NHS IT contract 'fiasco' still costing millions

17 September 2013

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18 September 2013 | Marino Donati

The Department of Health is in a “weak position” to renegotiate contracts for its “dismantled” IT programme which is still costing the taxpayer millions, according to MPs.

A report by the Public Accounts Committee concluded although the National Programme for IT has officially been dismantled, it remains in place via separate component programmes, which are still racking up big costs. 

The original contracts with CSC totaled £3.1 billion for the delivery of care records systems to 220 trusts in the North, Midlands and East of England. The department decided to renegotiate in 2011 after delays developing and deploying the Lorenzo system.

However, the department has been unable to meet its own contractual obligation to make 160 trusts available to take the system. Full ‘re-setting’ of the contract has not yet been agreed, but just 22 trusts are now likely to take the system.

Committee member Richard Bacon branded the programme “one of the worst fiascos in public sector contracting”.

“Despite the contractor’s weak performance, the Department of Health is itself in a weak position in its attempts to renegotiate the contracts,” he said. “It couldn’t meet the contractual obligation to make enough trusts available to take the system.”

The full cost of the national programme is still not certain, the report says. But the department’s most recent forecast of £9.8 billion does not include the future costs, including costs arising from the termination of Fujitsu’s contract for care records systems in the South of England which are likely to be significant, it concludes.

The benefits of the system calculated up to March last year were only half the costs incurred, the report found.

Bacon said the programme was evidence of a “systemic failure in the government’s ability to contract”, and that there was little chance of the paperless NHS target of 2018 being hit.

He said: “This saga is one of the worst and most expensive contracting fiascos in the history of the public sector. Yet, as the much more recent Universal Credit project shows, there is still a long way to go before government departments can honestly say that they have learned and properly applied the lessons from previous contracting failures such as the national programme.”

The committee report recommends that the department should:

      Manage the re-set contract with CSC robustly, so that its negotiating position is protected for the future.

       Report to Parliament details of all the additional costs of the national programme, including legal costs, as soon as they are known.

       Set out how it will support local trusts to secure benefits.

       Provide the Committee with an annual update of the costs and benefits of the programmes previously managed under the National Programme.

       Draw on the lessons from the national programme and develop a clear plan to deliver a paperless NHS. 

Health minister Dan Poulter said: "Labour squandered billions on their failed NHS IT programme. It is deeply frustrating that they also tied current ministers' and taxpayers' hands with ongoing liabilities from their wasteful contracts.

“But we can't let their failure hold patients back from seeing the benefits of the technology revolution that is transforming daily lives all around us. That's why we've set up a £1 billion technology fund to help the NHS go paperless by 2018."

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