The NHS has completed the outline business case (OBC) for an ambitious project to introduce a single national "state of the art", web-enabled finance and e-procurement system, which it believes could save the service £300m a year.

Following government approval of the OBC an OJEC is due to be placed late in September. Responses will be required by January 2002, with the aim of awarding the contract by December 2002

Sources close to the project say it is likely to be a candidate for a public-private partnership. Health Secretary Alan Milburn last month identified IT as one of four key areas in which the NHS will further develop partnerships with the private sector.

The project, worth approximately £300m over 10 years, forms the second component of the NHS shared services initiative – the first was HR and payroll – which aims to provide key business support services for all NHS organisations from a network of 10 to 25 national shared services centres.

Though being run as separate projects it is anticipated the two shared services initiatives will "converge", and that the model may be extended to cover clinical data and applications.

The scale and future potential of the project is attracting strong interest from blue chip technology and consultancy firms. "We’re getting a lot of expressions of interest from software and hardware firms, with consortia beginning to shape up," said Eric Jackson, director or e-commerce at the NHS purchasing and supply agency (PASA).

One front runner is likely to be a McKessonHBOC/Oracle-led consortium, which in June was named as preferred supplier for the NHS HR and Payroll shared services project. In addition, McKessonHBOC/Oracle in December 2000 won a £13.5m contract to provide all financial applications to a consortia of 12 Welsh NHS trusts on a shared services basis. Other potential bidders are understood to include KPMG, SAP and JD Edwards.

The concept of national finance shared services will first be tested in two pilot sites. National implementation will begin in 2003, with completion scheduled for 2006.

Given these timescales, some within the NHS are concerned the national project will curtail local developments. Trusts have already been instructed not to procure new finance systems ahead of the shared services project.

“Those that want to update systems will feel hamstrung,” said Keith Lilley, head of procurement at Leeds University Hospitals, commenting on the e-procurement element of the project. "Trusts are champing at the bit to move forward, we’re ready now."