CSC faces £1bn write-off over botched NHS IT project
UK Govt not keen to pay for late patient record system
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CSC, one of the two remaining prime contractors to the NHS National Programme for IT (NPfIT), has told its shareholders that it might lose an amount in excess of its £943m investment in the project.
The US firm and the government had been discussing amendments to its NPfIT work under a memorandum of understanding (MOU), which would have reduced its scope and value, but left CSC in place as a substantial provider of electronic patient record (EPR) systems to trusts in the north, Midlands and east of England.
In early December, the company said it expected to receive a further £1.5bn to £2bn from the government for this work.
However, CSC said in a financial disclosure that it was recently informed "that neither the MOU nor the contract amendment then under discussion would be approved by the government".
In the filing, used by US-listed companies for unscheduled disclosures, CSC said that this lack of approval could result in it losing an amount equal to, or in excess of, the firm's £943m investment in NPfIT, and that as a result it is withdrawing its financial guidance for the current year.
"There can be no assurance that CSC and NHS will enter in to a contract amendment or, if a contract amendment is negotiated and entered into, that the contract amendment as finally negotiated will be on terms favourable to CSC," the firm said. It added that negotiations with the government will continue in the new year.
Shares in the company dropped 9% following the announcement.
CSC's work implementing iSoft's Lorenzo EPR software is years behind its original schedule, with only a handful of systems in place across the north, Midlands and east of England.
The government said in September that it was accelerating the dismantling of NPfIT, with the expectation that in future trusts will buy EPR systems independently.
This article was originally published at Guardian Government Computing.
Guardian Government Computing is a business division of Guardian Professional, and covers the latest news and analysis of public sector technology. For updates on public sector IT, join the Government Computing Network here.
COMMENTS
AC @11:58 can't have worked on a major central Government contract. Much as I loathe companies like CSC, Crapita and their ilk, I can't blame them for the failings of the civil service. From personal experience (ex-civil servant myself, left because I couldn't stand the incompetence any longer) the following takes place on every procurement:
1. Someone has a good idea, which get approved for study (only if there seems to be political capital made by the relevant minister of course)
2. Highly expensive consultants are brought in to carry out the study - the powers the be can't trust the people who actually thought of the idea in the first place, as they are mere civil servants (cheap = nbg in their minds). Consultants think up a few extras & add them in.
3. A massive requirements document is created, that goes all the way down to the font preferred but leaves large functional areas vague & able to be interpreted in many ways
4. Bids are requested and are evaluated based to a large degree on buzz words, existence of current contracts (not track record & quality, just number), and whether they can arrange a reference site visit in a hot country
5. Contract is awarded
6. Someone says "X would be quite nice" and X is added to the requirement without any impact assessment being carried out. Rinse & repeat about 25 times
7. Supplier prototypes their interpretation of the vague requirements - customer actually wanted a different interpretation
8. New delivery dates and costs calculated - already running 2 years late & £1 bn over budget and design not even completed
9. User steering group formed - can't actually agree on anything, as all have their own preferred way of doing things currently and won't accept anything that doesn't exactly mirror their existing processes
10. Supplier asked to produce something that can do everything the steering group asks for, yes including 15 ways of carrying out the same task
I could carry on, but I think you get the message!
Mixed blessings
Sucks for CSC and their downstream providers.
Sucks a bit for HMG & the public as this *should* have brought cost savings and efficiency to the national treasure.
However, it is about time that ultra-large implementers / outsource partners / providers / whatever the term currently is, learned that they need to actually deliver what they agreed and the Government is not a cash cow they can leech money from for decades without delivering what the promised at the outset.
Running years late and massively over budget should be simply unacceptable. CSC is supposed to be an expert in their field and the reason that HMG (etc) use their services is supposed to be down to their efficiency, skill and capability.
Obviously it isnt there and this points to the harsher reality that there must be some bungs flying about.
My fingers remain crossed that CSC actually get reamed over this, and then the rest of the Biggies get forced into line and start delivering on-time and on-budget.
(yes, I appreciate part of the problem is a civil service that doesnt know how to tender properly but surely the skills of the big players should be able to accommodate that without trying to bleed the country dry)
At least...
... UK Gov didn't keep purchasing increasingly expensive equine defibrillators, RPA/Accenture style. About time these private consultancies paid for a bit of the stuff they siphon off the tax system.
Bit surprised that CSC went this way however, given their role as a placer of intelligence gatherers into foreign parts and all - I'm sure the actually important stuff they do for the UK Govt won't be affected by a bit of f#(&ing up the health service...
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