NAO urged to investigate £550m NPfIT contract

In his letter to the NAO, MP estimates real value of contract at £100m

Richard Bacon MP, a member of the Public Accounts Committee, has written to the National Audit Office (NAO) requesting that they examine a £546m contract awarded to BT last year under the NHS National Programme for IT (NPfIT).

Bacon has examined the scope of the contract and performed his own valuation of what it should be worth, and concludes that £446m of the total cannot be accounted for.

The contract scope includes 25 installations of RiO (an electronic patient record), support for the "Live8" (which has since gone down to seven) acute trusts that installed Cerner Millennium before Fujitsu left the programme in 2008. It also includes putting Cerner into four (now three) new sites.

Bacon estimated in his letter that each RiO installation should cost no more than £500,000, but allowed £1m as part of his calculations. He apportioned £1m per year for support of the seven Cerner sites, which over five years amounts to £35m.

He also allowed £10m each for the new Cerner installations, and a further £10m for the handover from Fujitsu to BT. The contract total, according to Bacon, should be £100m.

Bacon’s letter to the NAO asks the organisation to provide a detailed breakdown of how the contract value was determined, and to examine whether it represents value for money.

His letter concluded: "I am aware that the Department of Health was in a difficult position: once Fujitsu had withdrawn, support was needed for the NHS trusts that had installed Cerner systems from Fujitsu. I am concerned, however, that support for those trusts was bought at an extreme cost to the taxpayer. No department should put itself in the position where it has to pay whatever a supplier wishes to charge.

"Indeed, any department that puts itself in such a position leaves itself open to accusations of maladministration. This is one reason I believe an investigation would be useful in this case. If nothing else it would put to rest the concerns that many in the NHS are expressing over these extra payments."

A Department of Health spokesperson said: "The contract extension renegotiated and agreed with BT followed all appropriate governance. The principle of payment on delivery has been maintained and continues to protect the taxpayer by ensuring suppliers are only paid when they have successfully delivered."