BT's writedown on London NPfIT contract

Whenever I’ve asked BT in the past whether its £1bn contract as a local service provider in London has been profitable and, if not, why it has not announced any losses, the reply has been to the effect that all is well, and that the contract will prove profitable over its lifetime.

Today’s Financial Times reports:

“Of £1.3bn in writedowns at [BT] Global Services, £1.2bn was down to two contracts, one of which is to provide IT services to NHS hospitals in London. BT estimated the entire value of that contract, for 10 years and signed in 2003, was £1.1bn.”

The writedown by BT is at least a vindication of the terms and conditions of the NPfIT contract put in place by Richard Granger when he was head of NHS Connecting for Health.  

A BT press release yesterday said:

“We continue to make progress on our NHS National Programme for Information Technology (NPfIT) contracts. In an extension to our work in London, as the local service provider responsible for upgrading NHS IT systems in the capital, we have taken over the running of IT systems at eight acute hospitals in the south of England where we are also working with a further four acute trusts which have yet to roll out new systems as part of NPfIT.

“We will also implement 25 new systems in community and mental health trusts in the region, building on our success in London, where the roll out is now 70% complete.”

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On a wider, more general point, is there much point in annual company reports and accounts if people cannot know the full position until years after contracts are signed? And how many many financial companies, particularly US-based, have gone bust after audit firms signed off their accounts, depicting them as being in reasonable health?

Links:

BT frightenened by enormity of NHS IT Programme – Computer Weekly 2004

FT article today

BT to cut 15,000 more jobs – Computer Weekly

BT cuts 15,000 jobs – Management Today

BT and CSC deals under threat from Conservatives – ComputerworldUK

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Quote: "The writedown by BT is at least a vindication of the terms and conditions of the NPfIT contract ..."

Could you please explain how a huge loss by one of the country's largest employers resulting in more unemployment, caused by it following the country's largest employer in to something that could never work, and who after 5 years still doesn't have anything useful and usable for its primary job of providing health care, constitutes a 'vindication' of anything.

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Fair point except that it isn't Richard Granger's fault that the NHS IT programme is in trouble. He joined some time after the flawed decision to launch such an ambitious centralised scheme.

The only good thing about BT's writeoff on its NHS contract is that the hit is taken by BT and not the taxpayer. That's a vindication of the terms and conditions of the contracts which Richard Granger was involved in negotiating.

BT's writedown is not of course a vindication of the NPfIT. If a supplier gets into financial trouble after undertaking to build the world's first flying racing car which also works underwater, that's not a vindication of its decision to sign the contract.

That said the Department of Health has in recent months decided to pour money into BT's lap to keep it in the NPfIT, though not enough, as you say, to limit the redundancies, it seems.

Tony Collins

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