MP seeks NAO inquiry into BT £546m NHS deal

An MP on the Public Accounts Committee is seeking an investigation by the National Audit Office into a deal in which officials promised BT £546m of extra payments under the NHS IT scheme.

Richard Bacon, a Conservative MP who has followed the NHS’s National Programme for IT [NPfIT] for much of its eight-year existence, questions whether the Department of Health has paid a premium of hundreds of millions of pounds to BT, partly to dissuade it from leaving the NPfIT after the departures of Fujitsu and Accenture.

Had BT withdrawn from the £12.7bn NPfIT - Whitehall’s single largest IT investment - the scheme would have been left with only one of the original four local service providers, CSC, a limitation which would have jeopardised the programme’s existence.

Bacon’s request for an investigation will be welcomed by many within and outside the NHS who were surprised by the size of the Department’s deal with BT in 2009.

The MP has written to Amyas Morse, the head of the National Audit Office. The NAO reports regularly on the results of its value-for-money investigations to the Public Accounts Committee.

Bacon says in his letter that £400m of the £546m agreed with BT has not been properly accounted for and so raises questions about the proper use of public money.

The £546m was for BT to take over work from Fujitsu which withdrew from the NPfIT in 2008.

Bacon says he recognises that Fujitsu’s withdrawal from the NHS IT scheme left the Department of Health and its NPfIT agent, NHS Connecting for Health, in a difficult position. They needed to find a supplier to take over the support of eight NHS trusts where Fujitsu had already installed Cerner “Millennium” systems under the NPfIT.

Bacon’s letter questions whether the payments to BT were £400m more than necessary.

“It seems to me that it would have been reasonable, indeed generous, to have paid BT £100m for taking on the local service provider work from Fujitsu. I cannot see how £546m was justified unless the Department of Health was willing to pay BT any sum to keep it within the National Programme for IT,” says Bacon.

“I don’t believe any department should get itself in the position where it believes a supplier is so indispensable that it must pay the company hundreds of millions of pounds more than necessary. That is why I am asking for an investigation by the NAO into whether the £546m paid to BT represents value for money.”

Bacon says that, if nothing else, an investigation would be put to rest the concerns that many in the NHS are expressing over the deal.

In late 2003, the Department of Health awarded BT a 10-year £996m contract to become a local service provider to NHS trusts in London. The £546m deal, when added to BT’s other NPfIT work, gives the supplier NHS IT contracts worth more than £2.5bn.

What the £546m to BT includes:

* The roll-out of the “RiO” system, from CSE Healthcare, to 25 community and mental health sites in the south of England.
* Support for eight, now seven, trusts that had already installed the Cerner “Millennium” system.
* The Transfer of work from Fujitsu’s data centre to BT’s.
* The dployment of Cerner Millennium at four, now three, new trust sites in the south of England.

Isn't £25m more than enough for 25 RiO deployments?

Bacon says in his letter that if the “generous sum of £1 million” is allowed for each of the deployments of RiO, the total cost should be a total of £25m.

In 2001, before the advent of the NPfiT, healthcare software specialist Maracis bid against RiO’s supplier Servelec [now CSE Healthcare] for a contract let by the Somerset Partnership NHS Foundation Trust.

Maracis says that, during a debrief, it was told that its prices were similar to those offered by CSE Healthcare for a RiO deployment - then less than £600,000 for installation and five years of support.

Since 2001 Maracis has cut its prices - which supports Richard Bacon’s point that £1m per deployment is a generous sum for the Department of Health to pay BT for each of its 25 RiO installations.

£30m for three new Cerner deployments?

The typical cost to the health service of a patient administration system similar to that of the Cerner technology would be about £10m, so the total cost of installing the system at three NHS trusts should be about £30m.

£35m for five years of support at seven existing Cerner sites?

Bacon says in his letter that if £1m is allowed for support at each of the Cerner sites that BT took over from Fujitsu, the cost over five years at the seven sites would be £35m.

£10m for transferring data from Fujitsu's data centre to BT's?

If a further £10m is allowed for the transfer of work from Fujitsu’s data centre to BT’s, the total sum payable to BT for taking over from Fujitsu should be about £100m, says Bacon.

This adds up to £100m - so why was BT promised £546m?
Bacon says: “The remaining £446 million is, in my mind, not accounted for, and so raises questions of the proper conduct of business and the proper use of public money.

"No department should put itself in the position where it has to pay whatever a supplier wishes to charge.”

A BTspokesman said: “We never comment on the commercials of any of our contracts so it wouldn't be appropriate to do so here.”

A spokesperson for the Department of Health said:

"The contract extension renegotiated and agreed with BT followed all appropriate governance. The principle of payment on delivery has been maintained and continues to protect the taxpayer by ensuring suppliers are only paid when they have successfully delivered.”

Copyright © 2010 IDG Communications, Inc.

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