NHS Connecting for Health and the NPfIT local service providers BT and CSC have begun renegotiating their contracts – again.
One of the aims of NHS CfH is to conclude a deal before a general election, because a new administration may try to unpick anything of the NPfIT that they can unpick.
Alistair Darling has already said that the NPfIT is not essential to the frontline, and is “something that I think we don’t need to go ahead with just now”, while the Conservatives have indicated they’ll try to scrap the local service provider contracts.
The reason for the renegotiation of LSP contracts is the announcement by the Health Secretary Andy Burnham that the Department of Health is “discussing with our suppliers potential reductions to the scope of the systems and the cost savings that could be generated.
“In addition we are looking seriously at the internal savings that could be made from the costs of running the programme.”
He added: “In the light of this work I can confirm to the House that we are working towards achieving a reduction of £600m in the lifetime cost of the programme. This means we will now pare back the programme to the core elements that have been identified as critical by clinicians.”
Burnham chose his words carefully. He referred to the “potential” reductions in scope and cost savings which “could” be generated. Indeed the suppliers will need to be coaxed to deliver those savings.
In a little-noticed Parliamentary reply in December 2009, theNPfIT minister Mike O’Brien conceded that NHS Connecting for Health andthe Department of Health have little idea how to cut the size and costof the contracts with BT and CSC.
The Shadow Health Minister Stephen O’Brien had asked how the NPfIT savings will be made.
The minister replied:
“Thesedecisions remain to be taken. They will depend partly on the outcome ofdiscussions with suppliers about the potential for reductions to thescope of the systems…”
In response, Stephen O’Brien said: “Ministers areclearly clueless about how to deliver the Chancellor’s half a billionpound cut. When will Labour be up-front and honest with the publicabout exactly how these so-called ‘savings’ will be made?”
It’sclear that the potential LSP savings are dependent on CSC and BT; andwhy would these suppliers allow a few hundreds of millions to come offthe total price of their contracts?
On the one hand cutting£400-£500m from contracts worth more than £3bn would seem easy: much ofwhat was originally specified hasn’t been delivered, so it’s simply aquestion of taking out of the contracts what hasn’t materialised.
Onthe other hand, nobody would be surprised if BT and CSC were to forego£1 in their contracts for every £2 worth of cancelled contractualobligation.
It wouldn’t be difficult saving, say, £300m fromthe NPfIT spending commitments, if £600m worth of contractualobligations were to be removed from the contracts.
This would be a very good deal for BT and CSC – but not necessarily for the taxpayer. Bring back Richard Granger?
Some assume, from Alistair Darling’s apparent hostility towards the NPfIT, that the programme is to be starved of money, especially at the next Spending Review. But that may not be the case.
It’slikely that NHS Connecting for Health and the Department of Health willmake NPfIT commitments that cannot be severed by the Tories.
Thatsaid, it could cost the taxpayers and patients, for Whitehall officialswill continue to deploy expensive interim systems through BT and CSC inthe optimistic expectation that advanced, fully-featured Cerner andLorenzo systems will eventually arrive. That may or may not happen.
Surely it’s time to give trusts all over England a choice of [ASCC]systems to buy, not just those trusts in the south? Putting workthrough BT and CSC simply to keep alive vestiges of the NPfIT isspending more money than is necessary just to save face.
Excerpts from NPfIT in the House of Commons yesterday 8/12/09 – IT Projects Blog