF. The AAIB could not simply require all relevant documents. It was up to the MoD and RAF what documents it showed the AAIB.

And the MoD supplied the bare minimum.

Documents not shown to investigators

Many potentially-relevant documents were to emerge years later, long after the RAF Board of Inquiry had been disbanded. The documents came to light, in part, because of leaks by well-intentioned insiders who were concerned that possible flaws in the airworthiness of the Mk2 were being overlooked.

Back in 1994, the AAIB’s chief investigator Tony Cable knew there had been problems with the Fadec, none of which the RAF hierarchy regarded as serious. Among the many things Cable wasn’t told was that the Superintendent of Engineering Systems at the MoD, Boscombe Down had, nine months before the crash, found flaws in the Fadec that he said in an internal memo were “positively dangerous”.

And Cable didn’t know at the time of his investigation that the MoD was suing the Fadec suppliers because of faults in the system’s software that were exposed by a ground test of a Chinook at Wilmington in the US, Boeing’s “Center of Excellence”.

When the Fadec was working properly, which was most of the time, it made the job of Chinook pilots easier: they could fly the helicopter without controlling power to the engines. When the Fadec systems were not working properly they were apt to leave no trace of a fault, and could endanger the lives of all on board, said Squadron Leader Robert Burke who, at the time of the crash, was one of the most experienced Chinook Mk2 unit test pilots.

A near-catastrophe that left no trace

Four years after the crash of ZD576, Bric Lewis, the pilot of a US Chinook, exclaimed involuntarily “Oh God” into the microphone of his headset. His words were transmitted to all on board. His Chinook was falling out of the sky … upside down.

The displays in the cockpit showed no warning lights… no evidence of any technical malfunction. Then, as inexplicably as the Chinook had turned over, it flipped back again, into a normal, wheels-down position. After it landed safely no serious fault was found.

Bric Lewis and his crew lived to provide evidence that their Chinook had turned over. If they had died in the incident, would they have been blamed on the basis that no serious malfunction capable of causing the crash had been found?

An extraordinary campaign

That the campaign to clear the names of Cook and Tapper has succeeded is extraordinary, and yet it’s not in the least extraordinary. It has been a campaign characterised by its intensity, perseverance, and the status and number of those involved.

It has been a campaign that pivoted on the tenacity of the families of the two pilots and their pro bono advisers. Some of the campaigners cannot be named.

MoD spin

The campaign has also been marked by the determination of the MoD and RAF hierarchy not to attach any credibility or relevance to newly-disclosed information.

In the words of then independent MP Martin Bell in 2001: “The MoD is being anything but straightforward… clearly civil servants are trying to spin the facts to suit the air marshals’ agenda.”

With a manipulative use of language, and an evasive but self-confident way of answering of difficult questions – sophistry exemplified – the MoD was a decisive influence on defence ministers of the last administration.

Every defence minister in the last government was persuaded that there could be only one cause of the accident, and that was pilot error. Tony Blair wrote in his own hand that the pilots were to blame.

So how did one of most grievous military miscarriages of justice in the last 100 years come to be corrected? It was thanks, in part, to the injustice’s enduring visibility in Parliament and in the media, such that David Cameron, when in opposition, promised, if elected, to launch a formal review of the decision to blame the pilots.

And only a prime minister or his defence secretary could, in effect, take the steps necessary to overturn the judgement of a properly-constituted RAF Board of Inquiry. In ordering the Philip review, Cameron proved as good his word.

Liam Fox, too, unlike defence secretaries in the last government, has shown by his actions that he is not prepared to be putty in the hands of his civil servants and RAF air marshals. All credit also to Nick Clegg for his support of the Philip review.

Did the RAF try to dissuade Cameron from holding a review?

It’s unclear whether the RAF tried to discourage Cameron from setting up a review. What is not in doubt is that, in January 2010, a few months before the general election, four former chiefs of the air staff, and a former RAF Chief Engineer, wrote to the Daily Telegraph saying they would wish to brief ministers if there were to be “yet another” review of the RAF’s decision to blame the pilots for the crash of Chinook ZD576.

In their letter, Sir Michael Graydon, Sir Richard Johns, Sir Peter Squire, Sir Glenn Torpy, and Sir Michael Alcock said the finding of gross negligence against the pilots of ZD576 was “inescapable”.

