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What competition means for Cornwall

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Cornwall smugglers postcard.jpgAs Cornwall Council leader Alec Robertson faces a vote of no-confidence today over plans to outsource £800m of public services, the proposals are looking weaker than a my-dog-ate-it excuse for missing school homework.

Ruling councillors and executives have resorted to dubious justifications for the deal as it has come under increasing scrutiny from people demanding answers to the simple question: why do it?

There might be very good reasons why Cornwall's Council and health Trusts should shove their revenue, benefits, human resources, contact centre, libraries and some frontline care services into a profit-making venture with an IT outsourcer. There might be good reason why Cornwall should take only a minority stake in the venture, even though it will use its own cheap credit lines to finance the deal.

But Cornwall hasn't given them. Its reticence does of course hide a much bigger story than the one it's giving councillors.

Since Cornwall is transferring its public resources to a private vehicle (commanded by whichever of BT or CSC wins the bid) it's going to be operating in a market where it will have to fight, dog-eat-dog for survival. But the council has not even produced a market forecast. Councillors scrutinising the deal have not been told how Cornwall thinks it might manage in competition with other local authorities that are also launching backoffice corporations.

Such forethought is more important than ever since Southwest One, a similar outsource venture in nearby Somerset, ran into serious trouble this year.

Southwest One logo.jpgBooty

What happens when Cornwall Council Corp goes head to head with Southwest One? Might Cornwall Corp be so successful that it puts Somerset out of business?

It sounds absurd but this is the game these local authorities have got themselves into: the aggressive business of backoffice outsourcing, where prices get slashed and jobs get sent overseas. Outsourcing is one thing. Going into outsourcing is quite another.

It is the sort of world in which Cornwall Corp might crush Somerset Inc in open competition, and then celebrate when it wins the contract to do social services to the unemployed call-centre workers that subsequently flood the soup kitchens and underpasses of Yeovil.

It is a heartless world in which there is no public accountability. It is the sort of world in which some fat-cat BT executive might use the money he makes running Yeovil social services to buy a dainty little cottage overlooking the sea in St.Ives, his preferred location ever since Somerset got so full of scummy, out of work no-hopers from Southwest One.

Yet Somerset might actually turn its troubled Southwest One venture round. It might annihilate Cornwall Corp before it even gets off the ground, beating it to every contract with outsourcing councils up and down the country.

Somerset might then open an office in Truro, in a sort of corporate takeover of council services. Or it might keep all the jobs in Somerset, and manage Cornwall remotely like a digital Queen Victoria administering an overseas Empire of primitive peoples. Somerset could sell Cornwall Corp's premises off as holiday lets.

But this new market for privatised council services won't just be Somerset and Cornwall in a bloody fight to the death. Other public bodies around the country are going on the game as well.


The most glaring question, after who will reign supreme, is therefore one that the public authorities behind these ventures have been most unwilling to answer: how much business must their backoffice spin-offs generate before they become viable, so they don't end up like Southwest One.

How much business must they generate before they turn a profit? How many other councils must they do backoffice outsource deals with so they can attain these targets? How many assimilated council backoffices does it take to make a privatisation work? And how many corporate council spin-offs can the market take before it becomes saturated?

Cornwall has not even shown councillors the proposed business plans. Its Single Issue Panel, tasked especially with scrutinising the deal, is negotiating terms to see the details. They expect to be let into a locked room where they can see the documents for an allotted time but will not be permitted to make notes or take anything away.

That may explain why the deal's advocates have been able to talk it up with nonsense statements.

That's what Councillor Steve Double, portfolio holder for the Cornwall outsource, sounded like he was doing when on 26 September he wrote fellow councillors an urgent email rebuttal to points raised by critics.

Steve Double, Cornwall Council.jpgDouble had been put in an awkward spot by Southwest One. Somerset had intended its venture to do the backoffices for public authorities across the whole of South West England. It failed. Somerset's backoffice venture subsequently went stale. Southwest One is now said with emphasis on the second word.


Cornwall would be different, Double told his fellow councillors.

Cornwall's backoffice company was going to pitch for business from councils in London and the South East. Its horizons weren't limited to the West country. It was going into the TeleHealth business as well - the business of using a computer system to remotely administer health and social care. It had one eye on the future and one eye on national triumph.

"All of this makes the context completely different from SouthWestOne where IBM was hoped to sell services to other South West Councils," said Double.

Southwest One had in fact broadened its own horizons this year too, after it nearly went bankrupt.

