Aftermath of the riots: lending SMEs a helping hand

Posted on 09/08/2011 | Leave a comment

With the pictures of the aftermath of  last night’s riots still embedded in the memory and  with dozens of SMEs literally picking up their pieces of their businesses, perhaps it is time for the large to offer help to the small.

Larger business have IT facilities and premises that could be utilised in the short term to help SMEs get on their feet in the affected cities  and London boroughs.

IT suppliers could do their bit in tiding over SMEs who need IT facilities, perhaps provided by Cloud-hosted systems. Now is the opportunity for the Cloud to deliver a solution which is up and running and available quickly.

In addition, the government could be putting some of its array of IT  to good use, giving London-based business a leg up. Insurance will help, and the Federation of Small Businesses has already been pointing out the urgency today.   But SMEs need more. And they need it now.

If you can help, we suggest you contact the Federation of Small Businesses on 01253 336000    http://www.fsb.org.uk/

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MP contacts Cabinet Office and No. 10 on future of NPfIT

Posted on 08/08/2011 | 3 comments

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.”

Will CSC’s £3bn NHS IT contracts be cancelled?

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Will CSC’s £3bn NHS IT contract be cancelled?

Posted on 08/08/2011 | 2 comments

By Tony Collins

Several people have asked us whether the Cabinet Office’s Major Projects Authority will cancel  CSC’s NPfIT contract or whether draft memorandum of understanding between the Department of Health and the supplier will be finalised and signed.

The position is that a deal with CSC has not yet been agreed – and it’s not clear when it will be. Recommendations from the Cabinet Office’s Major Projects Authority have gone to David Cameron, according to yesterday’s Observer.

We’ve also been asked whether the The Major Projects Authority has any authority over CSC’s NPfIT contracts.

In January Downing Street  gave the Cabinet Office a mandate to “intervene” in projects that are poor value for money, have hit delays or are failing. If there’s a dispute between the Major Projects Authority and a department, the Cabinet Office can ask David Cameron for a decision.  So if the Major Projects Authority wants to cancel the CSC NPfIT contract it can – up to a point.

If the DH doesn’t agree, and it probably wouldn’t, it would be up to Cameron, who would probably back the Cabinet Office’s decision. It would then be the DH that dealt with the consequences.

The Major Projects Authority is under a clear-thinking Australian David Pitchford who is understands what goes wrong with big IT projects and why. He reports to Ian Watmore who also has a good understanding.

These are some of the reasons Pitchford gives for failing government IT-based projects:

1.Political pressure
2. No business case
3. No agreed budget
4. 80% of projects launched before 1,2 & 3 have been resolved
5. Sole solution approach
6. No timescale
7. No defined benefits

Most of these apply to the NPfIT.

One view about what should happen is that at least the part of the CSC contract that relates to acute hospitals should be cancelled, and the NHS should be under no further contractual obligation to buy from CSC – that was always an artificial device. CSC should be under no further obligation to deliver to the NHS.

CSC’s obligation has been a means of Whitehall, through CSC, maintaining some control over trusts and justifying a large central team. End that obligation and you don’t need a large central team. Last week’s Public Accounts Committee report on the NPfIT detailed care records systems said that NHS CfH has 1,300 people.

Whatever happens CSC will maintain a strong  presence in the NHS, at least through its purchase of iSoft. Many trusts with iSoft systems are likely to replace them with iSoft – CSC – products. Patient administration systems are huge investments and changing them can be risky.

EC procurement rules mean that trusts will need to go open tender when their existing contracts expire but some will find ways of awarding new contracts to existing suppliers, if that’s their wish.

So CSC’s future in the NHS is assured, whatever happens with its NPfIT contracts.

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Mutuals: meeting the leadership and change management challenge of spinning out

Posted on 08/08/2011 | Leave a comment

A recent blog post by the Transition Institute discusses the leadership and change management challenges that must be met in spinning out of the public sector.

The post, by Sarah Ashley, argues that there are a number of themes that recur among those spinning out, including a need for leadership, transparency, language and perceptions.

On leadership, she says, “To instigate and complete a successful change, leadership is extremely important. Though change champions can steer change from any layer of an organisation, the project needs to be spearheaded by an ambitious, dedicated and highly motivated individual. This person must be fully committed to change, and will have to confirm, persuade and assure others to support the change.

