Richard Bacon, a member of the Public Accounts Committee, suggests that SMEs trying to compete with NPfIT local service providers BT and CSC are being shut out of fair competition by onerous requirements and untenable terms and conditions
Indeed Bacon's letter suggests that the Department is willing to pay almost any price to BT and CSC to keep them within the NPfIT.
He says he is concerned that
He asks Connelly:"it appears that possible providers for £100 million community and child health systems at 13 Trusts in the South of England, under the Additional Supply Capability and Capacity (ASCC) framework, have been deterred from bidding because of what they have called “onerous” requirements and “untenable terms and conditions”, which bias the process in favour of existing lead suppliers under the NPfIT."
"Is it correct that suppliers able to deploy systems at a fraction of the cost of the LSP solutions have not been given a fair opportunity to compete?"
This is Richard Bacon's letter in full:
From Richard Bacon MP to Christine Connelly, copied to Amyas Morse, Comptroller and Auditor General at the National Audit Office.
Dear Ms Connelly
Contract Renegotiations in the National Programme for IT in the NHS
I am writing following your appearance at the Public Accounts Committee and our subsequent exchange of correspondence because of my continued concerns about the renegotiations of contracts with BT and CSC in relation to the National Programme for IT.
While I welcome the Government’s decision to seek additional savings from the National Programme for IT, and its commitment to permit Trusts more autonomy in making future IT decisions, I am very concerned about the evidence now emerging about the details of the contract negotiations, and specifically about whether proposed spending reductions are being achieved by permitting BT and CSC to make disproportionate cuts in planned deployments and in the functionality of systems on offer.
I note your observation in September 2010 that “the best way to deliver value is to honour the contracts”. It would seem to me therefore that we should explore whether value is in fact being delivered for the NHS and for taxpayers. I would therefore be grateful if you could confirm or comment on the following observations:
1. In London, the new contract signed with BT in April cuts £112m from the original £1.1 billion contract signed in 2003. Of the 32 acute trusts in London, around half will not now get Cerner Millennium as BT will offer at most 10 more Cerner deployments to add to the 8 already in place; fewer community trusts will get RiO; and the requirement for BT to deliver around 1,500 new GP systems across the capital has been dropped. New software for the London Ambulance Service has also been abandoned. This would seem to amount to delivering half the original contract for a small reduction in charges. In your opinion, is this really delivering value?
2. I note that Imperial College, contracted to implement Cerner Millennium, recently announced that a rival product has gone live across the entire Trust. Will the NHS pay for the Cerner Millennium deployment at Imperial even if it is not taken up? In the circumstances, can you say with any confidence that BT’s other commitments in London will in fact be taken up?
3. As the functionality of Cerner Millennium has been cut back drastically and, as its name implies, the product is now out of date technically, can you say whether you consider it is still value for money? I would point out that, under the original plan, the products now being installed should have been running live for six years.
4. In his letter to me of 18th November 2010, the Comptroller and Auditor General stated that BT will be paid £36m for each of the seven NHS trusts running Cerner Millennium already installed by the Southern region’s former local service provider, Fujitsu. It will get £23m for each of three new Cerner installations. And it will receive £9m for each of the 25 RiO community and mental health sites in the South. All prices are said to be based on pricing in the other LSP contracts.
However, it has been reported that RIO has been implemented in other Trusts for between £0.5 and £1 million. Is this correct? If so, what questions does this raise in relation to value for money? Is it also correct that BT will be paid more for delivering Cerner to three ‘greenfield’ sites than it would have been paid for the four sites originally agreed? The Cerner prices seem to be much higher than the prices paid by Trusts such as the Wirral who purchased directly. How can this difference in price be justified?
5. In the case of CSC and its software contractor iSoft, it would also appear that the companies may secure guarantees of substantial payments even if in practice NHS Trusts choose alternative products, so that there are many fewer deployments than planned.
6. I understand that the DH is negotiating a Memorandum of Understanding with CSC that would see 187 NHS trusts assumed to take the Lorenzo system; only 35 fewer than specified in the original £3 billion contract. But would you not agree that there is good reason to think that many fewer Trusts will in practice agree to take the system? In March, Trusts across the North, Midlands and East of England were advised that the version of Lorenzo offered for deployment would have greatly reduced functionality. A number of Trusts have already indicated that they are not committed to Lorenzo and reserve the right to make other arrangements. I note that in October 2010, you stated that: “those who don’t [take Lorenzo] can do what they want and they won’t get penalised, however if we do not get enough trusts in totality to meet the contract then the NHS as a whole will be penalised.” Does this represent good value for money?
7. As you know, the Lorenzo system has repeatedly missed announced deadlines since the 2005 iSoft Annual Report, which stated that it was “available from early 2004". Most recently, in April 2009, you set a deadline of March 2010 for Lorenzo, stating: "If we don't see significant progress ... then we will move to a new plan for delivering infomatics in healthcare". Yet again, this deadline was missed.
8. 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 Trust failed to go-live with Lorenzo in March 2010, 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.
9. Does committing the NHS in this way to payment for systems that may not be delivered represent good value, given the repeated failure of iSoft to deliver a working product to deadline? In these circumstances, why is the NHS still contractually bound to minimum volumes?
10. I am also concerned that it appears that possible providers for £100 million community and child health systems at 13 Trusts in the South of England, under the Additional Supply Capability and Capacity (ASCC) framework, have been deterred from bidding because of what they have called “onerous” requirements and “untenable terms and conditions”, which bias the process in favour of existing lead suppliers under the NPfIT. Is it correct that suppliers able to deploy systems at a fraction of the cost of the LSP solutions have not been given a fair opportunity to compete?
11. I would also appreciate any observations you have on how the costs of the iSoft Lorenzo, Rio and Cerner Millennium systems compare with the indicative costs submitted by suppliers as part of the ASCC market testing for acute and community systems (taking into account, of course, the costs of the various key milestone payments). 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. 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.
12. I would also ask you to undertake a specific review of the costs of running the Cerner Millennium system over a traditional PAS in Taunton; and the costs of running Lorenzo over a normal PAS in Morecambe Bay.
13. Please could you send me copies of any value for money reports which compare the cost and value of NPfIT systems over traditional deployments. Please include N3 Broadband and PACS as well as acute, mental health and community systems.
14. Please could you supply a copy of the indicative pricing submitted for ASCC - for acute and community trusts.
15. Please could you supply a more detailed breakdown of the 7 southern sites, in particular: the Fujitsu cost of each deployment; the Fujitsu cost of the interim running between the two contracts; the cost of the transfer, the running costs till the end of the contract; and the anticipated annual running costs payable by Trusts after the contract ends.
I look forward very much to receiving your reply.