“We understand that in the event of a Conservative administration coming to power it will revisit the Mull of Kintyre Chinook accident and consider the negligence finding,” said the letter of the five knights. “Each one of us has reviewed separately the findings of the Board of Inquiry and reached the same conclusion, namely that basic airmanship failings caused this tragic accident.

“If yet another review is to take place then we would welcome an opportunity to brief ministers and discuss in necessary detail why this finding remains inescapable. In particular, it will be explained precisely why it cannot be overturned by recourse to a hypothesis for which there is no evidence and which is revealed as wholly implausible when tested against the known facts.”

Sir Michael Graydon
Chief of the Air Staff 1992-1997
Sir Richard Johns
Chief of the Air Staff 1997-2000
Sir Peter Squire
Chief of the Air Staff 2000-2003
Sir Glenn Torpy
Chief of the Air Staff 2006-2009
Sir Michael Alcock
Chief Engineer (RAF) 1994-1999
London W1

It is likely that the Philip review came under pressure from the MoD and the RAF not to question the finding of gross negligence. The fact remains, though, that nobody knows the cause of the crash. It could have been pilot error. It could have been a chain of events that had little or nothing to do with pilot error. Indeed the AAIB investigation of equipment recovered from the wreckage revealed several anomalies that were never explained.

That said Tony Cable noted that there was little evidence to be gleaned from the investigation. Cable told a House of Lords select committee on 7 November 2001: “Throughout this investigation the evidence was remarkably thin, from my point of view, I must say”.

What could have caused the crash?

There were many potential causes of the loss of ZD576. What can be said with certainty is that we don’t know why it happened, or the events that preceded it.

One of the lessons is that “evidence” from aircraft manufacturers and their subcontractors should be treated with the same scepticism as speculation about the actions of the pilots. After the crash of ZD576, the main attention of the RAF and the MoD was on the possible actions of the pilots, not on the possible behaviour of the aircraft.

Nobody in the RAF hierarchy questioned the fact that most of the allegations against the pilots were made on the basis of manufacturers’ “evidence”. If that evidence is set aside as lacking impartiality, and indeed the AAIB does not confirm the accuracy of that evidence, there is no basis even for speculation about the actions of the pilots.

One of the things the campaign for justice has shown is that the RAF hierarchy took a circumscribed investigation of equipment found in the wreckage as the basis for a case against the pilots.

Black boxes found in the debris of civil airliners are sometimes transported under armed guard to independent investigators. Manufacturers are not always allowed to look at their equipment until it has been studied independently. Yet in the case of ZD576 manufacturers’ evidence has been taken as the whole truth. An Mod lawyer at the ZD576 Fatal Accident Inquiry in Scotland in 1996 sought to persuade the Sheriff that the manufacturer’s evidence was “hard fact”.

To my knowledge there has never been an investigation by the National Transportation Safety Board, the US equivalent of the AAIB, in which uncorroborated, unchecked evidence from aircraft manufacturers been taken as hard fact.

Today, the lack of understanding at the top of the RAF over how much information is needed after crashes of civil airliners to establish the likely chain of events may help to explain why air marshals still blame the pilots of ZD576.

In their eyes, the lack of evidence of serious technical malfunction appears to mean that the pilots were in control of the aircraft. Such a simplistic assumption would not be made in a full civil aircraft crash investigation.

Justice has now prevailed thanks to the Cameron government, supported by Sir Menzies “Ming” Campbell, Martin O’Neill, and numerous other parliamentarians including Lord ChalfontJames ArbuthnotDavid Davis and Frank Field . There are too many other campaigners to name, though I make exceptions with Hooman Bassirian, Karl Schneider and Mike Simons who, at Computer Weekly, were willing to shape and publish innumerable stories in support of the Chinook campaign. David Harrison, a freelance producer  at Channel 4  News, which has covered developments since the day of the crash, first alerted me to the flaws in the Chinook Mk2’s Fadec.  Most of the documents relevant to the crash came to me from the Tapper family.

Air marshals will never accept that the pilots were not to blame. But that’s a hallmark of institutional disasters: once a decision is taken on the main cause that decision will be supported and stuck to whatever the facts. Thank goodness the Philip review, when it came to its investigation, had an open mind.

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The campaign for justice for the pilots of Chinook ZD576 – Brian Dixon’s website

PPrune – hundreds of online pages of thoughtful discussion on the crash.

RAF Justice – how the RAF covered up problems with the Chinook Mk2’s Fadec.

