The £13bn (US$19.8 billion) NHS National Programme for IT (NPfIT) is facing collapse, after the Department of Health refused to sign a revised a deal with CSC as the outsourcer missed another deadline.
Last night, the government was forced to admit that CSC had failed in a crucial test case -- to deliver a workable patient administration system at Morecambe Bay by 31 March.
The other primary contractor to the NPfIT, BT, has seen a reduction in the size of its deal.
The news comes 48 hours after health minister Mike O'Brien lavished praise on the scheme. Doctors' association the BMA had called for a halt of patient record rollouts, and several patient groups opposed them too, but O'Brien told MPs the IT programme was "bringing benefits to doctors, nurses and, most importantly, to patients".
The NHS "could not now function without the systems and services the programme has already delivered", O'Brien insisted. The Conservatives have said they would scrap centralised patient records if they win this spring's general election. Labour has been accused of attempting to tie up deals with BT and CSC that would be too expensive for any future government to cancel.
A spokesperson at the Department of Health said that the government was "expecting CSC to provide a [remediation] plan", and that if this was approved, it may sign an agreement offering more localisation to NHS trusts.
The failure is likely to substantially affect profits at CSC whose financial year ends tomorrow (2 April). CSC had told the financial community that the system would be delivered and that it would, in return, receive significant payments from the NHS.
The NPfIT contracts are constructed so that no payment is made before the delivery of working systems. CSC did not return calls for comment.
BT, which had until recently delivered several problematic rollouts, has seen its £1 billion deal shrink substantially. It will now deliver systems to fewer London hospitals, as the government wipes £112 million off costs.
"BT can confirm it has reached an agreement with the Department of Health to update its Local Service Provider contract," said a spokesperson. The new agreement was "more flexible" and would offer the trusts involved a more locally-tailored setup, he said.
The other original suppliers, Accenture and Fujitsu, quit the programme in 2006 and 2008 respectively after failed contract negotiations. The government remains locked in a £700 million legal dispute with Fujitsu after it attempted to increase localisation in the company's contract, and the two sides could not agree on payment terms.
The programme, which is the world's largest non-military IT project and was previously described by NHS chief executive David Nicholson as a leading example of IT procurement, now faces collapse. It has so far cost £6 billion, far exceeding the initial budget and timescale.
Digital patient records, the central part of NPfIT, is four years late and remains highly controversial. The government has in the past been criticised by academics and medical leaders over the legality of a scheme that assumes patient consent, when in pilot test areas most patients did not understand what they were being opted in to.
The government recently attempted to accelerate the rollout of the records, and this drew the immediate wrath of the BMA, which warned that doctor-patient relationships were being harmed.