LSPs paid a quarter of contract price

Tags: Cerner CSC EPR Infrastructure iSoft Lorenzo

16 Nov 2009

The local service providers of the National Programme for IT in the NHS have been paid £1.1 billion, less than a quarter of the projected amounts for their projects.

Figures from health minister Mike O’Brien reveal by 31 March 2009, BT, the LSP for London, had only been paid £326m of the £1 billion of its ten-year deal for modernising IT systems in the capital.

CSC, the LSP for the North, Midlands and East had only been paid £684m of its £3 billion contract. Fujitsu, the ex-LSP for the South, was paid £133m out of £1.1 billion.

The ten-year LSP deals were originally awarded in 2003 and due to run to 2013, they have since been extended to as late as 2016.

Since the end of March there have been several roll-outs by CSC, with the Lorenzo product from software provider iSoft. These include roll-outs at Hereford Hospitals NHS Trust, Five Boroughs Partnership NHS Trust and NHS Bury.

For the first time, O’Brien revealed that what CSC had been paid for the first stage of each deployment. In four cases the figure was £4.758m, and in one more case over £8m.

“The agreed deployment charge for full deployment of all bundles of service, when complete, at the South Birmingham PCT, University Hospitals of Morecambe Bay NHS Trust, Hereford Hospitals NHS Trust, and Five Boroughs Partnership NHS Trust is £4.758 million in each case,” O’Brien said in a written parliamentary answer.

The minister said the agreed deployment costs for all Lorenzo services at the trusts that Lorenzo has been rolled out to (excluding NHS Bury) is £27m.

O’Brien said: “Expenditure incurred in implementing computerised record systems at National Health Service trusts has two components.

A one-off ‘deployment charge’ is paid when the trust has accepted the system, and there will be local costs associated with preparation, deployment and support.

However, the minister added that the charge for Bradford Teaching Hospitals NHS Foundation Trust is almost double, at just over £8m.

He added that the average agreed deployment charge per site for full deployment of all bundles of services of Lorenzo, when complete, is £6.4m.

Payments for the national infrastructure parts of NPfIT – the Spine, Choose and Book and N3 - are closer to original expectations.

Choose and Book has so far cost £133m out of a predicted £144m; the Spine cost £791m out of £889m; while the N3 network, delivered by BT, cost exactly the predicted £554m.

This spring director general of informatics Christine Connelly said she wanted to see Lorenzo “working smoothly” across an acute trust by March, having gone live in another setting by the end of November.

Earlier this month, NHS Connecting for Health published the criteria that would have to be met in order for the providers to claim that the implementation of the EPR had been successful.

In response to a question from shadow health spokesman Stephen O’Brien about whether a breach of the criteria constitutes a ground for the termination of LSP contracts, the minister said that the government has the ability to terminate the contracts but would only consider doing so as a last resort.

He said the provisions for terminating contracts were written into each deal. “However, termination is a step that the Department will only contemplate after every opportunity, and all possible assistance had been given to enable a contractor to recover its position.”

Link

Hansard written answers

Sarah Bruce

Reader's Comments

Remember 2003

16 Nov 09 14:11

In the summerl of 2003 (can you remember that far back) Granger proudly announced that the LSP contracts contained very severe penalities for late delivery. CSC's delivery of Lorenzo hasn't been late, it has been nonexistent. Presumably by this time CSC should have been paying the Department of Health for the privilige of delivering Lorenzo. But it appears that CSC is receiveing the full contracted price. Where are the penalities for late delivery?

Deployment Charge

16 Nov 09 15:11

Any chance somebody could tell us what the definition of "deployment charge" is?

Deployment Charge

pocorio@yahoo.com

16 Nov 09 16:11

I assume the 'deployment charge' is the payment received upon successful implementation of the system at a site. Generally there are then onging charges for support and maintenance.

Folie a trois

16 Nov 09 16:11

Somehow the DoH, management consultancies and suppliers managed to 'convince' each other that systems supporting interoperable messaging and coding standards capable of delivering on the output based specifications were already sitting on the shelf ready to roll out.

Moreover these parties undertook to roll out interconnected systems to a politicially determined schedule which would have been ambitious even for standalone implementations in single institutions.

So many of these assumptions were manifestly in error at the time - and some remain manifestly in error six years on. How else can the delays be explained?

Instead multiple competitive pilots could and should have been conducted for a small fractions of the explicit costs to date - and would have kept many more suppliers in the loop.

Also there are the opportunity costs of cancelled and deferred system acquisitions in the wake of CfH to consider.

I can't understand the lack of mainstream press and public interest in this compared to the relatively trivial sums involved in MPs expenses. How many duck islands would this money have bought?

Something for nothing!

17 Nov 09 21:11

Listen to yourselves, yes things are very late, that what happens when the NHS demands the design changes every six months, but massive strides have been made with regards to pacs and primary care. These LSP's if you look at the amounts mentioned will have struggled to make a profit if you take into account the resources they have allocated. As an IMT director I'm not saying we've taken the best way for this programme, but we are where we are and I've seen a glimpse of where we could be. Thus and I want to see the journey complete. You dont get something for nothing. Some comments sound like they belong to the free lunch brigade!

An expensive lunch, not a free one

18 Nov 09 11:11

It's hardly a free lunch. We were promised lunch at the Ritz, paid through the nose for it, and ended up getting taken out for a cheeseburger and fries instead.

Comment #5

18 Nov 09 13:11

I could not agree more with comment #5.

You cannnot surely expect timelines for software development to remain unaltered if the spec changes whilst it's being developed??

This is called SCOPE SLIP - and is a regular feature of failed NHS projects (in particular).

....the days of software development on the back of envelopes is long gone - thank god.

Scope slip - you bet!

19 Nov 09 20:11

Yes, the last poster who refered to scope slip is bang on the mark - the scope has slipped badly...downwards! The problem with the whole system was that it WAS designed on the back on an envelope on the whim of Tony Blair, rather than being properly dedigned by experts - e.g. PACS was supposed to provide national image sharing, but that bit (though used as an excuse for the over-priced PACS being forced on trusts) was conveniently "forgotten" during contract negotiations.. The expert advice that WAS given (and I know it was - I gave a lot of it for free!) was ignored, because the expensive lawyers for the LSPs managed to walk all over the rather less competent staff from NPFIT as then was.

And we all know the results.....LSPs who are paid to provide a layer of obstruction, and who's only "strong point" is their legal department - good enough to ensure that any penalty clauses can never be exercised!