Chinook ZD576 – report by Michael Powers QC.

Macdonald report on the crash of ZD576 – by three fellows of the Royal Aeronautical Society.

Flawed Chinook software updated after crash of ZD576.

The Chinook Fadec in-depth – by Malcolm Perks, another of the campaigners

FireControl – should PA Consulting share some responsibility for what happened?

By Tony Collins

The defence and aerospace supplier EADS is widely regarded as the main supplier of the FireControl project which was cancelled in December 2010, with wasted costs of at least £469m.

But did the project have too many consultants, some of whom were  accountability-free? The question is raised by report published today on FireControl by the National Audit Office.

Says the report:

 “The implementation of FiReControl was heavily reliant on consultants and interim staff, who contributed around half the Department’s [for Communities and Local Government] project team at a cost of £68.6m, over three-quarters of the total spend on the national team supporting the project.

“PA Consulting was contracted to provide consultancy services at a cost of £42m to the end of March 2011. Its staff held key positions throughout the project, including the Project Manager, one of only two senior members of the team who remained on the project throughout its duration.

“Despite the Department’s reliance on consultants, there was no framework to assess their performance until the end of 2008, when the National Audit Office recommended that the Department’s contracts with consultants should include mechanisms to enable regular objective monitoring of performance, such as performance indicators and key milestones.

“Without such mechanisms, the Department was unable to determine whether or not the services provided offered value for money.

“A review of the FiReControl project by the Office of Government Commerce in 2008 similarly found that some consultants in key management roles did not have a level of authority matching their responsibilities, which led to decisions being referred to others.

“Other consultants were found to hold a disproportionate (and accountability-free) amount of authority. In response, the Department reviewed its use of consultants and interims within FiReControl and reduced the number employed, leading to a fall of 24% in consultancy costs between 2008-09 and 2009-10, and a further fall of 26 per cent in the following year.”

The failure of the FireControl project – and many other central government IT-based programmes dating back decades – shows the need for independent challenge as projects progress or otherwise.

Gateway reviews are independent reports on the state of a project but they appear to be ignored if they’re too critical, as in the cases of FireControl and the Rural Payments Agency’s Single Payment Scheme; and the Gateway review reports are secret – even today – so there is no outside pressure on departments to act on them.

What’s to be welcomed is the intervention of the Cabinet Office in major projects. FireControl systems could have been delivered. They could have worked. But there were too many missed deadlines and continuing uncertainties, as the NAO points out in today’s report.

The Cabinet Office’s major Projects Review Group, as it was then, said the FireControl contract should be ended – and it was a few months later, amicably, in December 2010.

All credit to the NAO for naming PA Consulting, as well as the main supplier EADS.

NAO report on FireControl.

What FireControl and NPfIT have in common.

FireControl disaster blasted by unions

NHS IT supplier “corrects” Health CIO’s statements

An IT supplier to the NHS has written to MPs to “correct” statements made by Health CIO Christine Connelly.

The implications of the supplier’s corrections are that Conservative MP Richard Bacon might have been right all along:  that the Department of Health may be paying BT as much as £200m more than necessary to install the “RiO” patient record system at 25 trusts in the south of England.

The corrections by CSE Healthcare Systems – supplier of RiO – call into question some of the Department of Health’s justifications for the high costs of NPfIT versions of RiO.

RiO is an electronic patient record system that is supplied to mental health trusts and community service organisations. Trusts can buy directly from CSE Healthcare or via its partner BT Global Services which is the local service provider to London under the National Programme for IT.

Through the NPfIT, BT is installing RiO at 25 trusts in the south of England under a £224.3m NPfIT deal – £8.9m per site, compared with £500,000 to £1.5m per site if supplied to the NHS directly by CSE outside of the national programme.

At a hearing of the Public Accounts Committee on 23 May 2011, Conservative MP Richard Bacon asked Connelly to explain why RiO costs so much more when it is supplied by BT.

Connelly told the Committee that the Department of Health had investigated the RiO costs at Bradford District Care Trust, which is a mental health trust.

Bradford bought RiO outside the NPfIT, using the ASCC framework contract, which enables trusts to buy systems directly from suppliers without going through NPfIT local service providers.

The total cost of RiO at Bradford was £1.3m, which Connelly said was for a 59‑month contract.

She told MPs:

“So the comparison: in terms of the services that we provide, there are a whole set of services that are not within that £1.3m that are inside the Local Service Provider contract.

