The National Programme for IT in the NHS: an update on the delivery of detailed care records systems - Public Accounts Committee Contents

Examination of Witnesses (Questions 1-104)


23 MAY 2011

Q1   Chair: Can I thank you both very much for attending? This first session is going to be very tight. We have got half an hour, so we really want to use this to inform our questioning of those officials who are responsible for the programme. So if you could keep your answers as tight as possible, it is really to try and get some information that can help us do the main session as best we can, but I am very grateful to you both for coming. I am a non-IT person, but when I read this Report and looked at the previous Report it seemed pretty clear to me that you might have taken a position at the start that this ambitious project was undeliverable. You are the professional experts; I will start with you, Mr O'Connell and then come to you Ms Thureen: why did you sign a contract committing to deliver something, which we now know you cannot deliver, but which I think you as professionals might have taken a view back in 2003 was undeliverable?

Patrick O'Connell: Personally I was not here in 2003, but, to answer your question, I would guess or speculate that in 2003 the needs of the user—as perceived at that time—the policy of the Department, the state of technology, the trade-off between costs and schedule were believed to be doable at that time. As time has progressed, many things have progressed and evolved, and it has brought us to a different solution. I do not know that it necessarily means it was not doable at day one.

Q2   Chair: So if you had been around in 2003 would you have told Government, "This is not doable"?

Patrick O'Connell: In 2003? I do not think I would have said such a thing in 2003. It is more a matter that there are a lot of factors I am unfamiliar with from 2003, but the principle of it—

Q3   Chair: You know more in 2011, but in 2003, seeing the technological difficulty, the extent of the number of players who would have to come to the system, the fact that you had a whole range of different systems up and down the country—this was never deliverable. I cannot understand why professionals signed it in 2003 saying, "We can deliver."

Patrick O'Connell: One of the things that has changed is the need of the users. In 2003, if one had built the system that was envisioned versus the system that is needed today—in the sense of a centrally­located system versus a clinically-led system—I think they would have approached it differently. It looks like the need has evolved.

Q4   Chair: I am not sure that I accept that, but given the shortness of time, Ms Thureen. Am I pronouncing your name right?

Sheri Thureen: Yes, thank you. Based on my experience of running very large Government contracts that span 10 to 12 years, the contract, as it was set out, was not unusual. And these components, when you have such a large organisation that has very specific requirements, will go through a process, in the beginning, where you are asking the suppliers to make a very significant investment up front—in our particular case to build a product that incorporates the specifications of the NHS into it. It does take some time before you start to see the benefits realisation. So I think we are on a track that we still can deliver the programme, and, as my experience has been in the past, this is the point in the programme where we have the base functionality in place, and it will start to pick up through the ensuing developments.

Q5   Chair: What? You believe that you can deliver a fully integrated, electronic care records system, available to all, at all times, in all NHS settings, by 2016?

Sheri Thureen: I believe that we have made significant progress to date.

Q6   Chair: Can you deliver it?

Sheri Thureen: I believe that it is common knowledge that our contract as it stands today is being evaluated for both the scope and the volume to adjust to some of the conditions that we have encountered so far.

Q7   Chair: Can you deliver by 2016, which is the end of the contract, a fully integrated, electronic care records system, available to all, at all times, in all NHS settings?

Sheri Thureen: I believe we will have the foundation to provide for much of that through a connected approach versus a replace­all—moving to a connect­all versus a replace­all.

Q8   Mr Bacon: So we are paying for foundations? This £11 billion or £12 billion programme—I know the number has moved a lot—is buying us some foundations, a sort of first step to get us off the mark, is it?

Sheri Thureen: I believe it is buying some core components, you are correct. I believe that we have made significant progress. For example, in the North Midlands and East, 10 years ago, 97% of the population did not have electronic patient records; today 20 million electronic patient records are in place.

Q9   Mr Bacon: This is using the interim system?

Sheri Thureen: It is not an interim system that is providing that.

Q10   Mr Bacon: It is true, isn't it, that you have implemented far more interim systems than you have Lorenzo?

Sheri Thureen: It is true that we have—

Q11   Mr Bacon: It that true, yes or no?

Sheri Thureen: Yes it is.

