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The government has reached an agreement for a reduction in its contract with CSC, the largest supplier to the now-defunct National Programme for IT (NPfIT). The total saving for the Department of Health (DH) from NPfIT will now be approximately £1.8bn.

Health secretary Andrew Lansley told an E-Health Insider event in London today that the money it has secured from US-based firm CSC would be released back to the NHS. An announcement on how the money will be distributed is expected in the coming months.

CSC was contracted to deliver Lorenzo electronic patient records to trusts in the north, Midlands and east of England but the project has suffered from severe delays. The DH has been locked in renegotiations with the supplier for more than a year to revise the scope of the deal and claw back some the money it has spent with the company.

In May 2011 the department's chief information officer at the time, Christine Connelly, warned that it would be cheaper for the DH to keep its contract, rather than extricating itself from the deal, as CSC could seek substantial damages.

At the end of last year CSC made it clear in a filing to the Securities and Exchange Commission that it would be prepared to launch legal action against the government if it tried to terminate the contract, but the company appeared to soften its stance at the end of last year by confirming a $1.5bn write-off of the NPfIT deal.

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.

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