NHS finally seals CSC deal with £1bn of savings and no compulsory Lorenzo rollouts

After months of talks, the NHS and CSC have finally signed a revised deal that will cut the value of CSC's contract and see no new health authorities forced to take the Lorenzo electronic patient records system.

After months of wrangling over the troubled Lorenzo patient electronic record scheme, the NHS and CSC have finally come to a new deal, cutting £1bn from the value of the contract.

According to the Department of Health, the renegotiated agreement will strip CSC of exclusive rights to provide clinical IT systems in the north, Midlands and east of England. As a result, local health authorities in those regions will no longer compelled to use CSC's Lorenzo system, although central funding will be available from the Department of Health for any that decide to adopt the software.

In return for giving up exclusivity and in recognition of other factors, the Virginia-based IT services provider will receive a payment of about £68m for its Lorenzo work with the NHS, the company said in an SEC filing.

The revised agreement also sees CSC and the NHS redefine the scope of the Lorenzo products and set out the prices for Lorenzo deployments and support.

Under the deal, CSC will continue to be responsible for the rollouts of Lorenzo that have already been undertaken by Britain's health service.

"The modern NHS still needs healthcare IT systems to exchange information securely and meet the needs of their patients. By re-shaping this contract, delays will be avoided in delivering much-needed IT systems to the NHS and will ensure the investment made to date is not wasted," health minister Simon Burns said in a statement.

The Lorenzo system was heavily criticised by the Public Accounts Committee in 2011 as being 'unworkable' , and the rollout of the system fell several years behind schedule. Despite the original contract being signed in 2002, there are currently only 10 deployments of Lorenzo in the NHS.

The revised deal between CSC and the NHS follows over a year of stop-start negotiations between the two organisations, with the deadline for the new deal repeatedly pushed back. Earlier negotiations had hinted that any revised deal agreement would see further health bodies being compelled to take Lorenzo — a provision that has now been scrapped.

In the course of the talks, CSC announced to shareholders it expected to take a $1.5bn (£0.9bn) writedown on the value of its work with the NHS. The contract was initially valued at around £2.9bn.

The agreement follows a £200m cut to the project, announced in 2010  — part of a £700m programme of cuts to the National Project for IT (NPfIT) announced by the coalition government.

According to the Department of Health, the £1bn savings generated by the new deal — which runs until 2016 — will be reinvested in the NHS.

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