Q12   Mr Bacon: It is. In fact, it is 81 interim systems that you have implemented, because Lorenzo was not yet ready. Is that correct?

Sheri Thureen: Yes—

Q13   Mr Bacon: It just needs a yes or a no. Is it correct? It may be 82, it may be 79, I don't know. Is it correct you have implemented 81 interim systems, because Lorenzo was not yet ready?

Sheri Thureen: We have implemented more than 81 interim systems; it is 130 plus.

Q14   Mr Bacon: It's a higher number. So be it. What's the number actually?

Sheri Thureen: And we did that in the interim—

Q15   Mr Bacon: So what's the number?

Sheri Thureen: 130 plus.

Q16   Mr Bacon: 135 interim systems. Now, it is true also, isn't it, that these interim systems were not what was contracted for; in fact, they were rejected back in 2002 as being unfit for the national programme? That is true, isn't it?

Sheri Thureen: I believe that it was always our intention to provide—I don't believe that's true.

Q17   Mr Bacon: I'm not asking you what your intention was. I'm asking you if the interim systems that you're now deploying were rejected in 2002 as being unfit to deploy as part of the national programme. Yes or no?

Sheri Thureen: No. I am not aware that that was ever the case.

Q18   Mr Bacon: You do not think that that was the case?

Sheri Thureen: I do not.

Q19   Mr Bacon: Well, the Report itself says that that is the case. Are you disagreeing with the Report?

Sheri Thureen: Our contract was started in 2003, and part of our contract was always to take a look at what systems were in place, to enhance those that could be enhanced and also to deliver some new systems. Lorenzo is one of those new systems.

Q20   Chair: Mark, can you help us, because Richard is right. Where is the reference that says that it was considered that all existing systems had to be replaced?

Mark Davies: The origin was that Lorenzo was going to be the basic system that CSC was going to implement.

Chair: There is somewhere in the Report a reference—

Q21   Mr Bacon: It is paragraph 18; obviously the 81 is now slightly out of date perhaps, but this Report was only published last week. Because of the delay in developing Lorenzo, "CSC has also delivered 81 interim systems to Trusts whose systems needed to be replaced urgently. These systems were not previously considered by the Department to meet the aims of the programme and under the terms of the current contract will need to be replaced", because they did not meet the aims of the programme. I was right, was I not? The interim systems that you are deploying now were not seen as suitable in the initial stages—as suitable for the national programme. That is correct, isn't it? Just like it says here.

Sheri Thureen: I believe that those systems, perhaps, in the beginning were, but they have been enhanced, and some of those interim systems will go forward, because they are fully capable, and they are providing—

Q22   Mr Bacon: This was not what you were contracted for. What interests me is that you have just bought iSoft, have you not?

Sheri Thureen: We are in the process of acquiring iSoft.

Q23   Mr Bacon: So, once you have iSoft—assuming all the regulatory hurdles are cleared and you get it, as it were, under your belt—you will have this large portfolio of old, profitable legacy systems where all the development work is already done. Why on earth would you continue pouring good money after bad, trying to make Lorenzo work?

Sheri Thureen: The acquisition of iSoft is a strategic decision of CSC to expand our global healthcare sector business.

Q24   Chair: Do you think Lorenzo will ever work?

Sheri Thureen: Lorenzo today is implemented in production; it is supporting 10 Trusts with 3.3 million patients being supported and 8,000—

Q25   Mr Bacon: That is version 1.0 in most of those, isn't it?

Sheri Thureen: It is release 1.9.

Q26   Mr Bacon: In how many of those 10 is it release 1.9?

Sheri Thureen: Four.

Q27   Mr Bacon: In four?

Sheri Thureen: In three; sorry three.

Q28   Chair: One Mental Health Trust pulled out of the contract completely, because it had no confidence in it. So, out of your 97[1] Trusts that you are trying to deliver this in, you are playing around with it in three; you wanted to put it into four, and one pulled out. What on earth gives you the confidence, having said it was ready in 2003 to 2004, nine to 10 years later, that it is ever going to be ready, and certainly within the terms of this contract?