“Spinning out of the public sector and change management is not an overnight process, but the change does need to be swift. Once the decision to change has been made, the change should move quickly and throughout the transition the leader must be flexible but resolute. ”

You can read the rest of the post here

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Mutuals: balancing the benefits of employee ownership and innovation with the risks and rewards

Posted on 05/08/2011 | Leave a comment

By David Bicknell

The excellent King’s Fund report released yesterday on social enterprise in healthcare made some interesting points on employee ownership and risk in social enterprises and mutuals.

It said: “Evidence from other sectors (the commercial industry, and other public services to a lesser extent) largely focuses on the employee ownership model. In the UK, there is considerable evidence based on the John Lewis Partnership, a major retailer and the UK’s largest employee-owned organisation. However, much of the literature in this field is from the United States, where a significant proportion of the workforce (more than one-fifth) is financially involved in their organisation.

“Literature from the private sector is predominantly supportive of employee ownership, and suggests that there is a positive link between employee ownership and productivity, innovation and job satisfaction. This literature is based on the argument that, by giving employees a stake in their organisation, they will be more engaged and potentially more productive.

“However, Ellins and Ham report evidence that suggests that employee ownership may slow down decision-making and generate a risk-averse culture. A review of the literature by Matrix Evidence also suggests that any productivity gains are not immediate, but become stronger over time.

“The relationship between employee ownership and staff engagement is quite complex. It has been suggested that employee ownership does not automatically lead to greater staff participation, but that staff participation is necessary for the development of a successfuland productive employee- organisation. The literature suggests that the main benefit of employee ownership is greater staff involvement in decision-making, which is associated with a stronger tendency for organisational innovation. However, the direct link between ownership and staff satisfaction is much less clear.

“In commercial industries, employee-owned firms tend to have a lower risk of failure. They are able to create jobs quickly, and are at least as profitable when compared to conventionally structured businesses. Further, a survey by the Social Enterprise Coalition found that social enterprises were twice as confident of future growth compared with small- and medium-sized enterprises (SMEs) (48 per cent as opposed to 24 per cent of SMEs). Additionally, since the recession began, 56 per cent of social enterprises have increased their turnover from the previous year (compared with 28 per cent of SMEs).”

The other week when David Cameron launched the Open Public Services White Paper, he suggested that the Civil Service (and perhaps other
enterprises too) would need to adopt a risk-taking culture.

“The biggest challenge for the Civil Service is to try and adapt to this new culture and also a very difficult thing to do, and an easy thing to say, is that actually civil servants will have to take some risks. We all know that in business it is very easy to award the contract to Price Waterhouse. They’ve done it before, they’re an enormous organisation, they won’t fail. I think there’s a similar tendency within the Civil Service. It’s safe to keep it in house and deal with one of the big providers.

“If we really want to see diversity, choice and competition, we have to take some risks and recognise that sometimes there will be a new dynamic social enterprise that has a great way of tackling poverty or drug abuse or helping prisoners go straight, and we do need to take some risks with those organisations and understand that rather like in business, when you have a failure, that that doesn’t mean that the Civil Service has done a disastrous job.

“In business, we try new things in order to do better, and when they don’t work, we sit back and think, ‘How do we do that better next time?’ We do need a sense of creativity and enterprise in our Civil Service which is clearly there….a change of culture, perhaps a different attitude towards innovation and risk and a sense that that will be a good way of driving performance.”

Interesting then that a blog post in the Harvard Business Review site discusses risk and argues that taking a risk is not immoral – as some might argue – and that “the world is full of people who sit on their high horses disparaging risk and risk takers. They counsel caution in order to gain moral stature, all the while making use of a thousand innovations made possible by the very people and practices they shun.”

It’s not the people who shun risks who are the saints, the author, Dan Pallotta, says. It’s the ones who dare to take them. Good piece – worth a read.

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NHS mutuals and social enterprises will need more support to succeed, says the King’s Fund

Posted on 04/08/2011 | Leave a comment

By David Bicknell

Healthcare think-tank, The King’s Fund, has produced a new report on social enterprise in healthcare which suggests  that there  are many practical challenges facing organisations in making the transformation to becoming a social enterprise or mutual.

These include including access to NHS pensions for new staff and the vulnerability of smaller organisations to failure, particularly given the change in payment mechanisms from block contracts and grants to an ‘any qualified provider’ model. Some will fail or, at best, become subcontractors for much larger businesses.

