Tag Archives: CSC

CSC NPfIT deal is a crucial test of coalition strength

Posted on 28/09/2011 | 1 comment

By Tony Collins

Comment:

The Cabinet Office’s Major Projects Authority has intervened in NHS Connecting for Health’s running of the NPfIT.

In particular the Authority has taken a role in the negotiations between CSC and the Department over the future of about £3bn worth of local service provider contracts.

Had the Authority not intervened a memorandum of understanding between CSC and the DH is likely to have been signed several months ago. Fortunately for taxpayers a deal wasn’t signed.

According to a leaked Cabinet office memo the deal would have been poor value for money. It would have cut £700m or more from the cost of CSC’s contracts but doubled the cost to taxpayers of the remaining deployments.

The Cabinet Office memo said the “offer [from CSC] is unattractive”. It added:

“This is because the unit price of deployment per Trust under offer roughly doubles the cost of each deployment from the original contract”.

It could be said that signing such a deal with CSC would be as naive as a shopkeeper asking a Cadbury wholesaler to change his order from 100 chocolate bars to 30, and thus agreeing to paying Cadbury double the price for each bar.

Now it transpires that the official within the Cabinet Office who wrote the memo expressing concern about CSC’s offer is leaving. This could imply that an “unattractive” deal between the Department of Health over Lorenzo will go through after all.

Indeed the Cabinet Office has published its assessment of the NPfIT – the “Major Projects Authority Programme Assessment Review of the National Programme for IT” – which includes a section on CSC that suggests a new deal with the supplier may be signed, even though critics say the NPfIT contract with CSC should be “parked” with no further action taken on it.

The DH has accused CSC of breach of contract and vice versa. A legal dispute can be avoided by parking the contract with the agreement of both sides. If the DH signs a new deal with CSC it will be a sign that the intervention of the Cabinet Office has come to little or nothing.  It will also be a sign of coalition weakness. If the coalition cannot have an effect on a deal the DH has long wanted to sign with CSC when can it effect in terms of central government reform?

This is the worrying  section in the report – dated June 2010 – of the Major Projects Authority:

“… if the decision is taken to allow the Lorenzo development and deployments to continue there needs to be a considerable strengthening of the renegotiated position first to give CSC the opportunity to step up to its failings and for a clear statement of obligations on all parties and a viable and deliverable plan to be created and adhered to.

“There is no certainty that CSC would deliver fully in the remaining time of the contract, but the terms of the renegotiation could enable them to have a completed Lorenzo product which can compete in the market which replaces Local Service Providers…”

Other parts of the Major Projects Authority report are highly critical of Lorenzo. It says that in the North, Midlands and East of England there have been “major delays in the development of …Lorenzo”. As a result of the delays “interim and legacy systems have been used to maintain operational capability”.

The report also says the “productisation of Lorenzo is not mature” and adds: “This is evidenced by the fact that bespoke code changes are still being used in response to requirements from the early adopter trusts. This issue will be exacerbated if the remaining product development (of the modules referred to as Deployment Units) is not completed before future implementation roll-outs commence.”

The report says there is a need to be “certain about the capacity and capability of CSC to furnish sufficient skilled resources to undertake the level of roll-out needed to satisfy the existing schedule”.

It continues: “During the review it was mentioned that on occasion, people needed to leave the Morecambe Bay activity to go to the Birmingham installation at short notice to resolve problems. At this stage of the programme, CSC skills, schedule and utilisation rate, including leveraged resources, should be available to support a proposed roll-out schedule…”

There is still a “significant degree of uncertainty both about the planning of [Lorenzo] implementations and also the capability of the solution. The four key trusts chosen to implement the Lorenzo solution are in very different situations. University Hospitals Morecombe Bay is close to sign-off whilst Pennines Trust has stated its desire to leave the programme. Birmingham Women’s Hospital Trust is being held back by one issue which views have suggested are about a difference of opinion with the Supplier believing that they have met the Deployment Verification Criteria whilst the Trust is not happy about the level of functionality delivered. Connecting for Health expect to resolve this difference of opinion soon.”

And the MPA report says the latest implementation of Lorenzo 1.9 is “a long way short of the full functionality of the contracted solution which has four stages of functionality and is intended to be rolled currently out to 221 trusts”.

