CSC contract end would be 'disputed'

CSC has said that any immediate attempt by the government to end its contract under the National Programme for IT in the NHS would result in legal action.

On a corporate earnings conference call held on Wednesday to advise stakeholders on the company’s first quarter results, the company refused on a number of occasions to provide details on how much the NHS contract is worth, its revenues or it margins.

However, one caller who was trying to get more information about the importance of the local service provider contract for the North, Midlands and East of England, asked: “If [NPfIT] were to end today, what would be the impact in terms of your recoverability in terms of growth and margins going forward? Would you be on the hook for anything?”

In response, CSC’s chairman and chief executive officer, Michael Laphen, said: “If it was to happen today the top line would be impacted.

"I would say if it happened today - which, by the way, we have no indication whatsoever will happen - then more than likely we would wind up in disputes. I don’t think either one of is wants that to happen.

“I think both of us want to make sure this programme goes forward and delivers what we expected it to deliver. I’m not going to speculate on how disputes will come out, but I’m sure that the government would take one position and we’d take another position.

“I think we’re both working cooperatively to ensure that that doesn’t happen and that we’re moving forward within the affordable envelope that the NHS has.”

In May 2008, Fujitsu, the local service provider for the South of England, exited NPfIT and has since been caught up in legal disputes.

CSC said it is working with the UK government to try to understand its needs given the budgetary constraints and they expect an outcome “in the September timeframe.”

Laphen added that following on from “successful” deployments of iSoft's Lorenzo electronic patient record at NHS Bury and University Hospitals of Morecambe Bay NHS Trust, it is preparing for its final two early adopters to go-live in Q2 and Q3. 

He also said CSC “anticipates a quickening pace of full scale deployments” thereafter.

On the same call, CSC notified stakeholders that its fiscal first-quarter profit rose from $131 million (85 cents a share), to $143m, (91 cents a share) year on year. Revenues increased from $3.94 billion to $3.9 billion.

The IT services provider also confirmed guidance of revenue in the range of $16.8bn to $17.2bn for the fiscal year ending March 2011.

Link: CSC Webcast of 1st Quarter FY 2011 Earnings Teleconference.