“Earlier somebody said, ‘Well, doesn’t everybody have disaster recovery.’  Well, actually, no, and at this Trust only 25% availability is provided in their local arrangements, which are not included in these costs.

“So we have a cost in terms of the BT LSP in the South for the same period, which includes the hardware, the support, the disaster recovery at 100%, the Spine connectivity, all of which are not supplied inside this Bradford system.

“If we looked at those costs through BT’s cost profile, it would be valued at £2.5m.”

Bacon pointed out that £2.5m was still much less than £8.9m being charged by BT. He wanted the difference explained.

Connelly said:

“So first there is the period. So we need to take a look at the average period that you would expect to be there, because we pay a one‑off deployment charge and then we pay a monthly charge.  So in terms of the figure that you quote, it is generally for about a four-year period, and the figure we quote is generally for about a six-year period, sometimes a little more.  I think what we get is 24/7 support.

“We get full disaster recovery.  I think it is fine to say, “Oh, anybody has that.”  The cost of full disaster recovery is significant, when you look at the costs that BT have; we invited an external auditor to go look at the cost build-up, and they have audited these costs.  We looked at BT’s profit margin, and they have taken a significant reduction in their profit margin between the original contract and the contract that we have today…”

To which Bacon replied:  “But it is not the taxpayer’s fault if BT has unbelievably high costs.”

Bacon said that one reason the costs are so high is that CSE cannot talk directly to NHS trusts and must go through BT.  “That is the problem with this structure,” said Bacon. “It is like having you over here, and the customer over there, and an enormous thicket, a forest of lawyers, in between.”

Connelly replied that a change to the programme means that suppliers of RiO are now on site “talking to Trusts themselves”.  In London and the South, for RiO, a new user group brings together all the Trusts. Cerner, the supplier of NPfIT patient administration systems in London and the south of England, also deals directly with trusts rather than through BT, said Connelly.

Taking issue with Connelly’s comments about Bradford, this was CSE’s written statement to the Public Accounts Committee:

“During the evidence presented by Ms Christine Connelly, one of our contracts for RiO,  Bradford Mental Health Trust was referenced.

“Ms Connelly’s statement was that Bradford is receiving a lower standard of service than provided by BT in London and hence the lower price charged by CSE Healthcare Systems to Bradford.

“CSE Healthcare Systems wishes to correct the evidence given.

• Ms Connelly stated that the service is NOT 24*7 hours – the service is a 24*7 service.

• Ms Connelly stated that Disaster Recovery (DR) was NOT included in the service – a DR service is included.

• There was no mention of Facilities Management – we provide remote Facilities Management

• The service contract is for five years – not four years as stated.

• Ms Connelly implied that the system only had 25% availability – our records demonstrate that this is not true; the system is architected to achieve an availability of over 99%.”

**

Another NHS IT supplier Maracis has provided evidence that RiO costs several times more under the NPfIT than outside the programme, for similar levels of service, disaster recovery, availability and support periods.

On its website CSE Healthcare says its system is compliant with the NPfIT data “spine” and supports established standards for interoperability such as HL7 and XML.

The Public Accounts Committee is finalising a report on the NPfIT detailed care record systems. Its findings will be based on its questioning of Connelly and other witnesses, written evidence from CSE and others, and a report of the National Audit Office in May.

Connelly, who is Director General of Informatics, has announced she is leaving at the end of this month, after three years. She is being replaced in the interim by Katie Davis, who is from the Cabinet Office.

MP questions why IT costs at two nearby hospital trusts are vastly different for similar systems

By Tony Collins

A Conservative MP has asked the NHS Chief Executive Sir David Nicholson to explain why an NHS trust is deploying a centrally-chosen Cerner patient record system at more than twice the cost of a similar but non-NPfIT system at a nearby Foundation trust.

University Hospitals Bristol NHS Foundation Trust is deploying the Medway system from System C  (now owned by McKesson] at a reported cost of £8.2m over seven years. The acute trust is one of the largest in the country.

With support for less than five years, the nearby North Bristol NHS trust is taking the Cerner Millennium patient record system under the NPfIT at a cost of £21m from BT – and the go-live date in June has slipped to July.

Now Richard Bacon, a member of the Public Accounts Committee, has written to Sir David Nicholson asking for an explanation of why the two trusts are paying vastly different amounts for systems that do similar things. Bacon has also asked Nicholson whether he believes the higher sum is value for money.