The King’s Fund report adds that  any qualified provider presents an opportunity for social enterprises (and other emergent providers) to enter the market. The Cabinet Office has stated that social enterprises can be a ‘force for innovation’, which need support through more intelligent commissioning.

“All providers will need to be better at demonstrating outcomes, particularly those delivering non-clinical services such as advocacy and support, where outcomes are much harder to measure and prove, the report says.

The King’s Fund says its findings echo those of the recent Co-operatives UK report, Time to Get Serious (Bland 2011), which identified the factors that will be important in establishing mutuals and co-operatives across UKpublic services.

These include concentrated business planning and support – during both the implementation and operational phases – and long-term commissioning and political commitment to nurturing the development of the social enterprise model.

“Assuming that social enterprises are to be embedded as health care provider organisations, they need time to evolve and to emulate the levels of customer service, quality and innovation seen in organisations in the commercial sector. Social enterprise directors spoke at length about the benefits available to them; however, the extent to which they are exercising these freedoms to innovate or grow is unclear,” says The King’s Fund report.

“Transferring out of the NHS now has additional risks, because organisations will not be protected by the long-term contracts that were initially available through the Transforming Community Services programme. The social enterprise directors and foundation trust chief executives we interviewed gave a clear message that the most significant feature of social enterprises is their focus on engaging staff in decision-making, rather than offering a package of incentives.

“However, some felt that staff engagement can be achieved without formally changing the ownership structure of an organisation. Giving staff a stake in the organisation they work for needs to be combined with much deeper engagement in decision-making than has traditionally been the case in the NHS, particularly when it comes to empowering frontline teams.

“Changing an organisation’s culture is much more difficult than altering its structure, but is essential if further improvements in performance are to be achieved. This has implications for workplace relationships, and requires leadership styles that foster collaborative and inclusive approaches to problem-solving.

“There are a variety of options for NHS providers to reap the benefits of the social enterprise model – namely greater staff engagement, flexibility and autonomy, and flatter decision-making – without major organisational upheavals. For example, models such as multi-professional partnerships – extending GP partnership models to others in primary care/social and community care or in secondary care, and multi-professional chambers within foundation trusts – build on the benefits of service line management in providing autonomy and flexibility to clinical teams.

“Providers, whether NHS, private sector or not-for profit, cannot wait for the commissioning intentions of clinical commissioning groups to become clear. They need to be proactive, working with others to design high-value services that no commissioner could refuse to buy. Social enterprises are well placed to do that. However, whether the government’s vision of the largest social enterprise sector in the world will be realised depends on the motivation of NHS organisations, their ability to overcome barriers and realise the benefits of social enterprise, and whether social enterprise is sustainable in the long term. The opportunities are there; the question is whether staff and their leaders want to take them.”

The King’s Fund’s recommendations for the future development and sustainability of social enterprises delivering NHS-funded care include:

  • Miscommunication and misinformation has hampered the establishment and operation of social enterprises in health care. The Department of Health must continue to take responsibility for ensuring the accurate dissemination of information about social enterprise and the Right to Provide programme, as well as broader developments in NHS terms and conditions and the support available to emergent social enterprises. This builds on its existing programme of workshops, sitevisits, case studies and networks.
  • Social enterprise directors should establish and maintain an open dialogue with staff and external stakeholders in the setting-up phase and throughout operations. The values of social enterprise and employee participation should be reflected in what the organisation does from its inception. Staff engagement is especially important during challenging periods or when making difficult decisions.
  • Central government, the Department of Health and directors of health care providers should not assume that setting up new organisational structures will automatically generate greater staff engagement. Staff engagement is a necessary pre-condition for the successful development of a social enterprise, but will not be achieved solely as a result of structural reforms. Other providers can potentially gain this benefit without major organisational upheaval, through developing strategies for staff engagement.
  • The protection afforded to social enterprises through long-term contracts at the beginning of the Transforming Community Services programme is no longer available. In these challenging economic times, and with the government committed to provider competition, social enterprises may be more vulnerable to failure. It is essential that social enterprises develop the necessary business orientation and flexibility to innovate that will be necessary in a more competitive environment.
  • Social enterprise leaders should be supported to develop the necessary skills and competencies through national development programmes. The Social Enterprise Investment Fund should continue to provide expertise, advice and support.
  • The guarantees and provisions of the earlier Right to Request programme should be continued. Arguably, the programme has been successful because of its commitment to guarantee pensions for existing NHS staff, as well as the investment in awareness raising and development support, the contract guarantee, and backing from the centre for individual applicants when faced with local, regional and trade union opposition.
  • It is likely that the benefits of social enterprises in health care will be seen in the longer term, with potentially limited impact in the short term. To achieve this long-term impact, there needs to be greater certainty around commissioning priorities. It is vital that the government and Department of Health commit to a long-term support programme and commissioning strategy for emergent social enterprises.

