Memo reveals latest CSC offer
The Cabinet Office is looking to take a bigger role in discussions about any future contract with CSC for the North, Midlands and East of England.
A leaked memo from a Cabinet Office official indicates that it is concerned that “the Health commercial team are not approaching this in the best way.”
It also confirms that the DH is looking to sign a new memorandum of understanding with CSC, and that this would result in fewer trusts being contracted to use the system, in return for a further reduction in contract price.
The memo says that in February, CSC offered a deal in which the number of trusts offered a CSC system would be cut from 220 to 80, and that they would be offered a choice of system, not just the iSoft Lorenzo software that CSC was contracted to deliver by the National Programme for IT in the NHS.
It says that in return, CSC was looking for a one year extension to its contract, but that it was willing to cut a further £264m from the overall contract price.
The memo says that although “the additional savings are appealing, the offer is unattractive” because “the unit price of deployment (per trust) under offer roughly doubles the cost of each deployment from the original contract.”
The memo then outlines ways in which the Cabinet Office might get involved in the negotiations, as part of a wider shift from letting individual departments negotiate major contracts to managing such deals at a ‘Crown’ level, instituted by its minister, Francis Maude.
The memo, dated 1 March, indicates that MP Richard Bacon, who triggered the latest National Audit Office investigation into NPfIT, may have been pushing at an open door when he asked Prime Minister David Cameron to get the Cabinet Office involved in the negotiations over a new deal with CSC.
But it also indicates why CSC felt able to tell investors at the start of this month that it expected a new memorandum of understanding with the DH “within weeks”, even though it saw the last of ‘four early adopter trusts for Lorenzo walk away two weeks earlier.
The NAO’s third report into NPfIT was particularly critical of CSC’s failure to deliver Lorenzo to healthcare communities in the NME. However, eHealth Insider reported when the report came out that senior figures at the DH were still inclined to secure a new MOU, if possible.
In an interview with EHI on Monday, NHS chief information officer Christine Connelly outlined the bones of an agreement, saying it would deliver “savings considerably in excess” of the £500m already being demanded by the Treasury on CSC’s £3.1 billion deal.
She also indicated that a new MOU would be very different to the current deal, and to what CSC was willing to offer before it missed its February deadline to get Lorenzo into the fourth early adopter, Pennine Care NHS Foundation Trust.
She said the new focus would be on delivering flexible modules based around the Clinical 5, that would sit on a base care records platform.
The memo indicates that the DH knew in January that the February deadline for Pennine to go live would not be hit, and that CSC told the DH it wanted a new date of 24 May.
It says “this offer was not met favourably by Sir David [Nicholson, chief executive of the NHS]” and that he told the company to “think creatively” about what they could deliver and then report back. The offer outlined in the memo appears to CSC’s creative thinking.
NPfIT is now undergoing a Major Projects Review by the Cabinet Office, which will also have to sign off on any new deal for CSC with the Treasury.
The memo also touches on the ongoing legal dispute between the DH and Fujitsu, which quit as local service provider for the South in May 2008. It says Fujitsu would like to settle without formal arbitration, to improve its overall standing with government.
Last updated: 26 May 2011 21:28
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