Fujitsu said to be preparing £700m LSP claim

01 Sep 2008

Fujitsu may be preparing to seek up to £700m in compensation from the Department of Health for the termination of its £1.1 billion NHS IT contract in May.

The Japanese company had its contract cancelled by NHS Connecting for Health after year-long contract re-negotiations to deliver new electronic patient record systems more flexibly broke down.

Fujitsu said the requested changes would cost more significantly more money. When the NHS baulked at the extra cost, Fujitsu ended negotiations, triggering the cancellation of its contract by NHS CfH.

According to a weekend press report in The Independent Fujitsu, which had been the local service provider in the south of England, is now seeking to recoup the bulk of the £1.1bn it would have been paid for full delivery of the contract.

The paper quoted "sources close to the negotiations" as saying that Fujitsu was ready if necessary to go to court to press its claim. Sources close to the programme however suggested to EHI that it was expected the DH and Fujitsu would settle before ever going to court.

Of the 41 NHS acute hospitals in the South of England Fujitsu was to have delivered new EPR systems to it had by May installed the Cerner Millennium system at just eight NHS trusts. Better progress had been achieved in other areas of the programme including delivering of picture archivinga nd communications systems.

In June the National Audit Office reported that by 31 March this year Fujitsu had received part of some £1.3 billion of advance payments CfH had made to suppliers, but the ex-LSP had yet to repay £143m of their share.

Fujitsu has not confirmed the £700m figure. The company told The Independent, "At the moment we are in dialogue with the NHS and we hope to come to a satisfactory outcome."

An NHS Connecting for Health spokesperson said in a statement: "Under the terms of a joint confidentiality agreement with Fujitsu, we are not able to enter into discussion about these allegations. NHS Connecting for Health and NHS Strategic Health Authorities are working closely with Fujitsu to ensure a smooth transition to future arrangements for trusts in the south of England.

The statement added: "The recent National Audit Office report confirmed that the vision of the National Programme for IT is both intact and achievable.”

Commenting on the reported legal action Liberal Democrat shadow health secretary, Norman Lamb, said the disclosure was further evidence that the NPfIT was hopelessly flawed. He said it was a "centrally-imposed project that has not been properly thought through from the start and was never subjected to a proper cost benefit analysis".

Reader's Comments

Costs versus benefits

01 Sep 08 18:48

Presumably - if this went to court - the tax-paying public might find out a lot more about the LSP contract details (which have been shrouded in mystery for the last 5 years).

The question is: Would it be worth the £700m that the taxpayer might lose if the claim was lost?

IMHO, after all the NPfIT hype, it would be interesting to see just how water-tight these much-vaunted contracts really are when put to the legal test.

Most expensive Horlicks Ever?

02 Sep 08 12:24

I thought the idea of the "water tight" contracts was to focus reward on successful delivery. Wasn’t this the rationale for the entire LSP concept? Fujitsu made IMHO a total Horlicks of delivery. Poor understanding of customers needs which caused poor purchasing decisions followed by poor implementation. Why is the DH even negotiating if their position is contractually so strong? Or is it that the LSP concept was really about channelling money from the NHS into private hands?

Small change?

02 Sep 08 13:04

I found this quote the most worrying aspect of this story

"the vision of the National Programme for IT is both intact and achievable.”

The generals in the bunker continue to move symbols of their defeated armies across maps of long lost and abandoned territory. It's one thing to issue your spin and propoganda - quite another if you believe it yourself.

While this delusion prevails nothing will be salvaged and no constructive progress can be made.

700 million is but a drop in the rising ocean of wasted resource and opportunity cost.

what's important

cunpr@globalnet.co.uk

02 Sep 08 13:10

What's important is that the tax paying public get the truth, the whole truth and nothing but the truth about the cost of this contract being cancelled. Paul Cundy

Posturing

02 Sep 08 18:32

Whatever the merits of the FJ claim, they would only be able to claim the profits. The £700m represents the entire turnover, including the unspent costs.

It's just commercial noise.

Who made the horlicks?

02 Sep 08 20:06

In response to the Horlicks comment above - it is unarguable that what Fujitsu and Cerner delivered to the Southern Cluster Trusts was woefully less than the hospitals expected, wanted or needed.

But, in the cold, hard world of a £700M claim, the question to answer is "Did they do what the contract required them to?". You can be sure that Fujitsu are now spending a small fortune on lawyers - and as a commercial organisation, they won't be doing that unless they are pretty sure of winning a substantial settlement.

The best thing that can happen now is substantial disclosure of these contracts, and an end to the shambolic notion among government procurements that total risk transfer to suppliers is either possible or desirable.

But Sir!! You ordered a Horlicks

03 Sep 08 14:42

Frankly, given how few from the NHS could be bothered to turn up to explain and agree what they required during the allotted design window, you may not have got what you needed but you certainly got what you deserved.

Allotted design window

cunpr@globalnet.co.uk

03 Sep 08 16:02

"given how few from the NHS could be bothered to turn up to explain and agree what they required during the allotted design window,"

those would be the "alloted design window meetings" at 9:30 am on a monday morning for local GPs with notice given of less than 7 days?