Q29   Mr Bacon: It was actually the software supplier, iSoft, that said it would be ready, to be fair, Chairman; it was iSoft that said it was available from 2004. What confidence do you have that you can make it work?

Sheri Thureen: As I said, it is in production today for those three early-adopter Trusts on release 1.9. They have 8,000 users, supporting 3.3 million patients.

Q30   Chair: But hang on a minute. Unless our Report is wrong, our Report says you tried to introduce it in four; the Mental Health Trust—which Trust was that?

Mark Davies: Pennine.

Mr Bacon: Pennine.

Q31   Chair: Pennine has rejected it and is funding its own IT solution. The three have not yet accepted the software that you have given them; they are still waiting to accept it. I am just trying to have a little bit of common sense in this. Nine years on, you are experimenting with it in only three out of four—one has rejected—and in those three, nobody is yet satisfied with the software to be able to roll it out within their organisation.

Sheri Thureen: It has been accepted at one of those Trusts. The second Trust, Bury, has accepted—

Q32   Chair: When?

Sheri Thureen: Last week we had acceptance on that.

Q33   Mr Bacon: At the rate of deployment, how long do you think it is going to take you to deploy it across all the other sites where you are supposed to deploy it under the contract?

Sheri Thureen: As I believe is common knowledge, we are going through a restructure of our contract, which is discussing reduced volumes and scope. So I would not be able to talk to the details of that contract or deal, because it is under current evaluation.

Q34   Chair: I am going to ask both of you this question, but I will start with you. It would just be helpful for us to know how much you have been paid so far, how much you are owed and how much is left in the contractual commitment. Can you give us those three figures?

Sheri Thureen: So we have received £800 million to date for the whole programme. That is not Lorenzo; Lorenzo is only 3% of that. The top value of our contract is $3.1 billion.

Q35   Mr Bacon: Pounds?

Sheri Thureen: Pounds, sorry.

Q36   Chair: And how much do you believe you are actually owed—that is the contract—out of work done to date?

Sheri Thureen: Well, the payment on this contract is only received once we have successfully deployed a system and it has been accepted.

Q37   Mr Bacon: Yes, but because you have not declared any losses, you must have a value for your work in progress, mustn't you? What is that?

Sheri Thureen: You may have seen a couple of weeks ago that the company is in the process of closing out its fiscal year, and we did issue new guidance that talked about a reduction in inception­to­date profit on this programme.

Q38   Mr Bacon: But what is the current value of your work in progress?

Sheri Thureen: I do not know that number.

Q39   Stephen Barclay: What is the value of the termination clause of the contract? If the Department decided it wanted to stop work on this, what would be the termination cost?

Sheri Thureen: I am not aware of what that cost is.

Q40   Stephen Barclay: Not even an estimate

Sheri Thureen: I am not.

Q41   Stephen Barclay: You are in negotiations with the Department without knowing what the termination costs would be.

Sheri Thureen: We have a deal on the table today that we believe is a good deal, and I am confident that that is the right deal to have in place. We have been focusing on moving forward versus expecting to terminate the contract.

Q42   Chair: And this deal takes £500 million out of the contract because the Department is trying to reduce it by £500 million. Am I right in that?

Sheri Thureen: It is at least $500 million, and I cannot go into any specific—

Q43   Chair: Dollars? Is it all in dollars?

Sheri Thureen: Pounds, sorry.

Q44   Chair: Pounds, okay. So £500 million out of the contract at least—it could be more?

Sheri Thureen: Potentially.

Q45   Chair: It is more. And presumably that is because you are reducing scope and functionality?

Sheri Thureen: I would not be able to talk to the terms of that deal as it is still under evaluation.

Q46   Chair: Well, I think we do need to know. I can understand there is a bit you have to do commercially, but we need to know. Presumably, in reducing scope and functionality, can I just know whether you are reducing the number of Trusts you are going to deliver to?

Sheri Thureen: It is general knowledge that it is a reduction in the volume.

Q47   Chair: By how many?

Sheri Thureen: I would not be able to tell you that today.

Q48   Mr Bacon: And it would be a reduction in the scope as well. The functionality would be cut, correct?

Sheri Thureen: That is correct.

