BT gets only £1.3m for two years' NHS work
· Telecoms group has put £200m into IT project
· No writedown on 10-year London contract, firm says
Simon Bowers
Monday August 28, 2006
The Guardian
BT has been paid just £1.3m for the first two years of its work introducing new computer systems across GP practices and hospitals in London, despite spending an estimated £200m-plus of its own cash.
The company insisted last night it would not be forced to follow competitors and write down the value of the London NHS contract in its accounts.
Three years ago, BT announced it had won a £996m 10-year deal as lead contractor to design, deliver and operate next-generation computer systems in the London area as part of the NHS's £6.2bn nationwide IT overhaul.
At the time, it was heralded as a landmark deal for BT by chief executive, Ben Verwaayen. He said: "These wins are BT's biggest ever, and evidence of the new face of BT truly emerging. This is BT taking on world-class competition on its own territory, and winning."
Last month, again, BT chairman Sir Christopher Bland, who received his knighthood for services to the NHS, told investors: "BT has achieved some notable successes on its NHS National Programme for IT contracts."
But it has emerged that for the first two years of its London contract, BT has been paid by far the least of any of the NHS's lead contractors - just £1.3m.
This is believed to reflect the extent to which the NHS thinks BT has met its delivery targets. A spokesman for BT said it was perfectly normal for revenues to be slim at the start of a lengthy contract. "There is a lot of investment up front, but the profitability comes towards the end."
But the NHS's other lead contractors, operating similar-size projects around the country, have all been paid at least 20 times more than BT over the same period. The US consultancy firm Accenture, which is working with troubled British software firm iSoft, has received £52m and £58m respectively for its work on developing and deploying GP and hospital computer systems in the north-east and eastern England.
Despite these payments the US firm decided in March to make a $450m (£238m) provision against future losses from its NHS contracts, and is believed to be in talks with healthcare bosses about buying itself out of at least part of its contracted NHS work.
Rival US consultancy group CSC is thought to be seeking to take over.
BT's overheads on the project are estimated to have reached at least £200m. Some 1,000 consultants began working on the project at its Drury Lane office in London, though the figure has shrunk to between 700 and 800.
At least 30% of the consultants have been hired in, many at premium rates, from subcontractors including Perot Systems, founded by one-time US presidential candidate Ross Perot.
Much of the consultancy work is understood to have been focused on preparations to deploy software developed by its IT partner for the London NHS contract, IDX.
But the two parted ways last month with BT forging a fresh alliance with another rival software group, Cerner. The change of subcontractor is thought to have been a substantial setback for BT, which had invested considerable time and money advancing the IDX system.
Asked if investors should expect a writedown relating to the London contract, a BT spokesman said: "No. We are very pleased with the contracts we are working on.
"We are confident we will make money over the length of the London contract. There is no need to write off any money."
BT's reputation in London took a heavy blow earlier this year when it emerged that a child health computer system it designed and installed in several primary care trusts had many shortcomings.
The system failed to hold correct data on whether babies had routine health checks, vaccinations, visits from health visitors and assessments for special needs. A spokesman for BT insisted many of the problems related to inaccurate paper records and said the trouble had largely been rectified.
Meanwhile, iSoft yesterday confirmed reports that the company had received informal approaches from a number of potential buyers.
The troubled Manchester-based firm was thrown a temporary lifeline by its lending banks last week, but is under intense pressure to move to a more secure financial footing by December when its interest repayments jump to punitive rates. Some analysts have predicted the company will seek a rescue rights issue.
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FFS, just how hard it is to build a reliable database that will hold records on just over 60 mln people?
· Telecoms group has put £200m into IT project
· No writedown on 10-year London contract, firm says
Simon Bowers
Monday August 28, 2006
The Guardian
BT has been paid just £1.3m for the first two years of its work introducing new computer systems across GP practices and hospitals in London, despite spending an estimated £200m-plus of its own cash.
The company insisted last night it would not be forced to follow competitors and write down the value of the London NHS contract in its accounts.
Three years ago, BT announced it had won a £996m 10-year deal as lead contractor to design, deliver and operate next-generation computer systems in the London area as part of the NHS's £6.2bn nationwide IT overhaul.
At the time, it was heralded as a landmark deal for BT by chief executive, Ben Verwaayen. He said: "These wins are BT's biggest ever, and evidence of the new face of BT truly emerging. This is BT taking on world-class competition on its own territory, and winning."
Last month, again, BT chairman Sir Christopher Bland, who received his knighthood for services to the NHS, told investors: "BT has achieved some notable successes on its NHS National Programme for IT contracts."
But it has emerged that for the first two years of its London contract, BT has been paid by far the least of any of the NHS's lead contractors - just £1.3m.
This is believed to reflect the extent to which the NHS thinks BT has met its delivery targets. A spokesman for BT said it was perfectly normal for revenues to be slim at the start of a lengthy contract. "There is a lot of investment up front, but the profitability comes towards the end."
But the NHS's other lead contractors, operating similar-size projects around the country, have all been paid at least 20 times more than BT over the same period. The US consultancy firm Accenture, which is working with troubled British software firm iSoft, has received £52m and £58m respectively for its work on developing and deploying GP and hospital computer systems in the north-east and eastern England.
Despite these payments the US firm decided in March to make a $450m (£238m) provision against future losses from its NHS contracts, and is believed to be in talks with healthcare bosses about buying itself out of at least part of its contracted NHS work.
Rival US consultancy group CSC is thought to be seeking to take over.
BT's overheads on the project are estimated to have reached at least £200m. Some 1,000 consultants began working on the project at its Drury Lane office in London, though the figure has shrunk to between 700 and 800.
At least 30% of the consultants have been hired in, many at premium rates, from subcontractors including Perot Systems, founded by one-time US presidential candidate Ross Perot.
Much of the consultancy work is understood to have been focused on preparations to deploy software developed by its IT partner for the London NHS contract, IDX.
But the two parted ways last month with BT forging a fresh alliance with another rival software group, Cerner. The change of subcontractor is thought to have been a substantial setback for BT, which had invested considerable time and money advancing the IDX system.
Asked if investors should expect a writedown relating to the London contract, a BT spokesman said: "No. We are very pleased with the contracts we are working on.
"We are confident we will make money over the length of the London contract. There is no need to write off any money."
BT's reputation in London took a heavy blow earlier this year when it emerged that a child health computer system it designed and installed in several primary care trusts had many shortcomings.
The system failed to hold correct data on whether babies had routine health checks, vaccinations, visits from health visitors and assessments for special needs. A spokesman for BT insisted many of the problems related to inaccurate paper records and said the trouble had largely been rectified.
Meanwhile, iSoft yesterday confirmed reports that the company had received informal approaches from a number of potential buyers.
The troubled Manchester-based firm was thrown a temporary lifeline by its lending banks last week, but is under intense pressure to move to a more secure financial footing by December when its interest repayments jump to punitive rates. Some analysts have predicted the company will seek a rescue rights issue.
-----------
FFS, just how hard it is to build a reliable database that will hold records on just over 60 mln people?
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