The planned memorandum of understanding with CSC is bizarre, yet it's difficult to see how CfH and the DH can get themselves out of a contractual mess.
The deal will commit CSC to deploying the Lorenzo system to NHS trusts that have no intention of deploying it; and the deal commits CfH and the DH to paying CSC for a minimum number of Lorenzo deployments even if NHS trusts don't actually deploy the system,
For some in the NHS, the deal will mark a new low in the history of the NHS IT programme. It may also show why central government is congenitally ill-suited to signing big IT contracts.
For CSC the benefits of the memorandum of understanding are that it:
- keeps CSC in the NPfIT
- renews an NHS commitment to deploy Lorenzo at NHS trusts
- underwrites a minimum level of income from the NPfIT
- reduces the uncertainties of its legal negotiations with the department
For CSC the drawbacks of the MoU are that it will:
- reduce the overall cost of its NPfIT local service provider contracts by £500m, from about £3.2bn to £2.7bn.
- give CSC's executives little satisfaction if they receive DH payments for any deployments of Lorenzo that NHS trusts have refused to deploy, especially at a time of public spending cuts and civil service job losses.
For the DH and NHS CfH the benefits of the memorandum of understanding are that it:
- makes it much less likely CSC will quit the NPfIT and join Fujitsu in a joint legal action against the Department of Health and NHS Connecting for Health.
- reduces the cost of CSC's NPfIT local service provider contracts by £500m to about £2.7bn
- defers any day of reckoning within Whitehall over what many in the NHS regard as a failed programme.
- sets out a schedule of future deployments of Lorenzo, thus giving some assurance of the future of Lorenzo to those trusts that have already deployed it.
- relieves the health minister Simon Burns from taking any tough decisions about the future of the NPfIT, at least for the time being.
For the DH and NHS CfH the drawbacks of the memorandum of understanding are that it:
- commits public funds to paying CSC for Lorenzo deployments that may not happen
- commits NHS trusts to installing Lorenzo when they haven't given any commitment. Trusts have given only ambiguous signs on a questionnaire that they may install Lorenzo - but several trusts that had indicated on the questionnaire an intention to deploy Lorenzo have decided already to buy other systems.
- could prove difficult for the DH, CfH and ministers to account for the deal if the full truth were to emerge
So what is the likely outcome? It's probable that officials at the DH and CfH have convinced themselves that the required minimum number of NHS trusts will install Lorenzo, which will meet the Secretary of State's contractual and financial commitments to CSC.
All the signs from the NHS are that officials at the DH and CfH are being illogically optimistic, however. The facts suggest that the numbers of trusts that will install Lorenzo will fall far short of the Secretary of State's contractual and financial commitments to CSC - especially as the planned functionality of Lorenzo for the NHS has been cut back.
A trust's ambiguous support for Lorenzo in a questionnaire is not the same as a commitment to install the system. If the DH and CfH believe the two are the same they may be in danger, I would suggest, of misusing public funds.
About £6bn has been spent on the NPfIT for not much in return. Now more money looks like it'll be thrown at the programme and its suppliers to avoid confrontation, and so that officials and their ministers can avoid taking tough decisions about the future of the programme.
Surely this case study shows, if nothing else, that central government is not up to the job of signing and running very large IT programmes and projects, and should avoid them, just as the pilots of a 747 should avoid taking off when they know they have only two engines working.