Fujitsu and the NHS - bound by obsolete contracts

Now that a memorandum of understanding between Fujitsu and the NHS has expired the two sides have reverted to the original contract – which both view as obsolete.

The timetables and products set out in the contract are seen as irrelevant, even obstructive, superseded by changes in the NHS.

The memorandum of understanding had allowed Fujitsu to work within an up-to-date legal framework while the two sides negotiated a contract “reset”. NHS trust boards had expected the reset negotiations to have been completed by the end of November 2007 or by the end of December 2007 if the talks dragged on. But the two sides still haven’t reached an agreement. The MoU expired on 31 January 2008.

Sarah Elmendorf, Programme Director of the Southern Programme for IT, which is part of NLOP, the NPfIT Local Ownership Programme, has written to colleagues saying that the Fujitsu’s proposals for a contract “reset” were not acceptable.

Elmendorf has been chairing the contract reset meetings. She confirmed in her letter that both parties have reverted to the contract as it was prior to the memorandum of understanding “from that point onwards”. This implies that Fujitsu may be legally bound by the pledges in original contract, even during the period of the memorandum of understanding which was signed on 13 July 2007.

She said: “Together with representatives from the three strategic health authorities in the south of England we have been in negotiations with our suppliers to conclude the contract reset process.”

She continued: “Southern Programme for IT Board members in the south of England met on Tuesday 29 January [2008] to review the most recent Fujitsu proposal. While some progress has been made on the broad product set, Southern Programme for IT Board members reviewed the overall submission and were unable to accept it.

“As a result, the Memorandum of Understanding that was signed between us and Fujitsu in July 2007 (that started the Contract Reset) will expire on 31 January.

“The extant formal position will therefore be that both parties will revert to the contract as it was prior to the Memorandum of Understanding from that point onwards. Nevertheless urgent commercial negotiations are continuing and I hope to be able to report progress shortly.”

So for now the supplier and its many NHS customers are tied to a contract nobody wants.


Some NHS executives hope a deal can be struck by the end of this month – if Fujitsu doesn’t quit the National Programme for IT [NPfIT]. If it stays trust boards and clinicians will want to know whether the clinical content of new systems has been curtailed to compensate for any losses on the NPfIT.

Health officials in their talks with Fujitsu want to keep the terms and conditions of the original £896m contract, under which Fujitsu operates as a local service provider to the NPfIT until 2013. But both sides want also to arrange new schedules of products and timetables for delivery of them.

The boards of several NHS trusts were hoping that a contract “reset” would put right everything from a lack of clarity over information governance to data protection and financial matters. One concern is a lack of definition of a timetable for releases one two and three of Cerner’s “Millennium” Care Records Service which is supplied by Fujitsu. NHS South Central has reported that the objectives of the contract reset “include a review of the development and deployment approaches to the delivery of the NCRS [NHS Care Records Service]”.

Jim Easton, Chief Executive of NHS South Central, said that contract reset was key to the future success of the IT programme.

The specific aims of the reset are to:

– Fix the national financial model agreed with Fujitsu

– Improve the operational effectiveness of Cerner’s Millennium software, focusing on the requirements, design, build and test process

– Streamline payments to Fujitsu

– Increase the number and frequency of releases to NHS bodies

– Agree the Detailed Implementation Plan by 31st December 07

– Define the schedule for releases up to December 2008 and thereafter

Some trust boards are finding that because of delays in the delivery of suitable software they are having to invest in interim systems – although they’re unsure if they’re spending public money on obsolete technology.

Last month [January 2008] Ian Mackenzie, Director of Performance, Information and Facilities at Ashford and St Peter’s Hospitals NHS Trust, told his board that the contract reset means that the trust is still waiting for “clarity about a go-live date for [the] Card Records Service”. He added:

“It will soon be 24 months since the original project kick-off and this now represents a serious issue for the Trust as it [the lack of a replacement hospital system] is delaying progress in a number of key areas.”

And Alan Pickering, Interim Director of Finance and Information at South Downs Health NHS Trust reported to his board last month:

“In the longer term there are potential financial consequences to both the HIS and local NHS Trusts of the delay in implementation of the new system.

“This is caused by engaging significant project and technical staff to drive the project with client bodies for much longer than the initial programme and beyond the funding set aside from Connecting for Health.”

Sarah Elmendorf meanwhile has received representations from NHS trusts about what they want from the contract reset negotiations.

Executives at Surrey and Borders Partnership NHS Trust are among those who’ve expressed concerns to Elmendorf. They said: “The program [sic] has been stretched, funds are limited and penalties may be incurred through no fault of our own…Pat [Pat Keeling, Director of IM&T], will also take these financial concerns to Sarah Elmendorf, the Director of Southern Programme for IT, who chairs the contract reset meetings.”

It’s being said by Fujitsu that changes to the contract – which is ultimately held by the health secretary on behalf of the Government – would “deal with the differences” between what strategic health authorities in the southern region wanted and the requirements set out nationally by Connecting for Health, according to Lester Young, NHS account director for Fujitsu.


Significant risk of Fujitsu quitting NHS programme

Southern contract reset deadline up

Lessons from the NPfIT