It is now pitching for backoffice business from councils all over the country, like Cornwall proposes to do. It is desperate to make up nearly £60m of losses. IBM, its parent, is desperate to recover some £60m of accumulated debt and other credit lines. The competition will be tough.

It may therefore be too soon to talk of a carve up. But the TeleHealth bit of Cornwall's proposal (the shiniest bauble ever since it was tacked onto the proposal, after the council Cabinet approved the outsource in July 2011) has given Cornwall Corp a unique selling point among other privatising councils.


The plan for a Cornwall TeleHealth Corp has also lent a chimera of credence to the idea that the venture will bring jobs to Cornwall.

Alec Robertson, Cornwall Council.jpegRobertson guaranteed it would produce 500 jobs. The jobs have not yet been guaranteed by either of the suppliers. But they will apparently be guaranteed when they do guarantee them, presumably in a manner that can be depended upon.

Cornwall TeleHealth Corp will also be a boon of special significance for its outsource supplier, no matter which of BT or CSC win the business.

This pair were responsible for the disastrous NHS records system called the National Programme for IT. They may have been slow to deliver it (five years late, it is not yet finished) but they have moved quickly now there's new public assets up for grabs.

Cornwall will give them a way to resell their NHS systems into local government. NHS health records will be allied with social security records in the Cornwall system. It will become the fulcrum of health integration with social security, as well as benefits and other public services.

Yet why Cornwall can't do TeleHealth itself, and then pay these suppliers simply to supply, is another matter to which the Single Issue Panel has not yet been privy.

Cornwall's entire NHS has got behind the scheme, including the Kernow Clinical Commissioning Group, which will take over from the existing Primary Care Trust when the coalition government's plan to "devolve" the NHS in 2013 to those privateers more commonly known with inexplicable affection as GPs.

Cornwall has also failed to communicate why it needs to give its outsource supplier a controlling 51 per cent interest in its services.

The county could use its own cheap credit lines to finance its own TeleHealth, or to restructure its own services. But Cornwall didn't attempt to develop such an idea into a proposal that could be given serious consideration alongside the outsource. Nor did it develop the other options that first made the outsource idea look less threatening when they were put alongside it on the table, briefly, in 2011.


Why indeed had Cornwall not opted to do this all in-house, asked independent councillor Mark Kaczmarek in Cornwall's Cabinet meeting in July.

Kevin Lavery, Cornwall Council CEO.jpegCornwall chief executive Kevin Lavery, once head of local government for BT, and a career, supply-side advocate of privatisation, said the council should put its services into a commercial venture because only a commercial venture could behave like a commercial venture. He used the proposal to justify itself on its own terms.

"An 'in-house' option would not be in a position to offer the commercial skills which a private sector partner could offer," the meeting minutes attributed to Lavery.

"As an example, a dedicated sales team already existed within both of the two potential private sector partners and it would not be a practicable option for the Authority to try and create such a sales team as it would take a significant amount of time and investment," he explained.

It was just the sort of circular nonsense you would expect but would dearly hope, when you knelt down beside your bed and prayed at night, did not really pass for thinking in the high offices of the public sector.

But it is not all so bad. A push into Kent and the South East will be just the ticket for Lavery, who had pushed Conservative transformation work at Kent and London councils early in his career, and who later managed contracts in those regions for BT. That's also where BT has its NHS contracts. And it is where Lavery now proposes to pitch his outsource joint venture with BT, or CSC if the latter wins the bid.

When Kaczmarek asked Lavery why not do it in-house, the poacher-turned-gamekeeper might have said conversely, well the outsource company has got this bloody sales team. It's surplus to requirements. Isn't it?

NHSIT deal too good to be true

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Fairy tale for a sick child.jpgThe Department for Health has refused to divulge details of a deal that was meant to fulfil its promise to scrap the NHS National Programme. It may have done such a bad deal that it daren't allow public scrutiny of it.

It struck an "interim" conclusion of an extraordinarily protracted contract dispute with lead National Programme supplier Computer Sciences Corporation last week.

But it agreed to accept a less well endowed version of the software it originally contracted from CSC in 2003 - a Patient Administration System - because the supplier has still not finished it. The government is also considering putting up more central funds to cover the cost of trusts that seek to acquire systems outside of the NHS contract, Computer Weekly can reveal.

Just a week after the department said it had "saved" £1bn after concluding contract renegotiations with CSC, its refusal to divulge specific financial details has raised the prospect it will be getting less for more - not, as it promised - more for less.

£1bn "saving"

The department has been so evasive about the details of what pricing it agreed in the CSC settlement - negotiations over which were led by the Cabinet Office - that its own trumpeted saving no longer looks credible.