Q49   Mr Bacon: When Mike Laphen met the Minister for the Cabinet Office on 22 December, with the Chief Information Officer for Health, Christine Connelly, by what date did he say that Pennine would be implemented?

Sheri Thureen: I believe that was 7 February.

Q50   Mr Bacon: And was it implemented by then?

Sheri Thureen: It was not.

Q51   Mr Bacon: No, I did not think so. What really worries me about this is that you have your foot in the door: you are now three-fifths of the NHS. Accenture walked away declaring—we will say dollars, because they are American quoted—losses of $450 million, which was the equivalent of £270 million, and it walked away without really paying very much. There was a £60 million penalty, but, given what the contract said, it got off extremely lightly. It was glad to be out of it, which, given how much Government work it does, was an eloquent comment on the state of the programme. You then came along, you were one-fifth of the programme and you took on both their contracts, so you became three-fifths of the NHS. And in seven years you have deployed it in three hospitals and it has caused chaos: in Bury, in Morecambe and in Birmingham Women's. Pennine now, we were told, walks away. And the NAO tells us that if you are to be successful you now have to do at least two sites—two hospitals—per month for the next four years.

Why should we have any confidence that you are going to do this? Having now got your foot in the door and having bought iSoft so you can control it—there is somebody nodding over there, which is always dangerous, but I think this is correct—you are basically using it as a way to control the marketplace. You are going to get yourself into a position where it will be difficult to get rid of you because hospitals become dependent on you, even if they are with old legacy systems, and you will be a monopolist. Is that basically your strategy?

Sheri Thureen: To be clear, for the 50% of the programme that is not Lorenzo, we have implemented over 1,800 solutions. For the portion that is the Lorenzo side, we have implemented Lorenzo in 10 Trusts to date—

Q52   Mr Bacon: Yes, this is a bit of a red herring, isn't it, because you are talking about release 1.0?[2] I mean, that is so basic that it is a red herring. You have done it in three, nearly four, and then Pennine basically told you to take a running jump. It is really three, isn't it, not 10?

Sheri Thureen: Look at some of the clinical benefits that are coming out of Morecambe Bay today, where last month it was able to issue 1,800 immediate discharge summaries directly to the GP. That came right from the acute system into the GP system with a standard set of information, and it was delivered on the next business day. This is something that the GPs have been asking for for 10 to 15 years. So I do believe that for the Lorenzo system the core part of the solution is available, it is in production and it is very much starting to prove out the benefits.

Q53   Chair: One more question, then I am afraid, Mr O'Connell, we are going to have to ask you some questions.

Patrick O'Connell: That's okay.

Sheri Thureen: Come on in.

Q54   Chair: Sorry about this: this is one of the worst examples that we have had to deal with, I am afraid, of very, very questionable value for money for the taxpayer. The final question: what I just do not get is that you said in 2003-2004, "Lorenzo is ready to be rolled out". We are now in 2011, where you are sitting here arguing with Richard, and probably me, about the readiness of Lorenzo, even in the very limited sites in which you have introduced it. I just do not understand, first, how you have managed to have those years and years and years where you have failed to deliver, and, secondly, what on earth gives you the confidence that you could deliver it between now and 2016 even in a more limited range of sites.

Mark Davies: Chair, can I just offer one word here? The contracts were put in place in 2003 to 2004. Concerning delivery of those contracts—whether it was BT or anybody else—they were due to be all in place by 2007, with full implementation in 2010. So there was a bit of time to get it developed.

Q55   Chair: Just answer that very briefly, and then I think we have some questions for Mr O'Connell.

Sheri Thureen: As I said, part of the programme, however, delivered the 1,800 systems. On the Lorenzo side, we absolutely acknowledge there were delays in the development.

Q56   Chair: Huge, crazy, crazy. I mean, you have just called them delays. You know, this is amazing stuff. This is not a year or two, which is pretty awful.

Sheri Thureen: So we acknowledge those delays; some of those delays were as a result of issues we had with our supplier, where we had to step in to address them on their financial and managerial issues, and as we have already talked about we are now in the process of acquiring. We also had to adjust for the complexity of the NHS, so we have moved to a more modular approach, and to allow more configuration at the local level, so it can address the unique needs of the Trusts.