Really Jon, knowing how E-Health Insider helped expose the failure of clinical engagement in this program I'm suprised you let that last post through. It belittles the debate.

Allotted Management By Anecdote

03 Sep 08 17:43

......as usual. I shan't respond in kind. Ask the SRO/RID etc if they got adequate support from the Trusts.

Allotted design window

04 Sep 08 01:43

No - that would be the 2 years during which the Southern Cluster Trusts consistently failed to find specialists to contribute to the design... it might also include the failure of SPfIt to send out invitations to Fujitsu organised demonstrations of the solution, or the failure of SpfIT to pay travel expenses or backfill for people actually willing to contribute

It is a simple deceit to think that the supplier is entirely to blame - in large IT programmes it takes two to tango...

it takes two to tango...

04 Sep 08 12:59

but both need to know the steps.. Since they were the Service Provider they needed to ensure they knew the customers needs. A bit like having a new fleet management company, imagine if they took over and forced all the drivers to have Transits (carry everything you ever need, pretty good fuel figs .. oh and we got a good deal!). Total uproar. ..."but we invited you to a test drive session at the dealers in Durban" isn't going to make people happy. So why should an IT system be any different?

Failur to contribute ??!!

04 Sep 08 14:30

"....that would be the 2 years during which the Southern Cluster Trusts consistently failed to find specialists to contribute to the design... "

We've been out there ready and waiting....only constantly told by the NHS (and the LSPs) that we are "too experienced for what we are looking for". Inexperience and lack of old fashoned common sense in the recruitment of specialists with clinical backgrounds has a lot to do with the failure to recruit the right people with ****EXPERIENCE****.

Since when is "too much experience" undesirable? The culture of empire building and fearing the input of others into a project is key to the failure of NHS projects and inparticular the NPfIT. Franlky - as somone with 20+years of NHS IT (and with a clinical background) I'm tired of it and will now concentrate on generating my own income from sectors other than Clinical IT.

It seems that NHS IT cannot see the wood for the trees, and common sense seem to be seriously lacking in many areas. I just do not know how some of these 'managers' got the jobs - and I know that many of you out there reading this will agree.

It takes three to tango?

05 Sep 08 10:08

The real point is that the LSPs' contracts are with CfH/DH, who ordered a standardized system and hence demonstrated a complete lack of understanding of the NHS. Was it unreasonable of the LSP to assume that the DH knew what they were about?

When the NHS (who couldn't be persuaded to show up in sufficient numbers to requirements sessions even with 8 weeks notice) rejected what was provided by the LSP who were following CfH's contract it's pretty obvious we have a horlicks which at worst is one third the LSP's fault for being stupid enough to take the contract in the first place!

Huskies bite back

05 Sep 08 10:16

Oh dear, it looks like it is not as easy to shoot a husky as it sounds. Tough little blighers.

Wasn't it Eisenhower?

05 Sep 08 11:01

Correct me if I'm wrong, but I think it was Eisenhower who first said: "No project is ever truly dead until its original enthusiasts fall out over whose stupid idea it was in the first place."

Failure to listen more like!

05 Sep 08 11:21

I remember going to meetings 3 years ago with teh LSP where NHS people were blue in the face telling the supplier that their proposal wouldn't work because key parts were missing.

I remember being told, it's not in the contract (by suppliers not CfH who insisted it was).

I remember Cluster reports from senior CIOs stating that all was well and going to plan.

I remember being at a project meeting where the LSP presented a project deployment plan 20 pages long in which no-one could explain what most of the milestones meant - but we were told it had worked in a big industrial firm so it would work in the NHS.

Not enough listening/understanding from the supplier and too much positive spin given to and sent out from CfH.

£700m plus £143M already paid! So that's over £100m per hospital which would have cost around £0.5M each before Fujistu? I would hope that Fujitsu get laughed out of court, Accenture delivered more and still got less than this as their final settlement.

It was always going to end in tears.

05 Sep 08 12:02

When the NHS thought they could abdicate from responsibility and risk by contracting LSPs to select and deliver the best operational and clinical systems for their hospitals; no one stopped to think that it has always been very hard for the NHS, with all of their operational experience, to select the best systems for their use. How could anyone have expected Fujitsu, BT, Accenture or CSC who have no operational healthcare experience at all, to have succeeded? It was always going to end in tears…but we can presumably guarantee no heads will roll and these woefully poor solutions will continue to be rolled out with trumpets and fanfares at enormous cost and disruption. Apparently it still remains severely career limiting to criticise CfH or the national programme from the inside. So all seems to be on track then!

NHS dosn't understand how to manage Business Change through Programme & Project Management

05 Sep 08 15:39

Until the NHS understands what business change and project management is and that you need a settled, highly skilled and experienced team of staff over the life of the programme, CFH will never be implemented properly. This is what i think is a major problem thats rarely mentioned, the trusts dont have to set up properly organised or resourced programme offices or appoint recognised PM's and are delivering major CFH projects through administrative and operational staff which is a recipe for diasaster.

i started as a project manager in the nhs in 2002 and it quickly become obvious to me that there were brick walls around management thinking and awareness with regard to what is required to effectively manage change over a long time period using structured methods.