Thumbnail image for Chris Grayling, health minister, on the day of his removal from the Department of Health.pngThe little it has been prepared to say was buried last Tuesday under the news maelstrom caused by the government's Cabinet reshuffle.

After more than a week of cat and mouse games over the facts of the deal, the department has said nothing more than would imply it had written CSC a blank cheque.

Thus almost two years to the day after it said it had already scrapped the programme, and a year after it said it was still dismantling it but more rapidly than before, it slipped out that it hadn't really scrapped it at all. It has since refused to say anything more about it than vague and evasive restatements of the stultifying public relations statement it made last Tuesday.

The department said it saved £1bn by scrapping an obligation for NHS Trusts to buy CSC systems. It portrayed this as a liberation of the NHS from the last Labour government's communist-leaning, top-down diktats. But what it actually meant was that it had merely removed a commitment to implement a predetermined number of systems from its own contract with CSC.

It would not say precisely how it calculated the £1bn - coincidentally, the same amount CSC wrote off against the contract last December, seven months after the two parties struck their last but aborted interim agreement.


And it has been issuing slippery replies to questions about pricing settled in the agreement. When CW asked how much money it had put up for CSC systems under the agreement, it said disingenuously it understood the question to mean CSC systems delivered outside the programme, for which of course there was no money. It dragged out this misunderstanding for seven successive working days.

When CW asked how much money it had put up for each Trust installing CSC's software, it said it could not say how much because the software and support terms were variable. It said the same for those 10 Trusts already delivering CSC software, which were handled separately by the CSC settlement.

"It would be misleading to give specific figures," said a department spokesman in an email.

How then had it determined that it had saved £1bn, if it did not know how much it was paying?

How could it even have renegotiated its CSC contract without agreeing a price?

And how could NHS Trusts use the central IT funding it had set up for them, if they did not know how much was available?

Had the cost-conscious coalition government written CSC a blank cheque?

Thumbnail image for CSC India Headquarters.pngComputer Sciences Cowpowayshen

CSC itself proved as evasive after the deal was announced last Tuesday.

By the end of the week, after Computer Weekly complained about the contempt it was showing for those citizens and patients for whom it was ultimately responsible under its government contract, and the culture of secrecy within which it obscured its horse trading over public money, CSC put its top NHS man up for interview: Guy Hains, the international vice president who has led the supplier's dealings over its failed NHS venture.

But CSC pulled out the next day. It did not want to face difficult questions. News had also broken of further bizarre evidence that was alleged to link CSC to the abduction and torture of people under the US Central Intelligence Agency's demented War On Terror.

The NHS had apparently played the 'torture flights' card in its negotiations over the summer. But it dropped its concern for human rights when it signed the deal. It issued an identical brush off as had the Ministry of Defence and Transport for London when Reprieve, the charity that unearthed documents seeming to link CSC to the torture flights, asked them to justify doing business with the supplier.

"We asked CSC for clarification on these allegations. They have assured us that CSC adheres to its Corporate Responsibility Programme which includes an affirmative Human Rights statement," a Department for Health spokeswoman said in an email. CSC has not denied the allegations.


When CSC finally sent its own statement about the NHS contract settlement by email, it said it had agreed pricing terms with the Department for Health. It would not reveal actual numbers but figures had been agreed.

Its Lorenzo patient administration software had been cut back into a core system it was ready to deliver and additional components it had not yet finished. They were priced separately, as were services to implement and run them. None of the actual numbers were deemed fit for mortal ears.

Of the £2bn that it may be deduced the government has now agreed to pay of its original £3bn CSC contract, it was not clear whether it was reserved for payment only of those core systems, and that the optional extras would cost extra for NHS Trusts, along with the services to go with them.

And would CSC still get its £2bn if it failed to install its software at but a few Trusts?

Free market

This remains a possibility. As Hains told investors in April: it's a complicated system - it can take up to 12 months to implement it at a hospital.

"Its a 9 to 12 month programme to take the system and put it into a hospital and turn off the legacy infrastructure," said Hains. "There's usually very complex interfacing. All of that requires a huge amount of planning.

"So from day go one you are looking at switching over the first system some 9 to 12 months later. We are ready to do that. So we don't have ramp up time from the point at which we sign the agreement. We have plans in place to take on the first Trusts, and have built up their plans so they are ready to go," he said.

It is most likely therefore that the Department for Health had already established precisely how many Trusts wanted to buy CSC's software, and has got commitments from all them.