Q57   Chair: Why did you not suggest that in 2002 to 2003 when you signed the contract? That is one of the things that hits me in the face: why did you not suggest that then? You might have had something deliverable then.

Sheri Thureen: As is not uncommon in programmes of this type, the initial development and deployment goes through an early adopter process, and it is really not until you have got to that point where they have exercised the solution that you have a true understanding of whether or not the usability and the capability of the system are there.

Q58   Chair: I have to say to you—I will do it as a comment, because otherwise we are going to run out of time—that is a scary comment to make, because what it suggests is when Government signs a contract for a policy such as this, it is almost writing an open cheque, because you are not signing for a clear specification. And therefore, even with £11.5 billion—I can't remember what the figure was—you start off knowing you will not deliver, and that is what you are actually telling us. We signed an open cheque with you in 2002-2003.

Sheri Thureen: I am not saying that. We signed a contract that identified—

Chair: Which was undeliverable

Q59   Mr Bacon: One quick question: it is true though, isn't it, that CSC knew in February 2006 that Lorenzo was a complete dog? Scott Logan wrote a report—it was an Accenture and CSC joint review of Lorenzo—which said, "There is no well defined scope and therefore no believable plan for releases". You have known that Lorenzo was hopeless for over five years, have you not?

Sheri Thureen: I am not aware of that particular comment. I have talked about acknowledging that there were delays and that we did have to step in with iSoft to address both financial and managerial issues, which we did do.

Q60   Mrs McGuire: One very quick question: I have read your—what we would call—CV, and it is very impressive. And I am just wondering whether or not you are happy to sit here in front of this Committee and defend millions of pounds of taxpayers' money going in on the basis that 1,800 discharge statements have been made in Morecambe, because that, frankly, is what is coming across.

Sheri Thureen: Well, I think that is just the beginning of the benefits that are coming out of Lorenzo, but we have implemented 1,800 other programmes. We have 20 million electronic patient records that are providing real value today, and that is the direction that this programme was going; it was to put the electronic patient records in place.

Amyas Morse: Can I just ask you? You are renegotiating at the moment, and I do not want to enquire into the details of that, but is that renegotiating because you cannot really deliver what was originally planned, or because there is not enough budget to cover it? Which one of those is it?

Sheri Thureen: I believe we have a joint understanding that the contract as it stands today is not working for anyone.

Amyas Morse: So it cannot really be delivered the way it is now?

Sheri Thureen: There is a demand portion of that, and there is a delivery portion of that, and I think what we have said is both of those—the demand and the delivery—are not working for either side.

Q61   Chair: I am going to move to BT. On page 24 of our Report, Figure 9, it shows the renegotiation of the contract with you in 2010. It is about £1 billion. You are going to be delivering some sort of IT into just over 50 settings. That, in my very crude reckoning, is £20 million a setting, and some of that is off the shelf RiO stuff. How on earth can you think that is value for money?

Patrick O'Connell: I think that CCN3 is value for money and has moved the programme—

Chair: Sorry, I'm afraid you are going to have to speak up. The acoustics are really poor here.

Patrick O'Connell: I guess we think that CCN3 has moved the programme to a position of value for money by moving from a monolithic solution that is centrally led to a modular solution, to produce localism in health. Even though there has been a reduction in the number of overall Trust settings, it is the same amount of work that is being done differently, in the sense that moving from monolithic to modular is quite a challenge to do, and quite an extensive amount of work. The design is different, the deployment is different, the service is different, the number of domains is different, they bought different kit, the capability is different. So we have changed the game.

Q62   Chair: It might have changed the game, but, at the end of the day, from the point of view of the taxpayer, this investment is going to produce an IT­based system to help better health delivery to patients in just over 50 settings for £1 billion. That is crudely £20 million per setting. Is that value for money?

Patrick O'Connell: Well, there are actually over 100 major systems in BT's data centres right now; there are 62 RiO systems, there are 15 acute systems, there are 21 PACS systems—

Q63   Chair: Yes, but in the end it is a care record. What we are dealing with here, right, is the detailed care record system—part, I accept, of your IT system. You can tell me this—is this figure wrong, Figure 9 on page 24? It basically says £948 million, and then if you look up there you have cut the Acute Trust, you have taken out all the GPs, you have cut the community health services a bit and the Mental Health Trusts, and you are using RiO, which I understand is an off-the-shelf, rather cheapish system, for most of it. So we—the taxpayer—are spending nearly £1 billion to get an IT system to support healthcare in just over 50 healthcare settings. Is that value for money?

