CSC chief takes charge of NHS negotiations

CSC's new CEO has taken direct control of protracted negotiations over its failed contract to deliver the NHS National Programme for IT.

CSC's new CEO has taken direct control of protracted negotiations with the Department of Health over its failed contract to deliver the NHS National Programme for IT.

Mike Lawrie, who took over as chief executive of CSC in March, told Wall Street analysts yesterday that he met with NHS chief executive Sir David Nicholson last week to start hammering out a deal as part of his plan to turn round the ailing company.

"I was in the UK last week and met with the head of the NHS," said Lawrie in a Wall Street conference call about its loss-making fiscal 2012 finances.

"There's no question both parties want to get to an agreement. Now on a weekly basis the head of the NHS and myself are getting together. We are hopeful the NHS agreement will get completed in the not too distant future," he said.

CSC's failed NHS contract, over which it was forced to make a write-off of $1.5bn, had been the "primary reason" for what Lawrie told analysts were "very poor" financial results. CSC posted a loss before tax of $4.3bn for the year to 30 March.

It is now five years since CSC was contracted to deliver the first iteration of the software. CSC healthcare boss Guy Hains said last month that it was close to beginning roll-out. But even when the software is finished and a new contract agreed with the NHS it will still take at least 12 months per hospital to implement it. The  government has been trying to renegotiate its CSC contract for two years. The Department for Health was unavailable for comment.

Among the other reasons for CSC's loss were "40 troubled contracts" in its outsourcing business, said Lawrie, who came to CSC with a reputation as a turnaround specialist. He intended either to fix the contracts or renegotiate them. The firm has put a system in place for doing better due diligence on new business. "We want to make sure we don't sign up for more problems," he said.

This was just a minor part of a radical restructure Lawrie had planned for the company. CSC has, over the course of a 20-year acquisition spree, seen staff numbers treble. Lawrie said it had become a holding company that was so big it had no control of its many constituent parts around the world. Its management waited for results to come in instead of directing what they should be. Lawrie planned to turn CSC into an operating company, impose strict management controls, "prune" the business by selling off "non-core assets", and cut $1bn from back-office costs.

Lawrie has already begun replacing members of the senior management team, announcing last week a finance chief with a reputation for helping companies cope in industries undergoing traumatic change. The CEO has embraced the cloud services strategy that his predecessor Mike Laphen introduced in 2009 before much of the market knew what it was. He has also directed the company to make more use of its software assets.

The troubled NHS deal has also affected CSC staff relations, with UK workers and unions protesting over the company's approach to redundancies as it attempts to reduce the size of its contract.

Update 21 May:

The NHS has told Computer Weekly that CSC chief executive Mike Lawrie has not talked to the head of the NHS, Sir David Nicholson, but in fact spoke to NHS IT chief Katie Davis, director general and managing director of NHS Informatics.

During his conference call with Wall Street analysts, Lawrie specifically said on three occasions that he had met with "the head of NHS". 

Lawrie was previously CEO of UK-based software provider Misys. 

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