Scotland's NHS 24 IT system is £41m over budget and over two years behind schedule

Contract dispute with Capgemini led to further delays in a project which has been riddled with problems

Scotland's NHS 24 IT system is now £41.6m over budget and more than two years behind schedule, according to a report by the auditor general for Scotland.

According to the report, the total cost of what is dubbed the "Future Programme" has risen by a staggering 55 per cent to £117.4m, compared with the outlined business case cost of £75.8m.

Implementation costs were projected to be £29.6m, but the forecast overspend is £27.3m, while ongoing support costs have also increased by £14.3m, from the initial £46.2m outlined in the business case.

"The increase was due to changes in the contract specification and costs associated with the delay in implementing the system. These included the running costs of the existing system as well as training, legal, accommodation, travel, and contractor and in-house team costs," the report reads.

"Additional ongoing application support costs have also arisen because of gaps identified in the level of required support over the 10-year contract period."

The system was meant to provide health information online and over the phone from June 2013, making it easier for Scottish citizens to seek advice. NHS 24 had appointed Capgemini to deliver the applications under Lot 1, and BT to deliver the hardware and infrastructure under Lot 2 of the contract.

However, it has been riddled with problems, making it unlikely that it will generate the expected savings of £10m over the 10-year contract period. NHS 24 had to postpone the implementation date from June to October 2013 after the new system failed to meet critical patient safety performance measures such as the ability to function with multiple users at an acceptable speed.

Capgemini disputed the idea that the application was not meeting the requirements specified in the contract - and according to the auditor, it became clear that there were flaws within the contract documentation, including the performance measures specified in the tender negotiation documents not appearing in the final contract agreement.

In March 2014, NHS 24 raised a declaration and rectification action against Capgemini to address these contractual flaws. Capgemini provided a further version of the application, but the board of NHS 24 deemed that the system was not delivering a safe patient-handling application.

The constant back and forth between Capgemini and NHS 24 led to further delays and almost saw the contract terminated completely. Legal action was taken by NHS 24 and subsequently dropped as the organisations resolved their problems and signed a new agreement in June 2015.

The Auditor General for Scotland said there were a number of critical weaknesses including "flawed procurement and contract preparation" and the use of a team who did not have the prerequisite experience for the management and delivery of such a large-scale complex contract.

The auditor also noted that there was an over-reliance on suppliers for the testing and evaluation of technical aspects of the contract.

In conclusion, the auditor said that each month the Future Programme is not operational, NHS 24 incurs about £0.45m in additional costs.

"If the implementation is not successful, double running costs will increase during 2015/16.

"Given the scale of the challenge, the delivery of financial targets will be very challenging and will largely depend on the achievement of efficiency savings," the auditor concluded.