Billion-pound drop sees CSC make peace with NHS

Integrator signs reshaped four-year deal after taking £1bn price haircut, forgoing exclusivity and dropping legal threat

CSC and the NHS have drawn a line under their year-long spat after agreeing a four-year, non-exclusive deal that will see the integrator continue to deploy electronic patient records (EPR) technology.

As part of the previous government's NHS National Programme for IT (NPfIT), CSC was awarded an exclusive deal worth £2.9bn to provide the Lorenzo EPR system in the East of England, the Midlands and the North.

But the coalition was quick to signal its intent to scrap the NPfIT and, last summer, criticised CSC for failing to deliver on its contractual obligations.

Following a 12-month stand-off, the government and the IT services giant have this week announced the agreement of a remodelled deal. The contract runs until July 2016 and the Cabinet Office claims it delivers £1bn in taxpayer savings. The two parties have also relinquished the threat of taking legal action against each other.

CSC, which has received a £68m payment for services already rendered as part of the new deal, will continue to provide Lorenzo technology, but has lost its exclusive rights to do so.

It will continue to support the 10 NHS bodies already using the system in the North, East of England and the Midlands. But other trusts will now have the power to make devolved decisions about which IT systems they use and who they want to provide them.

CSC chief executive Mike Lawrie said: "We are already seeing strong demand from NHS trusts that are confident our solutions will bring the safety and efficiency gains required by a modern NHS."

Health minister Simon Burns added: "We have removed the restrictive, top-down, centralised approach and given the local NHS the power to make their own decisions about which IT systems they use."

Francis Maude (pictured), minister for the Cabinet Office, claimed that his department's cost-cutting drive has delivered procurement savings of £806m and £437m respectively during the first two years of the coalition's administration.

"This deal represents the government's commitment to restoring local control over decision-making and enabling greater choice for NHS organisations - ending the top-down approach and centralised control of the past," he said.

"If eligible local NHS organisations wish to use Lorenzo, they will be able to access centralised support and funding but will first need to develop a robust business case and demonstrate value for money in order to gain approval to do so."