The average cost of BT Cerner go-lives under  the NPfIT is £28.3m according to the National Audit Office.

Bacon’s letter is part of evidence which suggests that continuing NPfIT contracts is costing hundreds of millions of pounds more than necessary.

The coalition government, despite its plan to cut public sector IT costs, may spend a further £3bn to 4.bn with the NPfIT’s two major suppliers, BT and CSC, though the Cabinet Office’s Major Projects Authority is reviewing CSC’s £2.9bn worth of contracts.

Bacon’s letter also questions advance payments to CSC, and whether a recent hearing of the Public Accounts Committee was told the full truth.

An unwavering defender of the NPfIT, Nicholson is likely to defend the cost of the North Bristol implementation, and the advance payments to CSC. On costs, he will argue that North Bristol’s systems have better resilience than at non-NPfIT sites.

If that were true – and there is no evidence it is – the extra costs of having a “hot”, or real-time standby data centre, may not justify a doubling of a rival’s prices. 

This is Bacon’s letter to Sir David Nicholson:

Chief Executive, National Health Service, Department of Health, Richmond House, London SW1A 2NS

27 June 2011

Dear Sir David

NATIONAL PROGRAMME FOR IT IN THE NATIONAL HEALTH SERVICE

I am writing following the hearing of the Public Accounts Committee on Monday 23 May 2011, to follow up on two important issues that were raised during your evidence:

ADVANCE PAYMENTS TO SUPPLIERS

In your supplementary memorandum to the PAC following the hearing you gave a total of advance payments made up to 31 March 2011, in respect of all contracts over the whole period of the Programme, of £2,532m of which suppliers have retained £1,328m. You also identified a further £119 million of advance payments to be earned or refunded.  Since the memorandum was received by the PAC, it has been reported that the NHS made an advance payment of £200 million to CSC in April 2011.

I should be most grateful if you would let me know the answers to the following questions:

Is this report accurate?

Why was this payment was not reported to the PAC, either during the hearing or in the subsequent memorandum?

What was the justification for this payment and what value does it represent to the NHS?

What will happen in respect of this payment if a new memorandum of understanding is not in fact signed with CSC?

I would also be grateful if you would comment on the CSC filing with the US Security and Exchange Commission, which states that in the opinion of the company, if the NHS were to terminate the current contract “for convenience” it would owe fees totalling less than the $1 billion asset value CSC now has on its books for the contract.  

How is this consistent with the claim at the PAC  hearing by Ms Connelly that the cost of terminating the CSC deal could “potentially leave us exposed to a higher cost than if we completed as it stands today”?

2. THE COST OF DEPLOYING CERNER MILLENNIUM AT NORTH BRISTOL

Second, I would be grateful if you could comment on the cost of deploying Cerner Millennium at North Bristol, reported in your memorandum as £21 million, including service for 56 months, and on the current expected go-live date.  Specifically:

Can you explain why the delivery date agreed with BT at the contract “reset” was 4th June 2011?

Why it was then revised to 2nd July 2011?

And why it now appears that there is no agreed delivery date at all?

Can you also give your best comparison of the cost of deploying the Cerner Millennium system at North Bristol, with the cost to University Hospitals Bristol of deploying the System C Healthcare Medway system outside the National Programme?  It would appear from media reports that this latter contract includes deployment of functionality including PAS, Accident and Emergency, maternity, theatres, clinical data collection, and a data warehouse and reporting system, as well as integration of third party and current Trust applications.  According to the National Audit Office, the average cost for each new site under the BT South contract is £28.3 million, but the cost of the Medway system to UHB has been reported as £8.2 million over seven years. (http://www.guardian.co.uk/healthcare-network/2011/may/19/university-hospitals-bristol-foundation-trust-awards-e-patient-contract)   What is the justification for this apparent difference?

As the Senior Responsible Owner for the National Programme, can you give your explicit undertaking that the North Bristol contract represents value for money for taxpayers?

I look forward to receiving your reply.

With many thanks

Yours sincerely

Richard Bacon

MP for South Norfolk, Member of the Public Accounts Committee

Who’ll support the NPfIT now?

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.

Leaked memo reveals CSC’s plans.

A sign that coalition reforms will change behaviour of major suppliers.

Health CIO resigns – Cabinet Office executive steps in.

