Connecting for Health maintains hard line on suppliers by only paying on successful delivery.
The government has revealed that Connecting for Health, which runs the £6.2bn national programme for IT in the NHS, has released £234m to the main contractors - only 4% of the contract value - more than two years into the deals.
The low payments to suppliers, disclosed in a parliamentary written answer, highlight the extent of delays in the delivery of the world's largest civil IT programme. The £234m figure also raises concerns about whether suppliers are being paid enough to maintain the economic feasibility of the contracts.
It prompted MP Richard Bacon, a member of the Commons Public Accounts Committee, to question whether the programme should be scrapped.
Liam Byrne, parliamentary under secretary of state for social care, said in a written answer last month, "To date, £234m has been paid to the programme's principal contractors."
However, IT spending in the NHS has gone up - from about £850m at the start of the national programme to more than £1.1bn in 2003-04. This is partly because trusts have had to pay legacy suppliers more to extend contracts as products from local service providers have been delayed.
In 2003, when the project was launched, the Department of Health said the central funding for the national programme would be £400m in the financial year 2003-04, £700m in 2004-05 and £1.2bn in 2005-06.
Paul Goss, director at health IT research firm Silicon Bridge, said about £120m had been spent on Connecting for Health administration. This left £2.18bn available to suppliers, but only £234m has been spent to date - about 11% of the total £2.3bn allocation.
The contracts negotiated by NHS IT chief Richard Granger with his main suppliers mean that 80% is paid for successful deployments of systems, with much of the remainder based on their take-up by clinicians.
The shortfall in supplier payment, said Goss, was a result of delays to the programme. "It has delivered far less than expected at this stage in the project," he said.
This was reiterated by Sinead Quinn, healthcare programme manager at IT suppliers organisation Intellect. "The programme is not running to plan. That is the main reason for the discrepancy in what has been paid to the suppliers," she said.
The programme includes projects to create 50 million electronic health records, allow patients to choose their hospital appointments through an electronic booking system, and the electronic transfer of prescriptions and medical images. It also aims to build a new broadband network for the NHS.
Goss said the failure to deliver projects on time was not solely the fault of suppliers. "The delivery problems stem in part from the Department of Health's view that the health service understands its processes better than it actually does," he said.
Bacon said, "I think the management of the programme from the outset illustrates the worst facets of IT project management. Already, in the early stages, it is becoming a classic case of how not to do it."
The MP said, if necessary, it would be better to cancel the national programme at this stage and lose £234m than to carry on and potentially waste £6.2bn.
Goss warned that the squeeze on suppliers could affect the prospects of successful delivery of systems.
"Suppliers have been concerned that they have not seen the revenue they expected. They cannot go on like this forever. The consequence is that as a supplier, you reduce your operations and only fulfil the contract to the letter. I am quite sure the suppliers are considering their position now it is public knowledge the revenue is less than 25% of that planned."
An NHS Connecting for Health spokesman said, "Expenditure to date, as set out in the parliamentary answer, relates to invoices paid, not to financial commitments and it is not appropriate to compare the two.
"Payments are made for completed and fully accepted products and services in line with the procurement strategy and financial provision is made for work in progress with suppliers and accounts for the difference.
"Suppliers are delivering systems that meet clinical requirements and which perform properly and we now have 180,000 registered users."
A spokesman for BT, which is delivering systems in London, said, "BT understood the terms and conditions of the Connecting for Health contracts when it agreed them, we believe they represent good business for for BT and excellent value for Connecting for Health."
Changes at the top for IT programme
TEXT: NHS Connecting for Health is due to replace John Bacon as both senior responsible owner and chair of the national programme's governance board as part of a Department of Health reorganisation of the body.
Bacon will remain in his current position until new arrangements are in place. John Pattison, the senior responsible owner at the start of the national programme, filled the role until he retired in 2004.
Connecting for Health chief executive Richard Granger and the government's deputy chief medical officer Aidan Halligan were joint senior responsible owners until Bacon took the role.