NHS agreement with CSC ‘weeks away’
- 05 May, 2011 21:13
An agreement between the NHS and CSC is due to be signed in the "next few weeks", according to the supplier.
The news follows months of extensive negotiations between the parties, as CSC system deployments under its £3 billion contract missed a series of deadlines and a major NHS IT deployment site reportedly dropped the supplier over a "lack of confidence".
CSC will deliver work on a "reduced scope and volume" under the forthcoming agreement, the company disclosed in a statement.
The work comprises a substantial share of CSC's business, and it has now cut revenue guidance for its financial year - which it reports on in three weeks' time - by $100 million (£61 million) to $16.1 billion (£9.8 billion), in part as a result of the reduced scope. Under NHS deals, suppliers are paid according to milestones reached - and a revised set of deadlines will result in fourth quarter payments for the supplier being delayed to next year.
The terms of a new Memorandum of Understanding were "substantially completed and CSC expects signing of the MoU in the next few weeks pending final NHS and other government reviews and approvals", the company said.
Any agreement is likely to meet stiff opposition. Richard Bacon MP, a member of the Public Accounts Committee, will challenge the signing of an expedited deal before the PAC has had a chance to hold parliamentary hearings about the project, Tony Collins reported in his blog today.
In spite of the reduced scope and the extensive time period leading up to the agreement, CSC said the MoU will "reaffirm a continued commitment" to the contract.
CSC chief executive Michael Laphen told company shareholders there would now be "a new era of certainty and partnership with the UK government".
The company was recently abandoned by Pennine Care NHS trust, reportedly over a "lack of confidence" in its ability to deliver a system quickly, following missed deadlines.
Tola Sargeant, director at analyst firm TechMarketView, said she expected that the new CSC agreement will be aimed at delivering a "large chunk" of the £600 million overall savings being sought by the NHS on the National Programme for IT.
She also warned that there was a risk that an alternative site for the iSoft Lorenzo patient administration system would not be found, following Pennine Care abandoning the system, and that the government could still consider pulling the plug on its contracts with lead suppliers CSC and BT.
"Both of these would have a much more dramatic impact on the financial performance of CSC", she said, than the current revised timetable.