Patrick O'Connell: I think the benefits the system is producing are equivalent to the value for money that you started out with before: it is rearranged into a different setting that will not only produce value for money, but will produce more value for money going forward. The modular systems, and the ability to configure the systems today, allow the clinicians and the administrators to tailor their systems to move their systems in a way that is required by clinical care today.

Q64   Chair: If you were sitting in the Department of Health as the official, would you sign a contract that meant an investment of, on average, £20 million to get to where we are going to get to by 2016?

Patrick O'Connell: Knowing what I know, yes. I think it is value for money.

Q65   Chair: You think that is value for money?

Patrick O'Connell: It is.

Q66   Chair: Is it value for money for the new contract that you have signed for those bits of the South for which you are now responsible, where the cost is 47% higher than it is for this, for me, extraordinarily expensive contract for London? So the costs in the South are 47% higher.

Patrick O'Connell: No. I think the South is value for money, but I think we are mixing what I will call some significant one-offs with business as usual. When BT went into the South to take over the Fujitsu sites, there were significant one-offs that have added to the cost of the entire programme in the South, for example—

Chair: Well, I assume somewhere in this the taxpayer has also had to pay Fujitsu for something. So that's not incorporated. They are still arguing in the courts, aren't they?

Mr Bacon: Not in the courts.

Chair: They are still arguing over that. So your cost is on top of a sunk cost to Fujitsu?

Patrick O'Connell: I am not familiar with Fujitsu's story, but we had to take over the Fujitsu sites in situ and move them to the BT sites; we TUPE'd their people over, then we did the business-as-usual upgrade. If you take a look at apples to apples, the cost in London is higher than the cost in the South, as you would expect it to be, and it is value for money. It was a unique circumstance in the South.

Q67   Ian Swales: I would like to explore the basics of this. I am sure that—I do have some experience in this field, by the way—the people in this room could design the systems that we are talking about here in a few days. In fact, they probably could not, because there are probably too many people in this room, and I think that is part of the issue that I see with these NHS IT systems: we seem to have built this massive superstructure that is never likely to deliver clear, simple, straightforward systems to the NHS.

My question is that I do not think this is really so much a software problem as a management problem, and I would like to know your views on how the costs have ramped up here in terms of how clearly the programme has been run and how clearly the customer interface has been operated. I am not sure why the DoH actually made it so complicated at the start, but presumably it is getting ever more complicated as every Trust treats itself as different, every doctor says, "I am different from the doctor down the hall." And I would like to know your views about the management of all of this—not the software, but the management of the programme—because, let us face it, that's where most of the money is. The software costs are quite trivial in all this, we know that, or they should be anyway, with today's technology.

Patrick O'Connell: You mean the BT management of it?

Q68   Ian Swales: The management of the project—yes, the BT management, the CSC management, and how you see the management by the Department and by the Trusts, and so on, because that is where most of the money must be in all this. It cannot possibly be the software; a teenager in their bedroom can automate an e-mail from one system to another, or to a mobile phone; all that is trivial these days. This is about the management of some kind of superstructure that is going wrong—badly wrong.

Patrick O'Connell: I think it is more than that. Maybe we have not done a good job of explaining the complexity. This is a huge, huge; it is considered the largest civil IT programme in the world. The Spine, the N3, the LSP—there are three different parts there. There is a huge amount of industrial-strength robustness, availability, disaster recovery, that you cannot get someplace else. This is quite an unusual—

Q69   Ian Swales: This has never been attempted anywhere in the world. Neither of your companies has ever done anything like this in the world.

Patrick O'Connell: No. This is entire—

Q70   Ian Swales: So were we right to ask for it, then?

Chair: I don't think Mr. O'Connell would have signed the contract in 2003, from what he said earlier.

Patrick O'Connell: I think the company believed the contract was executable in 2003, at that time.