The report’s author, Rachael Addicott, has written this blog

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Today’s report on the NPfIT: the good news

Posted on 03/08/2011 | 1 comment

By Tony Collins

Conservative MP Richard Bacon says there is some good news from the “fiasco” that is the NHS National Programme for IT.

He says: “The National Programme for IT in the NHS, the largest civilian IT programme in the world, has failed in its main purpose.   After many years of thinking big but achieving little, the Department of Health has been forced to admit that the central aim of a detailed electronic care record for every patient in England will remain a pipe dream.

“The Department is unable to show what has been achieved for the £2.7bn spent so far on care records systems, while its attempts to renegotiate contracts have resulted in huge reductions in what suppliers are required to deliver without an equivalent cut in prices.

“Meanwhile, many Trusts could face unquantifiable future bills for the upkeep of interim systems which were never deemed adequate for the original contracts and which were only installed because suppliers were unable to meet their original obligations.

“The only good news from this fiasco is that every move of the Department of Health in this area will now be subject to the closest scrutiny from the Cabinet Office”.

Bacon was commenting on today’s report of the Public Accounts Committee on NPfIT detailed care records systems.

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Fujitsu denies Whitehall claim over NHS IT work

Posted on 03/08/2011 | Leave a comment

By Tony Collins

The Department of Health has suggested in a memo to MPs that Fujitsu, after having its NPfIT contract terminated, sought to improve its financial position by doubling service charges and threatening to turn off systems if it was not paid.

Fujitsu has denied the accusations, describing them as “wholly untrue”. It says that “as a trusted supplier of services to many Government departments Fujitsu would never countenance adopting such a position”.

The Department of Health’s claim was in the context of its legal action with Fujitsu after the supplier’s NPfIT contract was terminated in 2008.

In a memo published today in a report of the Public Accounts Committee on the NPfIT detailed care records systems, the DH responds to a question by MP Richard Bacon on what the maximum costs would be if contracts with the two remaining local service providers CSC and BT were to be cancelled.

The DH sets out some of the possible costs including those associated with providing ongoing services after the contract is terminated. Says the DH memo:

“It is likely that suppliers will seek to increase these ongoing costs in an attempt to improve their financial position (Fujitsu, for example, doubled the service charges claiming they would turn the systems off unless we paid).”

But the DH provides no evidence of its claim, and the Committee in its report today casts doubt on the credibility of some DH statements related to the NPfIT.

In a statement Fujitsu said:

“If the suggestion is that that Fujitsu threatened to  turn off its systems unless the Department of Health agreed to a doubling of charges that is wholly untrue. As a trusted supplier of services to many Government departments Fujitsu would never countenance adopting such a position.

“After Fujitsu’s contract terminated Fujitsu continued to provide significant services ( Care Records and PACS / RIS) to a large number of Trusts whilst a replacement temporary contract was negotiated.

“The temporary contract was required to cover the period up to transfer of the services to alternative suppliers. Fujitsu supported this activity for six weeks after termination at its own risk, without a contract and any security of payment.

“Had Fujitsu not done so this the risks to the NHS would have been significant. Far from taking advantage, Fujitsu acted very responsibly and properly in safeguarding the ongoing provision of services to end users.

“Fujitsu’s charges for continuing to provide services were based upon the charging principles set out in it original contract. This was confirmed by the Department’s own audit.”

DH puts case against cancelling NPfIT contracts

BT slammed over NHS value for money claim.

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DH puts case against cancelling NPfIT contracts

Posted on 03/08/2011 | 2 comments

By Tony Collins

The Department of Health has put a detailed case to MPs for not cancelling £4bn worth of NPfIT contracts with local service providers CSC and BT.