I have found in the main that LSP project staff been highly skilled and experienced professionals although driven by timescales that the NHS does not have the capacity to match and representing systems which are not designed or tested properly.

People and projects are moved about organisations willy nilly with no continuity and usually they only call me in when the project is or has failed, it seems that appointing properly experienced project staff into a suitably organised and resourced Programme Office environment is either seen as an unneccesary overhead or its need is not understood.

Unitl this issue is recognised and addressed in future government health ICT strategies delivering ICT enabled business change will be a nightmare in the NHS and money will be wasted.

In Space no-one can hear you scream,,,,

05 Sep 08 16:59

Which is exactly how many of us involved in Cerner Millennium implementations fet.

Regarding the previous messages, consultations with staff at one of the Cerner/Fujitsu bordered on press-ganging. Staff responsible for Cancer tracking raised concerns about Millennium functionality. These were noted and responded with "Jam tomorrow".

In my role I found the Fujitsu management to be lacking in knowledge of both health service processes and functionality of their product. In addition they were belligerently obstinate in their willingness to investigate serious problems. The Fujitsu HelpDesk in Wakefield must surely contravene the Trades Description Act.

My experience gives me the impression that the Silverlink PAS is the best of breed, iSOFT will get there in time and that Cerner (having totally razed each and every trust that has implemented it financially, performance management wise and in terms of staff turnover & stress) needs to have the plug pulled.

I have always said that Millennium will stand or fall on the big London teaching trusts (DH/CfH obviously don't give a flying toss for a few hospitals in Bucks and Somerset).

When is someone going to have the wotsits to read the gap analysis on what the service (and DH) require as opposed to what Cerner Millennium can (optimally) deliver.

Surely there is someone out here.

this is an experiment

06 Sep 08 14:25

This is not a horlicks...this is an experiment. Where on earth has an electonic medical records project of this scale (or even smaller) been successfully accomplished? There should be an organized effort to obtain after market surveillance data from all projects...

(post edited by EHI)

NHS dosn't understand how to manage Business ...

08 Sep 08 17:01

Can people please stop referring to the NHS as a single entitiy. To do so mearly reveals a complete and fundamental misunderstanding about how the NHS works. However, it is a fair point to say that projects are not run optimally and that some senior managers fail to understand the resources required to implement such an ambitious project. You are also correct that the NHS was not structurally capable of delivering the CfH objectives, which brings me slowly and painlfully to the same point I have been making for the past four years.

It was the idea that was wrong. No amount of clever contracts, clever project management, mounds of cash or armies of IT consultants was ever going to overcome, what was to some the bleeding obvious. The NHS does not have the capacity or infrastructure to deliver a universal electronic patient records system. Part of that infrastructure would need to be properly resourced projects, but there are many other fundamentals that are equally not in place.

What is still obvious to anyone who has been working in a hospital for any length of time, and bless you all, is that the NPfIT is never going to deliver a central system. It breaks too many rules of basic programme design. It is too over ambitious. It has no clearly defined and simple objectives. It has no resourced plan. Time scales are set by politicians, not by a feasibility study and impact analysis. It has no one carrying the can (no high level responsibility). Budgets are guess work. It relies for governance and control on suppliers who have a vested interest in no governance and control. It relies on an over complex contract rather than close relationships between the supplier and the service user. Needless to say I am writing a thesis on complex programme management and using NPfIT as the example of the programme management 'perfect storm'. The problem is that the Emporer has been naked for just too long for people to actually understand and admit that they were wrong.

i agree with programme being too large/complex

richardbak@lineone.net

12 Sep 08 12:00

the programme does cover too many areas, clinical, business, technical, geographical, organisational, etc, and when you include the human element of clinical processes and systems working across agencies, trying to implement on a 24/7 service model it should have been about developing systems and standards for areas like interoperability, interface engines, core data sets, suppliers capability, single log ons, etc, which was already happending with maybe a national data spine and standard front end.

A little story of how crazy this has all been. In 2002/3 ish i wrote an OBS for a child health system based on the CHIC national data set spec with additional local requirements for use across health, social services and education and was going through the dreaded OJEC (we had mckesson child health) when the PASA/CFH stopped us because CFH was going to give us an integrated CH system as part of the new Care Record (community PAS?).

Well i read version 1 of the 1000 page OBS and told my managers there was a specification gap the size of wales (about 2 A4 pages on CH) and the spec would not delivery CH functionality and that there were no clearly identifiable delivery timescales. We were worried.

2008 - 5 years later the trust have just purchased the system we would have bought from the same supplier in 2003 because CFH dosnt provide one. The supplier is now providing the system to CFH. UNBELIVEABLE.

An easy service to miss out/not consider because CH is low priority compared with acute care, although with 20 million children in england you would think they had noticed the omission!!!!