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CSC: Government has no right to cancel NHS IT contract

CSC: Government has no right to cancel NHS IT contract

Every taxpayer faces £77 bill as outsourcer expects £2bn extension

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CSC, which was this year roundly branded by government committees as a failure for its dismal performance on the NHS National Programme for IT (NPfIT), is set to be paid £2 billion more and given an extended contract.

As each income tax payer in the UK faces a £77 bill for CSC, the IT services firm delivered what sources described as a 'veiled threat' to the government over the costs of any potential cancellation. In a regulatory filing with the US Securities and Exchange Commission it said there was "no existing right" for the NHS to terminate the contract, and added that it could seek to recover hundreds of millions of pounds in court.

After delivering patient record systems to only three health trusts in a decade, CSC is expected to receive the £2 billion cash payment, whilst giving a £7 million golden handshake to its retiring chief executive who managed the performance. An agreement is on the table but has not been signed.

In an indication that the government is unwilling or unable to follow the parliamentary committee advice that cancelling CSC's contract may still be the cheaper option, ministers seem set to make the payments and extend the contract. This is after announcing with great fanfare in September that the project was over.

The Department for Health declined to give any explanation for the expenditure. The Cabinet Office also failed to answer the question, saying only that "major government projects have not always delivered what they set out to achieve", and adding that the Major Projects Authority - which recommended the end of the project - was created to deal with the problems. It did not respond to questions on why a project it officially cancelled will cost £2 billion more.

CSC, which is embroiled in several high profile fraud investigations and investor lawsuits, declined to explain the costs. It said it had a "strong and continuing commitment" to the NHS.

In papers filed with the SEC – which is investigating alleged fraudulent accounting by CSC in the Nordics – the company continued to assert it intended to sign a new agreement with the government, even though the conclusion of talks may not be successful.

While the contract scope was set to be reduced and there could be "no assurance" of a deal being agreed, CSC told investors that the agreement on the table "anticipates that the contract term will be extended one year to June 2017 and the company estimates revenue of £1.5 to £2.0 billion over that remaining term".

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