Accenture Walks from £6.2bn NHS IT Scheme

By Miles Costello

The Times, 28 September 2006

Accenture, the American consulting and technology group, has walked away from nearly £2 billion worth of contracts for the overhaul of the National Health Service's IT system, dealing a further blow to the troubled £6.2 billion programme, already beset with delays.

Accenture has handed its contracts to Computer Sciences Corporation, an American company that is already working on the project in the North West and West Midlands. CSC will take over the contract formally on January 8 next year.

NHS Connecting for Health, part of the Department of Health that oversees the NHS, said Accenture will keep £110 million of the £173 million it has already been paid for its work so far.

Accenture, which had been threatening legal action over delays to the project, would have faced penalty payments for cancelling the contract early.

The NHS said that the value of the nine-year contract to CSC would be equivalent to the £1.965 billion Accenture would have earned over the period.

Accenture, which is thought to have been considering its position over the NHS contract for some time, will remain responsible for picture archiving and communication systems work on the project.
It said in March that it was "actively exploring all options with respect to the contracts".

The withdrawal of Accenture represents just the latest setback to the Government's hopes of linking more than 30,000 GPs with nearly 300 hospitals by 2014. The Government has already come under pressure for a rethink, after delays and cost overruns have tormented the passage of the scheme.

The NHS today defended the scheme, claiming it was right to press ahead in the first instance and that progress had been made.

"The programme has already made much progress with hundreds of new computer systems already deployed, benefiting thousands of clinicians and millions of patients. The previous situation, prior to the launch of the National Programme for IT, with hundreds of different systems of varying quality and age and which do not link up, is not sustainable," NHS Connecting for Health said.

Richard Lobley, head of the Government practice of PIPC, a global project management consultancy that pitched for parts of the NHS contract, said: "It seems incredible that one expensive big supplier has been replaced with another behind closed doors. It just looks like jobs for the boys. No one seems to have noticed that the contract has completely changed from the original spec and on top of this surely losing a project’s major supplier should automatically trigger a comprehensive review?

"But is another IT supplier really what is required? What we need is to review the situation, respond and then tender again. It will be slower, but the end result will be better and worth waiting for."

PIPC would not pitch for any of the new IT contracts should they be reopened for tender.

Accenture's departure has turned out to be good news for iSoft, the troubled UK firm that has been retained by CSC as its preferred provider in the East and East Midlands areas.

Accenture had blamed iSoft for its expected losses on the IT overhaul and accused the company of breach of contract.

ISoft, whose shares rallied this morning on the expected Accenture withdrawal, reported in January that it was running late with its NHS work and issued a series of profit warnings during the year. This culminated in a £382 million reported net annual loss thanks to accounting irregularities involving revenue recognition.

ISoft has successfully negotiated an agreement with its lending banks that means it will not breach its loan covenants.

As part of the agreement, Accenture and iSoft have agreed that no further payments will be made between the two parties and any potential litigation since April 2004 will be scrapped.
John Weston, iSoft's chairman and chief executive, said: "This is a further demonstration of confidence in iSoft's ability to develop and deliver leading healthcare software products and we are very pleased to be extending our close working relationship with CSC."