Accenture calls for 'resolution' after £260m loss on NHS work

The NHS is facing a potential conflict with its biggest IT supplier, after services firm Accenture last week announced a £260m write-off on its £2bn, 10-year contracts to modernise the health service.

The NHS is facing a potential conflict with its biggest IT supplier, after services firm Accenture last week announced a £260m write-off on its £2bn, 10-year contracts to modernise the health service.

Coming on top of delays in the deployment of systems and end-user frustration with the NHS national programme for IT (NPfIT), this could prove a costly diversion for senior officials of Connecting for Health as it tries to deliver systems to hospitals.

Accenture, the prime contractor for the NPfIT in two of the five NHS regions in England, predicted substantial losses on NHS work for the next three years. It said, "Resolving this situation to meet the interests of all parties in a timely fashion is a top priority."

Accenture chief executive William Green said, "We have established the guiding principles for success in our ongoing work with the NHS and have devoted additional management resources at the highest level to resolve the NHS matter as quickly as possible."

But Richard Granger, director general of NHS IT, said other prime contractors, BT, CSC and Fujitsu, have not reported similar problems.

The contracts, which were struck in 2003, were structured so that payment was made on the delivery of working systems.

"Under our published procurement strategy we invited prospective suppliers to take completion risk and, where they chose to do so, this was reflected in the price. We continue to look to our prime contractors to fulfil their obligations to manage their delivery obligations," said Connecting for Health.

Accenture said some of its future losses on the deal were down to rescheduling of the NPfIT and delayed delivery of software from sub-contractors. Other losses were down to changes within the NHS, particularly the introduction of GP system choice, which was not accounted for when Accenture signed the contracts.

In February, Gillian Braunold, GP clinical lead for Connecting for Health, told Computer Weekly the organisation had been discussing arrangements with its service providers for months to deliver GP system choice.

Tola Sargeant, senior analyst at research firm Ovum, said, "When Accenture signed the contract it worked out how much it could expect from supplying GP systems. Now that is not the case."

Robert Morgan, director of outsourcing consultancy Morgan Chambers, said that if Connecting for Health were to refuse to negotiate with Accenture on the issue, the NHS could technically be in breach of contract.

"Suppliers may argue that they costed everything on the expectation of what the revenue would be. Now this is reduced, that may be effectively a breach of contract. In private, lawyers from both sides will be discussing this."

A spokesman for Connecting for Health said, "There is currently no renegotiation going on with Accenture regarding their contracts with the NHS."

However, Connecting for Health also said, "Once the details of GP Systems of Choice have been concluded, a change request will be raised on the local service providers' contracts to accommodate its impact."

Read article: Hard line could backfire on NHS

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