Fujitsu seeks £700m over failed NPfIT contract

Fujitsu is reported to be seeking £700m from the Department of Health after its £1bn contract as a local service provider on the National Programme for IT was terminated.

The Liberal Democrat Shadow Health Secretary, Norman Lamb said the disclosure was further evidence that the NPfIT was in his view hopelessly flawed. He said it was a “centrally-imposed project that has not been properly thought through from the start and was never subjected to a proper cost benefit analysis”.

He added that the scheme has “caused enormous frustration and exasperation for doctors and hospital staff “. He supported a call made by 23 leading academics that there should be an independent review of the scheme.

The Independent has reported that the NHS is “facing unprecedented £700m legal action” from Fujitsu, the local service provider in the south of England. It quoted “sources close to the negotiations” as saying that Fujitsu was ready if necessary to go to court to press its claim.

Computer Weekly understands that the claim is not a writ but a notice in advance of possible legal action.

Fujitsu has not confirmed the £700m figure. It told The Independent: “At the moment we’re in dialogue with the NHS and we hope to come to a satisfactory outcome.”

Comment:

The information in the Independent appears to be reliable. It’s unlikely that the case will come to court because the government has been reluctant in the past to be put civil servants on the stand. During a court case between EDS and National Air Traffic Services the case collapsed shortly before a series of civil servants were due to give evidence. It appears the government values secrecy over its major IT-based projects more than defending itself in a public court case.

Year after year HM Revenue and Customs threatens legal action against EDS over a settlement it reached after tax credits problems. But after numerous threats there has been no legal action.

If there is to be no court battle between the government and Fujitsu there is likely to be a settlement.  As Fujitsu is claiming £700m, even if receives only a fraction of that, the cost to taxpayers could be tens of millions of pounds. And for what?

Links:

NHS faces £700m legal action – The Independent

Parliament was not told the whole truth about NATS deal – Computer Weekly 2002

NATS court case is settled as a civil servant is due to take the stand – Computer Weekly 2002  

NPfIT hopelessly flawed – Lib-dem Shadow Health spokesman

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It’s no surprise that the contract has broken down.

I have seen so many similar situations, where the client expects the contractor to be “more flexible” (i.e. taking more risk) without recognising the need for mirroring the expected flexibility themselves (i.e. rewarding the increased risk of the contractor).

The client can’t have it both ways.

Common sense dictates that a contract must be fair to both parties; likewise any renegotiation of terms.

Contractors make large investments in securing large Government contracts and base their bid on the client’s expectations at the time.

Of course complex change programmes, like the NHSpfIT, are difficult to specify in absolute terms at the outset and, of course, a sufficiently flexible contract will always increase the potential for variable cost; because the contractor will most certainly factor in provision for the risk and uncertainty involved.

NHS Connecting for Health has made much of how the programme would benefit from the “strong” contracts. Recent history has seen the tub-thumping start to unravel.

The hugely ambitious NHS programme may be within financial tolerance but the timescale is extending exponentially. According to reports, the final delivery will be at least four years late and the quality of the deliverable remains unproved.

So it seems that cost, quality and timescale are all under severe pressure because yet another major change initiative is being managed as if it is just a very large IT project.

This approach will always create unexpected cost and disappointment.

Unless and until our politicians and civil servants realise that they need to take a completely different approach to managing change, the UK taxpayer will continue to pay heavily, again and again, for inappropriate management.

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