Lorenzo was originally due to have been delivered by the end of 2005.  If, after all the MPA’s criticisms, a new Lorenzo deal is signed what will this say about the ability of the Cabinet Office to influence decisions of civil servants?

In 2006 an internal, confidential report of CSC and Accenture on the state of Lorenzo and its future was positive in parts but listed a multitude of concerns. The summary included these words: “…there is no well-defined scope and therefore no believable plan for releases beyond Lorenzo GP…”

The current outdated NPfIT deal with CSC should be set aside , and no further action taken on it by both sides. CSC will continue to have a strong presence in NHS IT, at least because many trusts that have installed iSoft software will need upgrades.

But if a new NPfIT deal is signed with CSC it will greatly undermine the credibility of the Cabinet Office’s attempts to effect major change on the machinery of departmental administration; and it could help consign the so-called reforms of central government to the dustbin marked  “aspirations”. It will certainly give ammunition to the coalition’s critics. The Government has said it is dismantling the NPfIT. It didn’t say it was prolonging it.

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NPfIT to be “dismantled” – brick by brick

Posted on 22/09/2011 | 6 comments

By Tony Collins

A Department of Health press release issued this morning is headlined:

                        Dismantling the NHS National Programme for IT

I asked a senior official at the Department what is new in the announcement. The official’s diplomatic reply was simply: “I am not sure how to answer that.”

There is nothing new. There is no evidence in the press release of the Department’s claim that the NPfIT is being dismantled. Negotiations continue with CSC over its £3bn worth of NPfIT contracts and BT’s deals will remain in place.

Spending on the NPfIT has been about £6.4bn so far – and about £4bn has yet to be spent. The Government has succeeded in persuading some in the general public that the NPfIT is dead. The Daily Mail’s front page has the headline:

                                £12bn NHS Computer System is Scrapped

The online version of the story has had more than 460 comments, which suggests it has been widely read.

The actual announcement gives a hint of the conflicting views among civil service and ministers. The first paragraph of the Department of Health’s press release says the NPfIT is being dismantled and the second paragraph praises the scheme.

“The government today announced an acceleration of the dismantling of the National Programme for IT, following the conclusions of a new review by the Cabinet Office’s Major Projects Authority (MPA). The programme was created in 2002 under the last government and the MPA has concluded that it is not fit to provide the modern IT services that the NHS needs. In May 2011 the Prime Minister announced in the House of Commons that the MPA would be reviewing the NHS National Programme for IT. 

 “The MPA found that there have been substantial achievements which are now firmly established, such as the Spine, N3 Network, NHSmail, Choose and Book, Secondary Uses Service and Picture Archiving and Communications Service.  Their delivery accounts for around two thirds of the £6.4bn money spent so far and they will continue to provide vital support to the NHS. However, the review reported the National Programme for IT has not and cannot deliver to its original intent.”

The signs are that the scheme will be dismantled brick by brick – and will be almost completely dismantled by the time the NPfIT contracts with BT and CSC expire in 2013 and 2014.  The coalition has achieved a PR coup with the Daily Mail story because the public has the impression that in these austere times a £12bn NHS IT scheme initiated by Labour has been scrapped.

The reality is that nothing has changed.

Department of Health announcement

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CSC optimistic on new NPfIT deal – officials less so

Posted on 24/08/2011 | 1 comment

By Tony Collins

CSC is due to meet officials from the Cabinet Office next month to discuss a possible new deal over the company’s £3bn worth of NHS IT contracts. Proposals from the Cabinet Office’s Efficiency and Reform Group have gone to the Department of Health and Downing Street for approval.

Nobody seems to know yet what the ERG has proposed but CSC remains confident that a new NPfIT deal will be signed that is good for the supplier’s finances and for the NHS.  Not all Whitehall officials share CSC’s confidence, however.

A new deal may be signed – but perhaps without the exclusive arrangements in the original contracts and the NHS commitments to place a minimum amount of business with the company.

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CSC ambivalent on prospects of new NHS IT deal

Posted on 11/08/2011 | 2 comments

By Tony Collins

CSC is not quite as confident as it was on new NPfIT contracts

CSC is meeting UK Government officials next month to discuss the company’s £3bn worth of NHS IT contracts. It follows a review of the NPfIT contracts by the Cabinet Office’s Major Projects Authority.