So it can remove any contractual mandate and pose as free market liberator, and still strike an agreement with CSC for a set number of systems for a defined amount - all the while churning out vapid chuff chuff from its PR department to deflect any attempts at scrutiny that might expose how bad its deal is compared to that struck by its predecessors under a Labour government.

Thumbnail image for Francis Maude launching the Conservative Technology Manifesto - 30 MAR 2010.pngBehind the chuff, the government has settled for exactly what it said it was vanquishing: a top-down, centrally funded, one-size-fits-all, national IT project with an unreliable supplier on dubious terms.

"The National Programme for IT embodies the type of unpopular top-down programme that has been imposed on front-line NHS staff in the past," said Cabinet Office minister Francis Maude in the Department for Health press release last week.

Sir David Nicholson, chief executive, NHS.png"The NPfIT has provided us with a foundation. But we now need to move on if we are going to achieve the efficiency and effectiveness required in today's health service," said NHS chief executive Sir David Nicholson in the same statement.

Under the new arrangement, the government not only de-scoped the NHS system, it extended the duration of CSC's contract another two years, to 2016.

You had to read that on the website of the US stock market regulator, the only entity privileged to get information about what CSC, Cabinet Office and Department for Health are really doing on behalf of the British people.

Bad deal

In the balance of things, the government has probably not saved any money at all. The concession it did get - a removal of its volume purchasing commitment to CSC - may be offset by the loss of a volume discount. The £1bn "saving" will mean fewer implementations, probably at a higher unit cost. It is even likely that so few trusts will sign up and can be served software before the end of the contract period that "saving" £1bn is simple.

The government is in addition seeking to provide central funds for Trusts to buy non-CSC systems. Thus the cost of the programme goes down with one supplier and up with a variety of others.  

"We have given local NHS organisations the power to make their own decisions about which IT systems they use. The Department for Health is considering the most appropriate mechanism through which trusts may access central funding to support these kinds of capital investments," said a Department for Health spokesman in rare fit of candour.

This is what passes for transparency and accountability under the ConDem government that has made such a song and dance about it. Where are all those armchair auditors Francis Maude talks about? Probably concentrating on those drips of disclosure the government makes when transparency is in its interest.

What a NHSIT year for CSC

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Christmas pudding.pngTuesday 27 December was a good day to bury bad news. With 60m Brits digesting their Christmas Bank Holiday feasts in front of crap telly, news outlets were running skeleton crews. The most work done anywhere was by the nation's sewers, straining under the seasonal glut in excrement.

This was the day Computer Sciences Corporation let it slip that it might have to write off the entire $1.5bn it has invested in the UK NHS National Programme for IT (NHSIT), after two years of negotiations under the threat of cancellation.

Was this some fit of seasonal goodwill from the most vilified of boohisstems integrators - relinquishing its claim on money otherwise needed desperately for aunt Mabel's tit transplant?

Or was it just the latest manoeuvre in the battle for public opinion being waged over Labour's National Programme for IT?

It was of course the latter and though CSC's warning was not the defeat it appeared to be, it was a retrenchment the beleaguered company did well to keep from the limelight. Now it has cleared all its skeletons from the closet and is reportedly close to appointing a new CEO, the markets might ease their sustained punishment of its share price.

Weak resolutions

The spotlight can return now to the government, which after a year of playing shark cards on CSC has achieved nothing of its ambition to scrap the National Programme.

It hasn't scrapped the programme because it can't simply tear up its contracts. It may not want to either. It outsourced the work. CSC, its outsourcer, invested $1.5bn in it. It developed an albeit unfinished suite of next-generation health software. It wants the guaranteed return on investment the NHS deal originally promised.

Unable to cancel the contract, the Cabinet Office has been able only to stall while the political machine piles up evidence in condemnation of the programme. If public opinion turned the contract toxic, CSC would have to get rid of it; NPfIT could be scrapped.

Public relations

This seemed to be the game when in February the NHS interrupted ongoing negotiations with CSC to issue a public threat of contract termination. CSC was still missing deadlines for systems it was originally contracted to deliver in 2007. But NHS couldn't terminate the contract without facing the question of its own liability for the project's failure.

So Cabinet Office forbade NHS from signing the deal until its Major Projects Authority had reviewed the project and issued a verdict on the MOU. The evidence meanwhile stacked up against NPfIT and CSC.

Negotiations reached a preliminary conclusion in May, in the shadow of a damning National Audit Office report into NPfIT's failure and the part CSC and other suppliers had played in it. But the terms (when leaked - Public Accounts Committee hearings that month were denied details) did not look pleasant: a one sixth cut in the £3bn cost of the contract in exchange for nearly a third fewer implementations and a year added to the contract term.

