Original URL: http://www.theregister.co.uk/2006/09/18/dti_isoft/

DTI keeps eye on iSoft

Care home

By Kablenet

Posted in Government, 18th September 2006 23:33 GMT

The Department of Trade and Industry (DTI) has vowed to keep troubled National Programme for IT (NPfIT) software supplier iSoft Group under steady review.

A DTI spokesperson told GC News yesterday: "We are working closely with Department of Health (DoH) and Connecting for Health (CfH) to look at what has happened and to find the best remedy."

The DTI was responding to calls from MP Richard Bacon, a member of the Public Accounts Committee, to investigate the group's management after the company recently announced a £344m loss.

The Financial Services Authority has already initiated an investigation into possible financial irregularities at iSoft in 2004 and 2005 and the Financial Reporting Council is thought likely to be considering the group's problems.

Meanwhile, upfront payments totalling nearly £82m were made to iSoft in a complex deal which gave the company money in advance for existing NHS contracts.

Health secretary Patricia Hewitt defended the arrangements in a letter to Bacon, saying the deal will yield savings.

Hewitt confirmed payments of £58m were made in 2005 and one of £23.8m in 2006. Both payments were made just days before the end of iSoft's financial year.

She says in the letter,that the payments related to an Enterprise Wide Agreement between iSoft and the DoH negotiated by CfH, in respect of contracts with individual trusts, and was not part of NPfIT.

In exchange for the advance funding, the health service received reductions from iSoft totalling "£20m over three years" and in addition "removed some obligations on certain trusts, waived certain termination provision on existing trust contracts and provided greater flexibility on contract extensions," says Hewitt.

Bacon said: "It is hard to avoid the conclusion that CfH has repeatedly bent over backwards to try and rescue this company from its financial crisis, presumably to avoid the disaster that will hit the NPfIT if a vital software supplier collapses."

This article was originally published at Kablenet.

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