Richard Bacon MP, a long-standing member of the Public Accounts Committee, says in his letter, dated 13 January 2011, to Christine Connelly, the CIO at the Department of Health,
“As you know, the National Audit Office is now beginning a further urgent inquiry into developments in the NPfIT, and in particular of the awarding of former Fujitsu sites to BT.
"I would suggest that this inquiry will review a great deal of evidence that is relevant to the question of whether proposed contract renegotiations with BT and CSC really do represent good value to the NHS and taxpayers.
“I would therefore ask for your undertaking that no further steps will be taken to conclude further agreements with either company until the NAO has reported and the Public Accounts Committee has had time to consider its findings. “
Bacon gives Connelly a specific warning:
"It would seem to me that to enter into new irrevocable commitments in advance of this report would be irresponsible and potentially a breach of the Accounting officer’s responsibilities.”
His letter is copied to the head of the NAO, Amyas Morse.
Could MPs carry out Bacon's threat?
If the DH disregards Bacon's warning and agrees an irrevocable deal with CSC before the NAO and PAC complete their inquiry into the NPfIT, it's not clear how the Public Accounts Committee would penalise the accounting officer for the NPfIT, who is likely to be Sir David Nicholson, CEO of the NHS.
Nicholson is the Senior Responsible Owner of the NHS IT programme. His position appears unassailable. Even so Bacon’s threat raises the bigger question of whether it is the officials or MPs that have control over what happens on the NPfIT.
Who's responsible for the NPfIT - officials or ministers?
On paper control rests with ministers and Parliament. In practice it’s the officials. Particularly on the NPfIT, and perhaps more so than on some other large government projects, ministers appear to sign, or confirm, all that their officials ask of them.
Bacon’s letter will put Connelly in an awkward position as a deal with CSC is ready to be signed. Officials are anxious to appease CSC by signing a new deal rather than risk its leaving the NPfIT and joining Fujitsu in a legal action against the Department.
Whatever the strength of the DH’s position in any dispute with CSC, no government wants to put its civil servants in the witness box in any major IT-related legal case. This is one reason no government has taken any of its largest IT suppliers to court.
A deal with CSC at any price?
The DH has configured a deal with CSC to cut £500m from the supplier’s NPfIT contracts which are worth about £3.2bn. The Department planned to remove many of CSC ‘s contractual commitments.
Bacon is concerned about the costs of, and bugs in, the iSoft Lorenzo system, which is supplied by CSC under its NPfIT local service provider contracts. He is also concerned about the costs of the Cerner Millennium patient administration system and Rio mental health system which are supplied by the other NPfIT local service provider BT.
There is little Bacon can do to stop a new contract being signed with BT deal - the Department concluded a £546m deal with BT in 2009.
Does David Nicholson, NHS CEO, have any responsibility for the NPfIT failure?
But his letter may end up calling to account David Nicholson who gave a personal assurance on the imminent completion of Lorenzo at a hearing of the Public Accounts Committee in 2008. Nicholson told MPs “We have a product now, or are very close to having a product. I think some members of the Committee will have seen the Lorenzo demonstration. It has been very widely welcomed by the clinical community.”
Bacon says in his letter that even in the small number of cases where the current version of Lorenzo - much reduced from its original planned functionality - has been deployed, for example at University Hospitals of Morecambe Bay NHS Trust, there have been “serious problems”.
The [Morecambe Bay] Trust finally went live in the summer, and has been subsequently working on a ‘stabilisation plan’. By December 2010, there were believed to be hundreds of remaining bugs in the system. I also understand that NHS Bury has yet to sign off the deployment verification for the implementation of Lorenzo Release 1.9 - a year after going live with the system.”
Shortly before Christmas a spokesman for University Hospitals of Morecambe Bay NHS Foundation Trust told E-Health Insider that the system was starting to stabilise. But the Trust has yet to sign off the system as acceptable.
The National Audit Office is expected to complete its third report on the NPfIT by April. If so, the Public Accounts Committee is likely to question Nicholson and Connelly on the NAO report by the summer.
It's right that Richard Bacon should try and stop, at least for the time being, the signing of a new deal with CSC. Taxpayers' money should not be thrown at CSC to make life easier for civil servants by reducing the risk that CSC will quit the NPfIT and side with Fujitsu in a legal action against the Department of Health.
If the Department is unwilling to be sued by major IT suppliers, or to sue them, it should not enter into any large contracts with them. All large commercial arrangements must be underwritten, ultimately, by the ability to sue. But history shows that governments won't sue large IT suppliers. This makes the contract unequal from the start.,
That unequal relationship is now starting to hurt the DH and taxpayers. Officials feel they must keep CSC happy or face the possibility of a legal action they would feel they have no option but to settle out of court.
It's true that a deal with CSC would cut £500m from its LSP contracts - but such an agreement would remove from CSC's contractual commitments a much greater sum than £500m. That's hardly value for money.
The DH justifies its approaches by arguing that it is negotiating new deals on the basis of existing NPfIT contracts. But those NPfIT contracts are now manifestly poor value for money.
Why would taxpayers want to pay the price for large centralised systems when the few NPfIT systems being deployed are now locally-configured and are without the benefit of standardised technology?
And once the BT and CSC LSP contracts have expired in 2014 and 2015 there is no guarantee of central funding for NHS trusts for the high costs of supporting Lorenzo and Cerner Millennium.
If the DH signs a new deal with CSC before inquiries by the NAO and the Public Accounts Committee into the NPfIT and LSP contracts are complete, it will give substance to the suspicion that officials are controlling the NPfIT, not MPs.