Example of a trust that’s succeeding without the NPfIT – Trafford General Hospital.

Connelly at odds with PM over NPfIT value for money?

NHS CIO in dramatic resignation.

Cabinet Office publishes SME action plans today – a good start.

By Tony Collins

The Cabinet Office has today published SME “action plans” for each department.

It says the  reforms are “designed” – which is not the same as a commitment – to   “significantly open-up the public sector marketplace to small businesses”.

The new  plans support what the Cabinet Office calls an “aspiration” for the Government to spend  25% of its budgets on SMEs.

The actions range from:

  • breaking large contracts into smaller lots
  • working with major suppliers to increase SME access to sub-contracting opportunities
  • increasing the amount of information that is available to SMEs about contract opportunities
  • holding “product surgeries” for SMEs to pitch innovative ideas
  • piloting new procurement methods that are more open to SMEs.

Some of the documents published today could be more aptly  described as goodwill gestures to SMEs rather than  action plans.  Indeed, when read carefully, some of the action plans appear to be a civil service response to an unwanted ministerial decree.

HM Revenue and Customs, which is tied into an £8bn IT outsourcing deal with Capgemini, uses phrases in its SME action plan that are vague and non-committal, such as “build on the work done …”

These are some of the promises HMRC is making to SMEs:

– From June 2011, HMRC will develop and maintain information on its website relevant for SMEs. The information will include, but will not be limited to, signposting for SMEs to access relevant procurement details and how they can work with the Department. The Department will provide clear contact points for additional information and queries.

– Work with the 12 largest prime HMRC suppliers (representing c80% of 3rd party spend) to ensure they identify and engage with their own SME supply chains, including 3/4th level suppliers and agree actions (such as advertising suitable sub-contracting opportunities on Contracts Finder) with them to increase value of spend.

– Build on the work done on the recent open procedure procurement for Debt Collection Services …

– HMRC to consider appropriate procurements that are suitable for SME competition.

The Home office’s action plan is better, though.  It says it will:

– review forthcoming procurements and develop standardised processes and procedures to remove barriers to SMEs. “This will ensure the method used is as SME friendly as possible for the contract on offer.”  By June 2011.

Alongside publishing the action plans the Cabinet Office is creating a central team, Government Procurement, which will contract for widely-used goods and services for the whole of Government at a single, better price.

This, says the Cabinet Office, will end the “signing of expensive deals by individual departments” and “end poor value contracts such as those where government departments and agencies paid between £350 and £2,000 for the same laptop and between £85 and £240 for the same printer cartridge from the same supplier”.

Central procurement of common items is expected to save more than £3bn a year by 2015 – 25% of the Government’s current annual spending on these items.

Francis Maude says the Government is on track to have saved more than £1bn from tighter spending on discretionary goods and services including consultants and agency staff in the last year.

“Changes to make Government contracts more accessible to SMEs have already led to one not-for-profit SME successfully undercutting larger competitors and winning a £1.6m contract to provide office support services to HM Revenue and Customs,” says the Cabinet Office.

Maude said:

It is bonkers for different parts of Government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness which has been presided over for too long. Until recently, there wasn’t even any proper central data on procurement spending.

“So, as Sir Philip Green found, major efficiencies are to be found in Government buying. The establishment of Government Procurement means that the days when there was no strategy and no coherence to the way the Government bought goods and services are well and truly at an end…

“We are also determined to press ahead with measures to create a more level playing field so that small organisations and businesses can compete fairly with bigger companies for Government contracts. SMEs can provide better value and more innovative solutions for Government and the actions set out today will support their growth as the economy starts to recover.”

The Cabinet Office says that greater use of the ‘open’ procurement procedure  has increased by 12% across the public sector between March and April alone, helping to ensure that all suitable suppliers have their tender proposals considered.

And following the Innovation Launch Pad, five further Dragons’ Den style ‘product surgeries’ are planned so that innovative SMEs can pitch their proposals directly to Government.

The Government bought £66bn  of goods and services in 2009/10. An Efficiency Review by Sir Philip Green, which was published in October 2010, found that the Government had not made the most of its size, buying power or credit rating.

Green wanted the mandation of “centralised procurement for common categories”.

Are officials undermining ministerial plans to boost SME work?

There is some evidence emerging, however, that the civil service is misinterpreting ministerial will and standardising contracts by taking work away from SMEs and putting it with a few large companies. Campaign4Change will be looking at this in coming weeks.

