May 30, 2007

Updated: CSC says it blocked iSoft sale to ensure delivery of NHS IT programme

IT services firm sends its own staff in to work on Lorenzo system

By Tash Shifrin

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Lead NHS IT contractor CSC blocked the sale of troubled software supplier iSoft because it felt the move would not support successful delivery of the NHS’s £12.4bn National Programme for IT (NPfIT).

Instead, CSC is to increase the numbers of its own staff working inside iSoft, which is contracted to supply its Lorenzo care records system – a crucial part of NPfIT.

CSC, the lead contractor for NPfIT in three out of five regions, exercised its rights to prevent the £140m sale of iSoft to Australian software firm IBA, with a letter to iSoft blocking the deal that was revealed this week.

The crisis hit software firm was put up for sale after revealing continuing financial losses. It is also under investigation by the Financial Services Authority after irregularities were found in its 2004 and 2005 accounts.

Earlier this month, iSoft announced that it had agreed terms of a sale to IBA. But CSC wrote to the software supplier, saying it would not agree to a change of control.

In a statement explaining its motives, the IT services firm said it was “committed to the successful delivery” of NPfIT. “CSC's decision not to consent to the proposed change in control of iSoft has been governed solely by what it considers is in the best interests of achieving this goal,” it said.

The lead NHS contractor had “engaged with iSoft” over its potential suitors since the software supplier began seeking buyers. “Discussions and correspondence regarding IBA commenced in January, and we have continued in active dialogue with the company up to the present date,” CSC said.

“During this time, CSC has undertaken due diligence to assess the impact of the IBA transaction on NPfIT. Our ongoing discussions and correspondence with iSoft clearly reflected CSC's concerns and position, resulting in CSC confirming on 28 May, that it does not intend to consent to the IBA transaction.”

The company added: “We currently have around 100 of our own staff fully engaged with iSoft in this programme and are planning for this number to increase. In parallel, CSC has engaged with iSoft and its banks to explore ways to underpin the long term financial stability of iSoft."

NHS Connecting for Health, which runs NPfIT, said the matter was one for CSC. A spokesperson added: “NHS Connecting for Health has bought services from prime suppliers whose responsibility it is to choose their technology solution. We have had no approach from CSC in connection with this matter.

"If a supplier wishes to change the contract, they will need to negotiate and agree that change with us. When this has happened previously - as with BT and Fujitsu changing their subcontractor - we have protected the taxpayer by maintaining the original terms and conditions of the contract."

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