US fraud investigators to examine CSC's £2.9bn NHS contract

CSC’s controversial contract with the NHS National Programme for IT is to be examined as part of a US fraud investigation into accounting irregularities at the supplier.

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CSC made the admission in a quarterly financial statement yesterday in which it also revealed it had written off nearly £1bn ($1.5bn) from its £2.9bn NHS IT contract .

The US Securities and Exchange Commission (SEC) began investigating accounting irregularities in CSC's Nordic business a year ago, and since unearthed similar problems in Australia and the Americas.

CSC said yesterday both SEC investigators and its own Audit Committee - a team of forensic accountants it employed to get to the root of the problems - had discovered accounting irregularities in its troubled NHS contract.

"Each of the Audit Committee’s and the SEC’s separate investigations also have been expanded to encompass a review of...certain of the company’s contracts and related disclosures that involve the percentage of completion accounting method, including the company’s contract with NHS," said CSC's financial statement.

The ongoing investigations have so far discovered $21m of "intentional accounting irregularities" and $29m of unintentional accounting irregularities. Other accounting adjustments have been made but deemed merely "errors". 

The Department for Health would not comment on the revelation. It said any questions were a matter for CSC.

The UK government has been trying to renegotiate its contract with the CSC for more than two years after CSC failed to meet its obligations to deliver IT systems for the NHS National Programme for IT, once the largest and most ambitious civil IT project in the world.

CSC's $1.5bn NHS write-off gave it a clean sheet in ongoing negotiations with the Department of Health, the company said yesterday.

The charge included $1.3bn it had invested in the NHS National Programme and a $200m loss of sales. But CSC is seeking in negotiations to reduce the number of systems it is contracted to deliver to NHS hospitals. It was originally contracted in 2007 to deliver systems it still has not completed.

CSC did not specify whether the $1.3bn claimed NHS investments included the $0.5bn it paid in July to acquire iSoft, the supplier it contracted to develop software for NHS hospitals but had become a bottleneck that refused to clear after it became engulfed in its own accounting scandals.

CSC was unavailable for comment.