CSC insists NHS deal imminent despite prime minister’s warning

Two hours after David Cameron told parliament that all or part of CSC’s £3 billion National Health Service contract could be cancelled following committee reviews, the supplier moved to assure investors that the company was “close” to finalising an agreement.

At 12.30pm yesterday, Cameron said during prime minister’s questions that he was “very concerned” about the NHS IT programme, which is led by CSC in North and central England, and BT in London and the South. While the government and BT have already reached an agreement, Cameron insisted there were “no plans” to sign any contract with CSC until a series of detailed reviews are complete.

At that point, Cameron warned, the deal could be cancelled. He said the government will “examine all available options under the current contract including the option of terminating some or indeed all of the contract”.

But CSC chief executive Michael Laphen, speaking less than two hours later at the company’s investor meeting in New York, said that he believed the signing of a contract was still going ahead, albeit following the government reviews.

“My understanding is that the prime minister said they were continuing with the reviews as we knew, and as we reported, before they go forward signing a revised contract with us,” he said.

“I understand there’s some realtime reports out there regarding the prime minister’s comments and remarks in the prime minister’s questions,” he added. “I understand there’s a number of interpretations coming out of those remarks.”

One report, he said, was that CSC had been “suspended from UK contracts”, even though the prime minister had appeared to refer only to work in the NHS. “We have gotten no notice of that [alleged suspension], and don’t believe that that is forthcoming,” Laphen said.

CSC was “looking forward to the final approval and signing of the MoU agreement,” he said. “While the process to develop the MoU was protracted, it has resulted in a realigned programme that will deliver significant success and substantial benefits to the NHS, and both strategic and financial benefits to CSC.”

CSC has insisted that an MoU would be signed in the “next few weeks”. But the government reviews, which will now precede any contract signing, could take months.

First, the National Audit Office will report next week on the programme, following a previously highly critical report. Within days, the Public Accounts Committee will hold hearings with NHS and Department of Health executives regarding the NAO review, and it will then begin to compile its own extensive report.

The Major Projects Authority will also produce an in-depth review, as the prime minister intervened to make sure the Cabinet Office has a direct role in the management of the project and its suppliers, goverment IT expert Tony Collins noted in his blog on Computerworld UK today.

In spite of the tough words from the prime minister, in what was his first public criticism of the programme and his first open warning to NHS IT suppliers since taking office, CSC said the future of the project was bright. Laphen said: “We believe the NHS programme is on the cusp of a real success, a significant success.”

A spokesperson at CSC insisted again today that the company “is in the final stages of negotiating a non-binding memorandum of understanding with the NHS”.

“Completion of the MOU has always been dependent on final NHS and other government reviews,” the spokesperson said. “The prime minister’s comments today confirmed that the NHS programme reviews must be completed before any NHS agreement would be finalised.”

Last August, Laphen warned investors that any cancellation of its contract would likely “wind up in disputes” between itself and the government, adding: “I don’t think either one of us wants that to happen.”

Fujitsu, which left the NHS programme three years ago, is still embroiled in a legal fight with the government. In 2006, Accenture quit the programme taking a write-down of more than £300 millions.

When the National Audit Office reported on the programme three years ago, it highlighted that the project was running four years late and that officials had raised "unrealistic expectations". Eight months later, the Public Accounts Committee judged that the main systems were "not fit for purpose" and told the NHS to "get its head out of the sand".

The National Audit Office will report again on Wednesday 18 May.

Now read: Why PM's intervention on the NPfIT is welcome

Copyright © 2011 IDG Communications, Inc.

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