NAO to publish new report on NPfIT - did BT get excessive payments?

The National Audit Office is carrying out a new, fast-track investigation into the NHS IT scheme, including an inquiry into whether BT received £400m over market prices.The NAO has confirmed that it plans a further audit of the National...

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The National Audit Office is carrying out a new, fast-track investigation into the NHS IT scheme, including an inquiry into whether BT received £400m over market prices.

The NAO has confirmed that it plans a further audit of the National Programme for IT (NPfIT), after a request by Conservative MP Richard Bacon, a long-standing member of the Public Accounts Committee, who has followed the scheme since its inception in 2002. 

The NAO expects to publish its findings within four months, to support the NPfIT reports it published in 2006 and 2008

The report is likely to be in the form of an extended memorandum which will enable the NAO to do a fast-track investigation and include contemporaneous developments. This may discourage officials from criticising NAO findings as out of date. 

The NPfIT has so far cost about £6bn, with a further £5bn yet to be spent, largely on central contracts with the two local service providers BT and CSC. 

The Public Accounts Committee will question senior health officials - and possibly the NPfIT minister Simon Burns - on the NAO report.  

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One of Bacon’s main concerns about the NPfIT is a decision of the Department of Health to pay BT £546m for work which Bacon considers is worth no more than £150m.  He says the Department seems indifferent to criticism that it has overpaid BT.

“I am still baffled as to how and why the Department ended up paying BT so much for taking over contracts from Fujitsu. 

“The Department’s replies on the matter remind me of Imelda Marcos’s response to criticism of her spending habits at her trial when she said: ‘I get so tired listening to one million dollars here, one million dollars there. It’s so petty.’ With the Department of Health we’re talking about at least £400m of out-of-place spending.”

Officials justify the payment to BT by citing advice they commissioned from different consultants in the light of the termination of Fujitsu’s £1bn contract as the local service provider in the south of England. 

The consultancies that advised on BT’s £546m deal include PricewaterhouseCoopers, Gartner, Deloitte, IBM and Ernst and Young, as well as the Office of Government Commerce. 

The Department told the NAO that most of these organisations “benchmarked” BT’s proposals to take over from Fujitsu. A closer study of the work of the consultants, though, reveals that each assessed different parts of the £546m deal, including technical aspects, and it’s unclear whether their reports verified the cost of the deal as a whole.    

Gartner verified BT’s “overall technical proposal”,  and Ernest and Young the “financial models”. PricewaterhouseCoopers and the OGC carried out “an initial appraisal of options” after Fujitsu ceased to be the local service provider. IBM and Deloitte did a technical assessment of “data centre hosting arrangements”.

Bacon said: “In giving credibility to the BT payment, the Department names some large consultancies as having verified some of the figures. I shall be asking the NAO to investigate exactly what these consultancies said.”

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