NHS trusts to be freed from CSC contract commitments

The Department of Health (DH) has proposed a deal with CSC to release NHS trusts in the National Programme for IT from their contractual obligations to use software from the troubled supplier.

CSC recently revealed it had written off nearly £1bn ($1.5bn) from its £2.9bn NHS IT contract, after it was forced to renegotiate the deal following major problems in delivering on its commitments.

The letter of intent agreed between DH and CSC proposes a set of principles for the department’s new contract with the supplier, which is expected to be signed by 31 March.

While the DH will have to commit to a certain number of trusts using CSC’s Lorenzo software, under the proposal it is likely CSC will see a significant reduction in the number of NHS organisations buying its products, as it will have to compete for any additional deals.

A DH spokesman said: "The agreement we have negotiated gives choice to trusts about taking this software, rather than imposing the decision on NHS organisations. This is in line with the government’s overall approach to the NHS, making sure that the people in charge of decisions are the ones driving improvements locally."

The letter also suggested that a structured set of payments will be made following certain product deliveries, as well as additional payments to CSC.

But CSC said it would not enter into the interim agreement if it did not deem the terms to be favourable.

The letter was approved by a steering committee overseeing the negotiations process from the Department of Health, Cabinet Office and Treasury.  

“Entry into the interim agreement will also require government approvals and there can be no assurance that such approvals will be obtained in a timely fashion or at all,” said CSC, in a statement to the US Securities and Exchange Commission.