The Computer Sciences Corporation has had to bite the bullet and take a $1.49 billion write-off in the fall out of a catastrophic NHS IT project.
It is thought that the write off is the single largest for a UK IT project, after plans to implement a nationwide patients record system hit the rocks.
The negotiations around the deal are ongoing, writes EHI, but after continued uncertainty the firm has had to inform its investors of a hefty write-off in its quarterly financial results.
It was previously thought that CSC was expecting take a hit to the tune of $1.39 billion (£849 million), approaching the amount of its original investment, and it seems that CSC bosses have finally given in. CSC had orginally been expecting to get a $3.1 billion (£2 billion) payment it claimed back in September, having appeared to have agreed the figure with UK authorities.
For its part of the bargain, CSC had been tasked with putting together the Lorenzo EPR software, but ended up years behind schedule, and has found the UK government dismantling a $18.9 billion (£12 billion) NHS IT project. Four early adopters of the Lorenzo EPR plan have now pulled out.
For CSC, the good news is that it will still get $150 million (£94 million) every year in maintenance revenues from NHS customers, though there are expected to be redundancies of its staff working on the EPR project, and investors are unlikely to be pleased about being hit in the pocket.
CSC has been in prolonged arguments with the Department of Health over payments, with bungled work and continued delays by the US contractor blamed by the UK department.
Multiple deadlines were given to put the record system in place, with the Department of Health growing increasingly irate as each whizzed past. The Public Accounts Select Committee also tore into the wastefulness of the debacle last year.
However, the government’s ability to place large contracts in the first place has also been the subject of heavy criticism. After a series of disastrous IT projects there have been MP inquiries and widespread condemnation of the lack of expertise in negotiating big contracts.
After scathing reports, Cabinet Secretary Francis Maude recently announced that an academy would be put in place to train up government officials in procurement and stop them tottering off after major botch jobs.
According to government IT expert at City University, David Chan, the fact that the government refused to hand over huge amounts of cash following a bungled job is a step in the right direction.
“It is a positive,” Chan told us. “It shows that they are willing to take the suppliers on, as previously the government has been more willing to hand over money after paying over the odds. The suppliers should bear some of the risk for the project too, and CSC were unable to deliver.”
Chan also said to TechEye that there are lessons to be learnt from yet another IT fiasco: “Obviously the project was a failure, and one of the main things that can be learnt is that it is better to get more small contracts rather than this massive one with CSC.
“Large contracts have been preferred in the past as they are in some senses easier to administer. They also offer kudos to those securing a big contract.”