Computer Sciences Corporation has told US investors that it expects to earn up to £2 billion more from its contract with the Department of Health, for providing electronic patient record software to the NHS.
Despite its dismal record on delivering the Lorenzo electronic patient record software to NHS trusts in the North, Midlands and East - just three out of 97 contracted - CSC has told investors it still expects to make a profit on its NHS deal.
This will come mostly from recurring maintenance of legacy systems it put in as stop-gaps. And CSC doesn’t believe the NHS will terminate its contract.
According to an investigation in the Times, CSC says that it will earn revenues of £1.5 to £2 billion over the remaining term of the contract.
It has also told Wall Street British ministers wouldn’t dare cancel the NHS deal for fear of being sued and the steep costs involved in switching supplier.
The news comes despite the £12 billion NHS IT programme being "axed" in September by health secretary Andrew Lansley.
It also comes despite the DH telling CSC in February that it was in breach of contract after missing a series of Lorenzo deployment deadlines. CSC now says it expects to have its contract extended to the end of 2017.
CSC won a £3 billion contract for the whole of the NME after Accenture quit the national programme. The deal was meant to cover all 166 NHS trusts in the three clusters.
CSC made good progress in parts of primary and community care and in providing 'interim' hospital systems, but failed to deliver the next generation integrated patient record software, Lorenzo, beyond a handful of pilot sites.
The DH has been conducting negotiations with CSC about a new deal since 2009. Savings of £500m, then increased to £700m, on the original contract value have already been promised by the DH.
EHI understands that a detailed outline deal with CSC was reached with the DH by early spring, but then not signed. The negotiations have been disrupted by a National Audit Office inquiry into NPfIT and subsequent public and departmental investigations.
In May, the DH's then-director general for IT, Christine Connelly, told the Commons' public accounts committee hearing into the NAO report that the cost of terminating CSC’s local service provider contract for the NME could be more than continuing with it.
For the Department, the negotiations appear to be driven by a desire to get at least some of the IT systems desperately needed by the NHS, to deliver budget cuts that have already been counted, and above all to avoid costly litigation.
The DH remains in dispute with Fujitsu over the 2008 termination of its NHS IT contract for the South of England, in what is believed to be one of the largest ever civil actions in the UK. The DH’s combined potential legal liability is thought to be in excess of £1 billion.
In its latest filing to the US Securities and Exchange Commission, CSC says that even if the DH cancelled the deal it would have to continue to pay CSC to maintain the software that has already been installed.
While the NHS has the right to “terminate at convenience” this would leave it liable for claims by the company. “Based on the events to date, the company does not anticipate that the NHS will terminate the contract.”
In the summer, sources told EHI that the negotiations had ceased. This led to suggestions that the DH was contemplating a ‘do nothing strategy’ – not terminating CSC’s contract but not awarding it a new one either, but instead letting it 'whither one the vine'. They now appear to be on again.
© 2011 EHealth Media.
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