We also hope this will be investigated by the new Government Procurement team which will be headed byGovernment Chief Procurement Officer, John Collington.

Link:

Home Office SME Action Plan.

HMRC SME Action Plan

All departmental action plans.

CSC’s future in NHS IT – an analysis

By Tony Collins

              We trust the Cabinet Office more than the Department of Health to terminate or re-negotiate CSC’s £3.1bn NPfIT contracts.

  •  CSC’s strong position in NHS IT
  • Could CSC claim hundreds of millions from DH?
  • We’d be over a barrel, warns Connelly
  • More expense to cancel CSC’s contract than complete it, says Connelly
  • Are Connelly’s arguments flawed?
  • What happened to the concept of cutting your losses?
  • Remove life support for CSC’s contracts says Techmarketview 
  • CSC sees NHS IT as global reference site
  • CSC MoU is “ready to go”
  • Coalition reviews of CSC contracts a “stamp in the passport”
  • CSC will split Lorenzo into smaller chunks
  • No one NHS trust will dominate requirements

The share price of CSC, one of the biggest NHS IT suppliers, fell by 11% in New York trading this week, after its financial year-end forecast fell short of analysts’ estimates, according to Bloomberg.

Computer Sciences’ share price fell $4.76, or 11 percent, to $39.33 and although today [2 June 2011] the price is up slightly it is far below the 52-week high of $56.61. Bloomberg says that CSC has been hurt by delays in federal contract decisions and is also working to revise its NHS contract in the U.K. CSC has £3.1bn worth of NPfIT contracts.

CSC’s strong position in NHS IT

Despite the temporary knock in confidence for CSC over its share price, in part because of the NHS uncertainties, CSC remains in a strong negotiating position over the future of its work for the UK health service.  

Could CSC claim hundreds of millions from DH?

Christine Connelly, the Department of Health’s CIO, told the Public Accounts Committee on 23 May 2011 that if the DH terminated its contract with CSC for convenience [rather than terminate for breach of contract] CSC could claim hundreds of millions in compensation.

Connelly also said there is the “potential that the supplier may then come to us and seek damages based on the work in progress that they have on their balance sheet today, with a view—not that I am saying at this point that we would share it—that we have impacted their ability to get return on that asset that we were holding.

“So they may come to us and seek damages as a proportion of that balance sheet value. Again, that may be several hundred million pounds”.

Further, by terminating CSC’s contract, the Department of Health would have to support NHS trusts that had bought CSC systems under the NPfIT.

Connelly said:

“I am not talking about what it costs in terms of running those other systems, but there would be a cost if we decided no longer to have Lorenzo or [iSoft’s] IPM or whatever. We would have to take the people who are currently using those systems and move them to something else; that would be a transition cost.

“There then is likely to be a period where we would still be running the systems that we had now terminated. If you look at what happened to us in the South with Fujitsu, Fujitsu increased the cost of supporting the systems. They almost doubled the cost compared to the contract that we had.

We’d be over a barrel, warns Connelly

“So for the period before we had transitioned the systems across, we would expect to pay some premium on that support and obviously we would seek not to do that, but given that we would then be over a barrel, because we are running systems that one supplier has provided and we have now terminated, if we do not manage that well that could be a very difficult position.

More expense to cancel CSC’s contract than complete it, says Connelly

“So potentially, if you ask me about the absolute maximum [the DH is exposed to on its CSC contracts] we could be exposed to a higher cost than the cost to complete the contract as it stands today.”

Are Connelly’s arguments flawed?

But Connelly’s comments appear to make several assumptions namely that:

a) the DH hasn’t a strong legal case against CSC for breach of contract. In fact the DH should be able to credibly contest any claim by CSC for hundreds of millions of pounds in compensation.

b) CSC could withstand a long legal case against the UK government. In fact Fujitsu wants to settle its legal dispute with the Department because the row could damage its relationship with the coalition.  The policies of the coalition mean that suppliers no longer have isolated relationships with departments. Damage to a relationship in one department could affect a supplier’s relationship with government as a whole.

CSC is one of the top 10 suppliers to the UK Government. It will wish to avoid any dispute with the DH that could affect its relationship with the Cabinet Office’s new Crown representatives.

c) it would cost a fortune supporting NHS trusts that had bought NPfIT systems from CSC. In fact there are several healthcare suppliers – other than CSC and BT – that have been supporting and enhancing NHS trust systems outside of, and within, the NPfIT. They could support former CSC trusts at a fraction of the cost of BT [or CSC].