The MPA was apparently not content. Within weeks NHS CIO Christine Connelly was replaced with a Cabinet Office executive. MPA delivered its review, recommending the NHS extract further concessions from CSC, effectively condemning the MOU to the shredder. But the document was classified and seen by only a limited number of ministers and civil servants. CSC carried on in the belief that the review had not yet been completed. When CSC stated this in a statutory report to shareholders on 15 June, MPA stayed schtum.

MPA stayed schtum again on 3 August when the Public Accounts Committee produced its report into NPfIT, calling for some sort of review to consider terminating the contracts.


The MPA also stayed schtum when on 10 August CSC said in a statutory statement to shareholders that the MOU was still waiting on the conclusion of the MPA review. It wasn't until September that the Department of Health finally admitted it had the review. It said it would consequently seek to dismantle the programme more quickly than it had been doing. But this was hogwash: it had not reached an agreement over CSC's £3bn contract.

Cabinet Office finally published a heavily redacted version of its review on 23 September, just seven days before the six-month deadline for its return of a £170m advance if the MOU hadn't been concluded. Of course the MOU hadn't been concluded. MPA had redacted its final recommendation on the MOU. It had apparently not delivered its verdict so the MOU wasn't agreed and the money had to be repaid.

CSC had egg on its face over the repayment. Its CEO announced his retirement. CSC then went back to the negotiating table. But it told shareholders on 9 November it was still waiting on MPA's recommendation on the MOU and therefore the future of its contract. Its financial results were terrible.

The stand-off had achieved something. It had crushed CSC's share price to below a goodwill threshold, contributing to a £2bn deduction in earnings. That crushed its share price further. But there was still no resolution in negotiations that had now been going on for two years.

Nothing, it seems, would make CSC fold its cards. Yet if the government settled for anything less its ICT strategy and long-standing condemnation of the National Programme would look puerile.

Times £2bn CSC NHS exclusive.pngHard news

That was until 8 December when the Times Newspaper stepped in with the apparently shocking results of an "exclusive" investigation: the MOU would involve CSC's contract being extended by a year and £2bn, it said.

The Times story was ridiculous. But it caught on with some help from MPs on the Public Accounts Committee. Committee chair Margaret Hodge compared CSC to "cowboys". Whatever had been going on since negotiations had resumed, CSC was on the ropes, but still clinging to its contract. The MOU terms published as findings of the "exclusive" investigation had been public since May and a matter of public record since CSC repeated them to shareholders in June.

CSC had said in the summer the MOU deal would extend the contract a year. It said it expected to realize up to £2bn in revenue in the period. It was very unlikely this meant an additional £2bn, or two-thirds increase, on the existing £3bn contract. A £500m reduction was part of that same deal. It more likely meant that would be the period when CSC would realize the bulk of its income on the entire contract. It's payments had always been contingent on delivery. It might have won a quid-pro-quo extension for a cut in the cost of the contract, but MPA hard-nuts had not dragged negotiations out for another year only to hand CSC another £2bn.

Google Finanace share price shapshot for CSC - Year to 31 December 2011.pngWinter harvest

CSC's share price held out till a scheduled dividend payout on 20 December. It then took a dive. Ratings agencies started downgrading CSC. Phrases like "junk status" started flying around. A week later CSC said the MPA had rejected the MOU. So the Cabinet Office had finally delivered the verdict it had published internally in June and redacted in September.

CSC said the MOU talks would resume in January. But with nothing having been achieved in 2011, it had to face the possibility that it would not never recover the £1.5bn it had invested in NPfIT to date. Talks were clearly getting nowhere even now they were entering their third year.

So Cabinet Office goes back to square one after a year of public buffoonery and fruitless backroom scheming. It's ICT strategy is starting to look ridiculous. Neither the Department for Health, the Cabinet Office nor CSC will answer even the simplest of questions about the situation, such as when MPA actually delivered its verdict to CSC.

The only reason anyone knows anything about the talks is because CSC is required by law to tell its shareholders. They enjoy a greater right to know what about what the government is really doing with the National Programme than British citizens and tax payers.

Margaret Hodge may have been right. But the government's failure to produce a CSC deal that will allow it to conduct its planned "dismantling" of the National Programme and deliver redress for its failure makes it begin to look like it lacks the moral as well as contractual rectitude, no matter how bad a deal it thinks the NHS got in 2003.

DoH deploys flimflam in battle for hearts and minds

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The Department of Health dramatically announced a non-story today, pausing from its negotiations with disfavoured ICT suppliers to publicly condemn - again - the computer systems they supplied under the National Programme for IT.