It’s likely officials will discuss a major revision of CSC’s contracts – and possibly an end to them. The Cabinet Office minister Francis Maude is thought to favour termination but the Health Secretary Andrew Lansley, on the advice of NHS Chief Executive Sir David Nicholson, wants to keep CSC in a revised NPfIT.

Recommendations from the Cabinet Office have gone to David Cameron for a decision.

In a conference call yesterday on the company’s first quarter results CSC’s executives said the outcome of the NHS contracts represented an “elevated” risk factor.  But they said CSC is still on target for signing a new deal.

Mike Laphen, CSC’s Chief Executive, said his company has included in its forecasts about $250m [£155m] of NHS turnover until the end of its financial year in April 2012. Any delay in reaching a new deal in September could affect the $250m forecast said Laphen.

He said: “Right now we are assuming that we are still on target with the MoU [Memorandum of Understanding between CSC and the Department of Health]. We are absolutely staffed up ready to execute. We’ve got the products in the delivery pipeline and we believe we have the demand…”

On its NHS work CSC continues to “execute and deliver against our current commitments across primary and secondary care”. CSC’s iSoft “Lorenzo” remains in production routinely supporting daily operations at three early adopter sites.

“We are progressing delivery modules… including emergency care and outpatient prescribing which are anticipated to be installed at the University Hospitals Morecambe Bay once an agreement is reached with the authority,” said a CSC spokesman.

The company told analysts that for its 2012 financial year “there are still a number of large balls still in the air” which include the NHS contract, integration of iSoft and US government spending. “Our business is sound and we have one of the strongest balance sheets in our industry,” said the company.

UK IT market analysts Techmarketview said CSC’s management team “isn’t quite as confident of a positive outcome [on talks over NHS contracts] as it was a few months ago – and rightly so.”

CSC also noted there had been a “significant shift in the market”  from outsourcing to cloud, though with cloud many companies are still deciding “what they’re going to do, or not do”.

MP contacts No 10 and Cabinet Office on CSC’s NHS IT contracts.

BT slammed over NPfIT value-for-money claim.

Was NPfIT really a programme?

Trust forced to buy NPfIT software or face fine

NPfIT has proved unworkable – BCS

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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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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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MP responds to our campaign on £265m extra spend on Siemens passport IT contract

Posted on 27/07/2011 | 1 comment

By Tony Collins

Richard Bacon, a Conservative MP on the Public Accounts Committee, has written to the head of the National Audit Office to ask that he consider an inquiry into £265m of extra payments to Siemens on a passport IT contract.

It comes after the Home Office declined to explain why a contract with Siemens that was expected to cost £80m to £100m ended up costing £265m.

On Monday this week Home Office spokesman Andrew Bell politely declined to answer any of Campaign4Change’s questions on the Siemens contract.

As a result we forwarded to Bacon emails of our questions to the Home Office and its answers.    

Now Bacon has written to Amyas Morse, head of the National Audit Office, drawing his attention to our email exchange with the Home Office.

Says Bacon in his note to Morse:

“I wondered if the NAO might consider looking at the Siemens contract for the IT infrastructure for the passport service?  The Home Office appears to see relatively little need to justify the fact that an £80-100 million contract with Siemens actually cost £365 million.”

Bacon also pointed out to Morse that CSC has replaced Siemens on the passport IT contract. CSC is a main supplier on the NHS National Programme for IT, NPfIT.  In a report due to be published shortly by the Public Accounts Committee, CSC’s work on the NPfIT is likely to be heavily criticised.

Unless the NAO investigates the passport contracts Parliament will have no certain way of knowing whether the CSC passport IT contract, like the Siemens deal, is deviating from the original expected costs, scope or timetable.

Officials are keeping Gateway reviews secret – though these could give MPs an insight into progress of the CSC passport contract.  

My questions to the Home Office, and its reply, are here.

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

Posted on 15/07/2011 | 2 comments

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

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NHS IT supplier “corrects” Health CIO’s statements

Posted on 30/06/2011 | 3 comments

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.

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