What happened to the concept of cutting your losses?

Anthony Miller, managing partner at market analyst Techmarketview, says it is “utter rubbish” to suggest that cancelling CSC’s contract will cost more than seeing it through to the bitter end. “Has the Government no idea about the concept of ‘cutting your losses’?” asks Miller.

Remove life support for CSC’s contracts says Techmarketview 

He adds:

“It should be clear to everyone involved that CSC’s NHS IT programme has deteriorated from ‘walking wounded’ to ‘do not resuscitate’. The sooner life support is removed, the better for all concerned.”

CSC sees NHS IT as global reference site

CSC, however, continues to see the NPfIT and its NHS IT work as a global reference site for healthcare IT.

Guy Hains, CSC’s President, Global Healthcare, told analysts last month that the NHS component of its business “is still the largest programme globally [and] is the reference point for most of our conversations with other national governments”.

He added: “It’s that experience, the learning points, the good and the bad, that carry forward into most of our development work we are doing elsewhere…”

CSC MoU is “ready to go”

Hains appeared confident that a new memorandum of understanding on its NPfIT work would be signed imminently. “We’ve got government reviews to complete. That’s imminent. We’ve done a lot of work regarding alignment with the NHS, and the MoU in that sense is ready to go”.

Coalition reviews of CSC contracts a “stamp in the passport”

He referred to the reviews of CSC’s NHS contracts as a “stamp in the passport before we go forward”. He said that creating Lorenzo code is “80% done”, adding: “We’ve got some important work to do and it relates to the clinician use and the very much frontline use of the system, and we’ve been learning with the NHS about the better way that we can deliver that”.

CSC will split Lorenzo into smaller chunks

CSC is to release Lorenzo in smaller chunks. “We’re doing it in ten smaller delivery units rather than two major releases. And we’ll be able to deploy those in a separable, incremented way. There’s no question that that will help digestion as it goes into the NHS”. As for working with early adopters, CSC is going through a “radical change in development”.

Hains said that rather than develop the software and then go through extended testing, “we are bringing the engagement of those lead clinicians and lead trusts upstream right into the requirements, refinement and capture stage, so that will allow us to shorten the time to market for the whole programme”.

No one NHS trust will dominate requirements

CSC is putting “governance into the programme” that means that one single trust doesn’t dominate in its requirements. “We’re getting a more common requirement through an expert user group.”

**

Comment:

The Department of Health gives the impression that it is over a barrel, that it cannot afford to fall out with CSC. But it’s clear to others that it is the Department’s commercial lawyers that are cringing before CSC, asking to be forgiven for being a nuisance. In essence the Department is saying to CSC’s lawyers: “Do with us what you will.”

Can public funds be entrusted to the Department of Health in such circumstances?

Richard Bacon, a Conservative MP on the Public Accounts Committee who has followed the NPfIT for many years, told ComputerworldUK that CSC’s contract should be abandoned. He said that the company “should not be rewarded for failure”. He reacted with disbelief to the suggestion that it would cost more to cancel the contract than complete it.

“I find that idea incredible, staggering,” he said. The Department’s comments could be a negotiating ploy to strengthen its arguments around the continuation of the programme, he added.

He said:

“If it’s actually true that it would cost more to cancel, then it’s a scandal. It would be an enormous indictment of [NHS chief executive] David Nicholson as the project’s Senior Responsible Owner, and of Connecting for Health, which allowed such a deal to be signed. “If it’s the truth, then those officials should be dismissed.”

It’s hard to argue with Bacon’s logic. Indeed we are not sure the Department should be taking a lead in any negotiations with CSC or BT. The NPfIT contracts should be in the hands of the Coalition government, via the Cabinet Office, not the Department of Health’s.

The Cabinet Office represents the taxpayer. The Department of Health’s informatics directorate represents a variety of interests including its own. Those interests seem tied to the continuance of the NPfIT.

*Thanks to David Moss for drawing my attention to the Bloomberg article on CSC’s share price.

Links:

Richard Bacon’s views on NHS IT.

NHS urged to turn off life support for £3bn CSC contract.

NPfIT – Our view on what should happen now.

Why did the NPfIT fail?

Health CIO Christine Connelly hits back at National Audit Office.