The department announced the "acceleration of the dismantling" of the National Programme. But could not say how it had been accelerated or what exactly was being dismantled.

"The statement today is a commitment to accelerate the process," said a Department of Health spokeswoman. "We are not giving today the detail of what that will involve."

The department announced a year ago that it was scrapping the National Programme for IT and has been in negotiations with suppliers ever since.

It is still in negotiations with suppliers and still announcing that it is scrapping the programme. But it cannot accelerate anything until the negotiations are concluded.

Primary programme suppliers BT and CSC have contracts for the supply of patient systems that extend to April 2015 and hold the NHS to paying a further £2.91bn for the scheme, said the National Audit Office in May.

Also over the summer, the Cabinet Office Major Projects Authority sent DoH its recommendations for the future of NHS IT. The DoH spokeswoman said today the MPA had concurred with its year-ago announcement about the scrapping of the National Programme. The year-ago announcement, made by Health minister Simon Burns, had concurred with Cabinet Office IT policy. The DoH today said it was concurring with the MPA recommendations.

The DoH refused to publish the MPA report. It said it was a Cabinet Office report. The Cabinet Office, which is big on government "transparency", refused to publish the report. It said it was a report about the NHS and therefore the business of the DoH.

The DoH 2010 announcement had unveiled a "Connect-All" strategy. This would involve introducing common systems standards so that any supplier could supply any system to the NHS, simply plug it in and it would integrate and communicate with any other system. This was similar in principle to Cabinet Office policy for government IT.

Coincidentally, a story fell into your humble correspondent's lap this week that the System One patient system CSC has supplied to GPs and community Trusts under the programme was not compliant with the NHS Data Model and Dictionary. It was therefore not interoperable, and not in keeping with either the terms of its National Programme contract nor the "Connect-All" policies of the DoH and Cabinet Office.

DoH's negotiations with CSC are the most excruciating of matters that must be "accelerated" before it can get on with "dismantling" the National Programme. Neither party was able to confirm the rumour about CSC's interoperability.

Also coincidentally today, trade association Intellect, representative of BT and CSC, produced a report on the interoperability of NHS systems. DoH's non-announcement had included one new detail, which was that it and Intellect were going to conjure up a market for the supply of health computer systems.

The market had of course been asphyxiated by the DoH's previous collaboration with Intellect members in the National Programme. Intellect today said it aimed to "create a vibrant marketplace" for small health ICT suppliers by its new venture with the department. It attached the interoperability report to its press release.

The department refused to discuss what was really happening: that was its negotiations with suppliers. BT and CSC also refused to discuss the negotiations.

All it and suppliers would say in addition was how much the National Programme had actually bought with the £6.35bn it had spent to date. That amounted to a national network, email and booking systems, and software to archive medical images.

Commentators thus found it hard to grasp exactly what had happened today. The Daily Mail reported: "£12bn NHS computer system is scrapped... and it's all YOUR money that Labour poured down the drain".

A hubbub ensued. The DoH was scheduled to make a major announcement about the programme later today. Word was, it was going to be scrapped.

David Rose, assistant news editor of The Times newspaper, got closer to the truth, or at least expressed a view that has echoed around the corridors of National Programme suppliers today: "Lansley bashes Labour ahead of that party's conference?," he tweeted this morning.

Health Secretary Andrew Lansley had coincidentally been doing the rounds with a complaint about the financing deals the last Labour government had used to build hospitals. The deals had many years to run. They were expensive. They didn't fit with the coalition government's aim to dismantle the NHS...

Lansley didn't really say he planned to dismantle the NHS. His department presumably only wanted to dismantle the National Programme, and hospitals, and any residual reason anyone might have to suppress their cynicism in face of such flimflam.


BT said in a statement it was not renegotiating its NHS National Programme contracts with Department of Health. It was nevertheless in talks of one form or another about the future of its relationship with DoH.

That was relayed in media-speak: BT "continues to work with the Department to explore how best to meet the needs of the modern NHS".

That includes also the contract BT has to supply care records systems to acute trusts in London at a price nearly 50 per cent over prices expected even in the £multi-billion National Programme.

Shortly after the publication of this article, the Cabinet Office published its Major Projects Authority review of the National Programme. It has not published other reviews and has been unable to say whether its policy is now to publish its reviews or not.

The BT London contract had anyway been so poorly managed, said the MPA Review, it had a "crisis" that almost resulted in termination. All has been well, apparently, since about January.

That raises further doubts about the department's claim to have "accelerated the dismantling" of the Programme.