Among the points the DH makes is that “the NHS cannot continue without replacing the systems now covered by these contracts” – which refers to the NPfIT contracts with BT and CSC.

The DH also says that CSC and BT “have been clear that they are not willing simply to talk away”. Legal advice to the DH is of a “significant” risk that BT and CSC may, if their contracts are ended, work with Fujitsu in a unified legal action against the Department. Fujitsu and the DH are in a protracted legal dispute after the Department terminated Fujitsu’s NPfIT contract in 2008.

The Department’s memo to the Public Accounts Committee is published today in the PAC’s report entitled “The  National Programme for IT in the NHS: an update on the delivery of detailed care records systems”.

The report is highly critical of all the main parties to the NPfIT including:

– CSC which the report says has delivered only 10 of 166 of its ‘Lorenzo’ systems in the North, Midland and East. The PAC report calls on the Government to give “serious consideration to whether CSC has proved itself fit to tender for other Government work”.

– BT, the other main supplier to the NPfIT, which has “proved unable to deliver against its original contract”, says the report.

– Sir David Nicholson, the Chief Executive of the NHS who is senior responsible owner of the NPfIT, who is criticised by name. It’s rare for the committee’s MPs to personalise their criticism. It says there has been “weak programme management”  and adds: “We are concerned that, given his significant other responsibilities, David Nicholson has not fully discharged his responsibilities as the Senior Responsible Owner for this project. This has resulted in poor accountability for project performance…”

– The Department of Health and NHS Connecting for Health which cannot be trusted to give reliable or complete information on the NPfIT, even to government auditors.  The report says: “Basic information provided by the Department to the National Audit Office was late, inconsistent and contradictory… This occurred despite the fact that Connecting for Health, the NHS organisation responsible for managing the Programme nationally, has 1,300 staff and has spent £820m on central programme management.”

– The Department of Health over its poor ability to re-negotiate contracts with BT and CSC. The report says that the Department ended up “clearly overpaying BT to implement systems …BT is paid £9m to implement [RiO] systems at each NHS site, even though the same systems have been purchased for under £2m by NHS organisations outside the Programme.”  This “casts the Department’s negotiating capability in a very poor light”. The report adds: “We are worried that the Department will fare no better in its current negotiations with CSC …”

– The Department of Health for leaving NHS trusts in a mist of uncertainties. Trusts with NPfIT systems will not know the costs of supporting them after the BT and CSC contracts expire in 2014/15. It’s also uncertain how individual trusts will manage CSC and BT NPfIT contracts when the supplier agreements are held by the Secretary of State for Health.

– The Department of Health for leaving CSC in a controlling position to supply trusts with upgraded interim iSoft systems that were not part of the original contract. Says the PAC report: “It is important that CSC, particularly given its proposed purchase of iSoft, does not acquire an effective monopoly in the provision of care records systems in the North, Eastern and Midland clusters.

“This could result in the Lorenzo system effectively being dropped as the system of choice and many Trusts being left with little choice but to continue with out-dated interim systems that could be very expensive to maintain and to upgrade, or to accept a system of CSC’s choice.

“CSC should not be given minimum quantity guarantees or a licence to sell a product other than that procured and selected by the Programme within the Local Service Provider contract.”

But in its memo to the Committee the Department is unrepentant. Indeed the self-justifying detail and tone of the DH memos, which include selective, apparently corroborating quotations from a KPMG consultancy report that the Department has never published, suggest that, while the NPfIT has changed, the zeal with which DH officials defend the scheme, whatever its problems, has changed little since the programme was announced in 2002.

The DH’s case for not cancelling the contracts with CSC and BT was prompted by a written question from Richard Bacon, a Conservative MP and long-standing member of the Public Accounts Committee who has taken a close interest in the NPfIT.

Bacon asked:

What are the maximum payments to which NPFIT would be exposed for contract cancellation of the detailed care records systems, for each of the LSP providers [CSC and BT]?

The DH said that if the contracts were cancelled for convenience the maximum payments could be [DH italics] in excess of the currently anticipated costs to complete the BT and CSC contracts. If the DH were to cancel contracts for acute hospitals only, the maximum payments may reduce by 50%, said the DH.

The DH adds:

“These costs do not include the deployment or operational costs of any new systems that the NHS would need to procure. The NHS cannot continue without replacing the systems now covered by these contracts.”

