Accenture pulls out of national programme
28 Sep 2006
Accenture has departed from the NHS National Programme for IT, walking away from two contracts worth a total of more than £2bn.
The company, which is the second biggest supplier to the national programme, made the announcement before its fourth quarter earnings call today. It is understood that the firm has been unable to reach an agreement with NHS Connecting for Health on renegotiation of its contracts.
As widely predicted by industry and city sources, Computer Sciences Corporation (CSC), the local service provider (LSP) in the North-west and West Midlands cluster, will take over both of Accenture’s two national programme regions: the North-east and Eastern clusters.
The departure of Accenture is a body blow for the NHS IT modernisation programme, raising tough questions over why one of its most experienced international contractors has decided it is best served by walking away from over £2bn worth of contracts.
It also raises a question mark over the viability of the programme for the other prime contractors: BT, CSC and Fujitsu. According to CfH figures, of the 1,028 systems deployed by the regional lead contractors so far under the programme 827 were carried out by Accenture.
One industry source told EHI that Accenture’s strong preference now appeared to be exit the programme entirely, while avoiding making penalty payments to CfH which it is understood to be liable for under the terms of its contract.
In March 2006 Accenture made a £250m loss provision against its NPfIT contracts citing “significant delays by one of Accenture’s major subcontractors in delivering software”. It also “higher development costs and increased integration costs” together with “revised programme release schedules”.
The main bargaining chip the consultancy firm appeared to have was the threat to start legal proceedings against its own and CSC’s main sub-contractor iSoft for damages for late delivery of clinical software. “This option gives Accenture a finger on the red button,” said the source.
On 25 August CSC and iSoft announced a new contractual arrangement which iSoft said “in certain circumstances” would give it the “opportunity to win additional NPfIT business in future through CSC”.
Two week’s ago CSC’s chief financial officer, Mike Keane confirmed the firm’s appetite to win more CfH business: “We have a very comfortable relationship with the NHS and we believe that this would be business we would like to compete for.”
At the end of August EHI reported that Accenture suspended any new work on acute implementations in July. A source told EHI: “They called us in at the beginning of July saying they are suspending all implementation activity for 12-18 months.” EHI has since been told that a “virtual programme” remains in place only for contractual reasons.
E-Health Insider also learned this week that CSC has already begun working with NHS trusts in the two Accenture clusters to identify trusts with an urgent need for new systems who want to take CSC’s version of iSoft’s iPM patient administration software (PAS) solution.
Trusts in the two Accenture clusters involved in negotiations with CSC are thought to include United Lincolnshire Hospitals NHS Trust, Bradford Teaching Hospitals Foundation NHS Trust and Airedale Hospitals NHS Trust.
Contacts are also believed to be underway between CSC and Accenture’s sub-contractors to ensure an orderly switch. The terms of Accenture’s LSP contract are understood to include a requirement for a 4-5 month transitional period.
After deploying iSoft iPM to about 80 NHS trusts in the North-west and West Midlands, including nine acute hospitals, CSC is believed to have almost no sites left willing to take the existing iSoft software, and faces a severe revenue squeeze. While the numbers appear impressive there has been a catalogue of problems reported with the systems put in and many of the community trusts are understood to only have very low levels of concurrent users – in some cases less than a dozen.
In December 2003 Accenture was awarded the LSP contract for first the North-east of England worth £1.1bn and then East of England, worth £934m. In the years that have since passed it has implemented a range of systems largely in the community and primary care sector but just one iSoft acute trust PAS. Accenture won the contracts offering iSoft software, but relations between the two companies have since become strained.
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