£8.8m NHSIT threat "hypothetical" (but already served its use)

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The Department of Health and South Central Strategic Health Authority may have forced inadequate, incomplete and immoderately priced BT RiO software down the throats of health Trusts under the threat of a £8.8m fine. But it didn't actually impose any fines because every Trust earmarked for a BT care records system did what it was told.

So, say those involved, the question of whether or not there was a fine was hypothetical. So if you'll just move along now please because there's nothing of interest here.

They said this after Computer Weekly asked them about the Business Case that Oxfordshire and Buckinghamshire Mental Health Trust (OBMH) built in favour of doing what it was told. The case rested on the threat of a financial penalty: BT RiO would have come near the bottom of the list of available options were there cost of doing anything else not inflated by an £8.8m fine.

The DoH refused to answer questions about the fine because the it had never been collected. OBMH hid behind the SHA.

Bill McAvoy, chief information officer of South Central SHA, told Computer Weekly it was "a hypothetical question about past events" and therefore "a relatively moot point".

"No penalty was invoked because the Trust deployed RiO," he said.

The penalty was not hypothetical when OBMH came to decide whether it should use RiO not. Then it was a very real threat. But there were some things that were moot points.

The most important was how the money would have been extracted from OBMH had it decided to stick with the care records system it already had or chosen some other better or cheaper alternative to BT RiO. The next most crucial moot point was just how BT was going to get paid for software it hadn't delivered.

The first question was unsettled. So it might not have necessarily meant lopping £8.8m off health budgets by turning away cancer patients, closing wards or sacking nurses. Though we cannot discount the possibility that the money wasted on NHSIT hasn't already led to such events indirectly, nor indeed that it helped the ConDem government hasten plans to privatise the whole beloved shebang on the false premise that it's not affordable.

Just how the penalty would have been levied on Trusts that failed to implement RiO was never determined, said McAvoy. Had the situation arose, the DoH and SHA would have got together with the offending Trust and worked it out.

"Any cost recovered from a defaulting Trust would be recovered by the Department of Health," said McAvoy. They would have referred to whatever general guidance was then available on the DoH extracting penalties from Trusts.

The money would then not have been paid directly to BT, at least not in the sense of there being a brown envelope or an invoice item reading, "Penalty for not installing BT RiO: £8.8m".

The penalty would have been "offset" against the Department of Health's contract settlement with BT, said McAvoy, "rather than being passed through to the supplier on an individual basis."

In other words, he said, parties to these large contracts sit down periodically to settle their costs and fees to one another, effectively squaring them off. A supplier might have spilled coffee over the database server, for example, while the customer might have decided it didn't want the software after all because it was over-priced tat (speaking hypothetically, of course).

At the end of the day, no money would have been passed back to BT, but it would still have collected the penalty payment. It would still have been paid for nothing, but would have been saved the embarrassment of bereaved relatives waving placards as BT money men drove off from the DoH headquarters at 79 Whitehall with their suitcase full of readies.

No doubt the DoH would have been saved the same embarrassment over collection of the penalty from offending Trusts in the first place. It wouldn't have actually sent the bailiffs round to take incubators and anesthetic equipment from delivery wards. It would have just squared it off in a quiet room somewhere. As long as BT got its £454m. That's all that mattered really.

And now all Mental Health Trusts in the south of England have done what they were told and installed RiO, the Department of Health has told them they don't have to use RiO if they don't want to. It's the DoH's new strategy of local autonomy. Looks like that's hypothetical too.

Agile in the NHS: 10 years, £5bn and still not finished

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When the Department for Health signed £5bn of contracts for care records systems in 2003, Oxfordshire and Buckinghamshire Mental Health Trust (OBMH) already had one.

But OBMH was forced to swallow the system under the extortionate National Programme for IT (NHSIT) anyway, even though it would cost way in excess of twelve times what OBMH already paid for a perfectly functional patient system, and even though, seven years since NHSIT was conceived, the software still wasn't up to the job.

This must be what passes for agile development in the NHS: £5bn, 10 years and still not finished.

If you want to know why the Public Accounts Committee thinks NHSIT is an expensive failure, this is a prime example. OBMH bought the NHSIT software because that was the only way to avoid a £9m fine being levied on Trusts that didn't get with the programme.

The numbers are unbelievable, even without the extortion. OBMH had been paying an IT SME called Maracis £60,000 for ongoing support and development of its "enviable" PCIS care records system, which OBMH already owned under a perpetual licence that only cost £250,000. In comparison, NHSIT had arranged to pay BT £9m for each Trust it supplied under the programme.