Cancellation costs 

Cancellation costs could involve, said the DH:

– Contractual costs: The minimum amount the supplier is allowed to receive under the contract.

– Damages This would include covering some of the suppliers’ unrecovered costs to date and pre-accrued claims at the point of termination

– The costs of providing the ongoing services after termination. It is likely that suppliers will seek to increase these ongoing costs in an attempt to improve their financial position. The Department claims that Fujitsu increased its service charges and claimed it would turn systems off if outstanding sums were not paid.

– Costs of replacing systems, plus support and development of live services.

– Legal and professional fees for terminating, transferring work and investigating the facts around termination.

But the DH makes no mention that the Department would have a strong negotiating position if contracts were terminated because any dispute could cause the Cabinet Office to lose confidence in that supplier, which may affect the ability of the company to win further government work.

Would any major supplier want to fall out with government as a whole, rather than just one department?

Coalition changes mean that government considers itself as a single customer when reviewing the reputation and credibility of individual suppliers.

MPs don’t trust the DH’s information

Many of the points made by the DH in 15 pages of memos appear to have been largely discounted by the committee, partly because MPs did not trust what the Department said.

Comment

The Department of Health has a history of quoting selectively from consultancy and legal reports to support the argument it is making.  This is what tabloids do at times. Indeed the DH  never publishes the consultancy and legal reports it quotes from, so should we trust its arguments that point to keeping the NPfIT contracts with CSC and BT?

There may be good arguments for cancelling the contracts that have not, and are unlikely to be, mentioned by the DH.

Some benefits of cancelling NPfIT contracts

Cancelling could end the uncertainties for trusts that would otherwise be pressured to take NPfIT systems. It could also end the uncertainties for trusts that have yet to buy NPfIT systems and may face punishing costs to keep them running, and in step  with changes within the NHS, after the contracts with BT and CSC expire in 2014-2015.

If Campaign4Change were advising the coalition we would suggest it commission a genuinely independent review of the pros and cons of cancelling the NPfIT contracts.  The review  should not be commissioned by the DH or Connecting for Health because their lawyers and consultants will tend to tell the department what they think it  wants to hear.

One of the messages that comes loud and clear from today’s report of the Public Accounts Committee is that the DH cannot be trusted to make the right decisions on behalf of taxpayers and the NHS. The DH cannot even be trusted to tell the truth to judge from the PAC report.

The Cabinet Office needs to take control of major DH IT spending. Perhaps the sooner the better.

Public Accounts Committee report on NPfIT detailed care records systems.

NHS must consider scrapping NPfIT – MPs.

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Posted in Campaign4Change, legal disputes, managing change, NHS, npfit, outsourcing, public sector, public services, reforms, supplier relationships

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Former Dragon James Caan tells SMEs ‘cloud computing has changed the landscape’

Posted on 03/08/2011 | Leave a comment

By David Bicknell

An article in ITPro magazine featuring former Dragon’s Den presenter James Caan describes the benefits for SMEs of cloud computing.

Caan insists advancing technology and the growth of the online industry makes it easier and more efficient now to set up your own business and access information faster.

” It (cloud computing) has changed the landscape quite significantly. Companies no longer need to have large bulky archives with all their databases written on papers. Cloud computing enables all this information to be stored online in a digital format, with little limitations on size.

“What’s also very important is that cloud computing enables information and data access anywhere in the world, as long as there is an internet connection. My private equity firm Hamilton Bradshaw uses cloud computing and I’m still amazed how efficient the system is.

“I was recently abroad and I wanted to show my colleague some fairly large documents. I was able to access the files and information within minutes. Of course there is a risk with cloud computing, but security is high on the agenda for cloud computing companies. They are continuously updating their processes for user security.”

And believes Caan, that focus on security is something more SMEs should be aware of, even if their times is limited.

“I think all companies, not just start-ups, aren’t doing enough for their business information security. In the case of small businesses this may be down to the perception that they aren’t in a high risk position. As a business owner you wouldn’t leave the front door of your office open at night so why would you put your information assets at risk?

“Business owners are typically so swamped with everyday tasks and issues they tend to push their business security to the bottom of their priority list. However, I believe that a company’s information is one of their most valuable assets and should be at the top of every entrepreneur’s agenda.”

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Posted in Campaign4Change, Cloud Computing, SME

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