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June 25, 2008

Fujitsu exits NHS contract

The multi-billion pound project to modernize IT services in the UK National Health Service, the National Programme for IT (NPfIT), has suffered another setback, after negotiations with Fujitsu over a 10-year 896m pound ($1.76bn) contract collapsed.

By CBR Staff Writer

The two sides had been negotiating over the introduction of a single electronic records system for patients, with Fujitsu due to implement the system in the south of England.

Datamonitor analyst Ed Thomas told Computer Business Review that the announcement was inevitable. It’s no big surprise. There were rumors floating around that they were renegotiating the deal, and things have been going wrong for the project since it began, he said.

It was recently revealed that the 12.7bn pound ($25bn) project is running four years late. It was launched in 2002 and was due to be completed in 2010, but it is now more likely to be up and running in 2014.

Richard Granger, director general of IT for the NHS, quit at the end of 2007. He famously compared the main contractors on the project to huskies pulling a sled. When one of the dogs goes lame, and begins to slow the others down, they are shot. They are then chopped up and fed to the other dogs. The survivors work harder, not only because they’ve had a meal, but also because they have seen what will happen should they themselves go lame, he said.

Thomas said that while at the NHS, Granger wanted to insert a reset process into all 10-year agreements, so contracts would be renegotiated after two years to reflect the current state of the project. He regretted not insisting on it, but I suspect that this is what has happened here, he said.

According to the Financial Times, the dispute arose over the NHS’s need for flexibility in providing electronic care records for patients. The project, called Connecting for Health, is now set to serve a termination notice to Fujitsu. However, Fujitsu has claimed that it took the decision to walk away from the talks.

Computer services already installed by Fujitsu are not under threat. Thomas believes that BT is the favorite to take over the contract.

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Thomas said: BT is already involved in the project, they built the N3 network, and I think they are most likely to take over. I’d be surprised if the NHS went through another tendering process, as I can’t see there being much interest in it from outside companies. They will not want to go anywhere near it.

Article originally published May 30th 2008.

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