The Trust expects the RiO system to cost in excess of £350,000-a-year when the NHSIT contract runs out in 2010 - and that's just for starters. Development costs will go on top. Then there's the cost OBMH expects to incur from buying in other systems to fill in the gaps left by RiO's poor functionality.

It sounds like too much for any cash-strapped NHS trust to swallow, and it's a wonder BT managed to persuade anyone to use its care records system. But lets not forget the extortion. OBMH's Business Case for using BT RiO said the chief reason was indeed the £8.8m fine it would be forced to pay if it tried to use an alternative - even if that alternative was the Maracis system it was already using when BT RiO and NHSIT were but a twinkle in some bozo's eye.


In the 12 years OBMH used PCIS, the system "served the Trust well", said the report. It put OBMH in the "enviable position" of already having a comprehensive records system. The Trust was nevertheless forced to conclude (after using it for 12 years) that PCIS wouldn't meet its strategic objectives in the long term because there was no longer a market for non-NHSIT records systems in the NHS.

No matter that Maracis had already "significantly" developed the system over the years since it first installed it at OBMH in 1998, four years before NHSIT even got started.

And what a farce it turned out to be. After NHSIT got started in 2002, OBMH was told to ditch a regional care records system it had already been working on with other Trusts. Just as well the Trust had carried on with PCIS because it had meanwhile supported new implementations of implemented document management, an integrated electronic health record and clinical management information - all while NHSIT was still trying to get started.

NHSIT originally planned to force Trusts in the Southern Cluster to accept the IDX CareCast records system on subcontract from Fujitsu, which then held the calamitous Local Service Provider Contract for the South. But IDX was shown the door in 2004, leaving NHSIT up the creek without a paddle. OBMH was meanwhile getting on just dandy with PCIS on mobile devices - being possibly the first trust to have electronic care records available to its community workers.

NHSIT meanwhile tried to clear up the mess it had created with IDX. It tried replacing it with Cerner Millennium, a system so so poorly suited for Mental Health Trusts that OBMH had to muck in on a programme to get it fit for purpose. But it was so rubbish they had to ditch that too. PCIS was meanwhile still going strong.

OBMH's ongoing use of PCIS was making a mockery of NHSIT. It not only had a working care records system, but it was being continuously developed as well - and for mere tens of thousands of pounds. It implemented support for the Care Programme Approach to mental health, an outpatient project, a patient transfer project, an outreach data project, and a Child and Adolescent Mental Health data project.

In the wake of Fujitsu resigning from the programme, Some Mental Health Trusts had meanwhile taken a look at the iSoft Lorenzo application. But Lorenzo's delays and financial problems scared them off. Then in 2009 BT bought up the remnants of Fujitsu's contract and trusts were lumped with RiO.

OBMH was still making great strides with PCIS. It automated document loading, implemented another child and maternity records system, a notes system and an archive project.

And then came crunch time. The Trust was told that if didn't ditch its trusty PCIS and install RiO the South Cental Strategic Health Authority would extract an £8.8m fine. Suddenly, the £90,000 a year it was paying for ongoing development of a system that was already and ever being made fit for purpose was nearly a £1m a year over 10 years. Who clocked the bonus for that one?

Thought experiment

To appreciate how absurd this situation is, contemplate spending £5bn on a patient administration system.

Remember that industry analysts used to justify the high cost of these systems by saying BT ought to be paid a decent rate for a decent job. Now try this thought experiment. Imagine installing Maracis everywhere (disregarding for now that this would be as absurd as installing RiO everywhere). The first time costs of Maracis are, according to the firm, £250,000 for a single Trust and £60,000-a-year for ongoing support and development. (£70,000-a-year if you throw in bespoke development).

Lets say for the sake of argument the 392 Acute, Mental, Community and Ambulance Trusts originally set to be supplied under NHSIT all bought Maracis and were all charged the same rate. Lets also assume (for the sake of argument because Maracis doesn't do a GP version) the 5,643 GP practices originally set to be supplied under the £5bn NHSIT programme all bought Maracis as well, and they paid an average (across practices from 1 to 10s of GPs in size) £40,000 for install and then £8,000-a-year. The total cost of the Maracis NHSIT contract would be £1bn. That's one-fifth of the cost. Even if you add £100m for large-scale extras and throw in another £100m for fat cat salaries and wide boy pensions, that's still only £1.2bn.

A more realistic comparison can be made if we were to imagine either BT or Maracis getting a contract to supply all 80 UK Mental Health Trusts. At the rate each of them established at OBMH, it would cost £720m under BT and £76m under Maracis.

This is clearly absurd. Just where has all the money been going?

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