Q71   Ian Swales: Can you answer my question? The management from the public sector in the UK and your companies, the interface in that—how well has that been going, and how much has it been the source of the cost and the delays in this project?

Patrick O'Connell: I do not think that is really the issue. I think that, if you are asking about the NHS staff, we have found them to be professional, committed, dedicated, and to have worked extraordinarily hard to try to advance healthcare in a very evolving and changing environment.

Q72   Ian Swales: So the delays are all down to your companies, then?

Patrick O'Connell: No, they are more than that. It is the need of the users and the community. The users and the community today, the clinical people today, want a modular system: they want to be able to do it. They want a domain per Trust. I do not know if you know what a domain per Trust means.

Q73   Chair: Why did you not know that in 2003?

Patrick O'Connell: In 2003 there was only one domain. There was only one domain ordered in 2003.

Q74   Chair: Yes, but presumably the user community at that point wanted the same sorts of things as it wants today. I do not think clinicians have changed.

Patrick O'Connell: Today we have Facebook, we have Twitter. In 2003 there were only so many possibilities with technology. Today, 2011, with Facebook, all these things, more possibilities—

Q75   Stephen Barclay: That does not explain the lack of basic management information. I mean, the Report says at paragraph 9 on page 7: "Our findings are presented in the context of a lack of clarity between the Department and its suppliers about basic management information." This is notwithstanding the £820 million spent on project management. What is your view as to why there is such a basic lack of management information?

Patrick O'Connell: There is not a basic lack of management information on our part. I think that we work well with the NHS; we reconcile our figures. One of the things you have when you look at figures from other folks is that you have economic conditions, and the fact is that I happened to work in 2009 to 2010 and many Reports were done in 2004. Secondly, when you look at the average cost, there is no average cost because every Trust costs something different. The arithmetical average is not really a measure of the cost. Thirdly, there are things such as one-offs, and then there is business as usual. In the South there were a lot of one-offs. There were three different things—

Q76   Stephen Barclay: With respect, you are not answering my question. There may well be one-offs, but, as the Report says, "For example, information, we"—the NAO—"received from suppliers on Friday 13 May does not reconcile with information provided by the Department the previous day." So you have a situation where the Department is sending information on 12 May, which is different from the information provided the following day by suppliers. Would either of you like to comment on that?

Patrick O'Connell: I think, from a BT standpoint, we have no issue in terms of reconciliation of our numbers with the NHS. It could be that the questions that were asked in terms of two different people asking two different questions, but our numbers reconcile with the Government's.

Q77   Stephen Barclay: So the NAO has failed—

Q78   Mr Bacon: Did you just say your numbers reconcile with the Government?

Patrick O'Connell: Sorry, with the NHS.

Q79   Mr Bacon: Because we were getting the distinct impression that that is not the case. The Department last week was giving the numbers to the NAO, and the NAO was then going to you and saying, "What do you think?" And BT was saying, "We do not recognise those figures". Mr Davies, would you like to comment?

Mark Davies: That is correct. That is absolutely correct.

Patrick O'Connell: I accept the fact that we do not recognise some numbers from the NAO; I was making a comment—

Q80   Mr Bacon: No, the NAO is merely passing on the figures given to it by the Department of Health. Let us be clear about that. Am I right Mr Davies?

Mark Davies: Yes, absolutely. Our figures were sourced from the Department of Health.

Q81   Stephen Barclay: Does that not raise questions over the—

Q82   Mr Bacon: Sorry, can I just pursue that? You said a minute ago your numbers reconciled with the NHS. That is not correct, is it? It is not necessarily your fault Mr O'Connell—it may be because the Department of Health is shambolic and you keep good records; that is a possible explanation for this—but it is not the case, is it, that your version of events and the Department of Health-CFH version are the same?

Patrick O'Connell: The BT numbers and the NHS numbers, in the way that we discuss the numbers, work. As people do a lot of "what ifs?" to me, there is a chance that some of the numbers would be out of context. So out of context is a likely case in the complexity.

Q83   Stephen Barclay: But if there is a lack of clarity on basic management information does that not raise questions over any renegotiation?

Patrick O'Connell: If that were true, yes. But I think, as I said earlier and I repeat, that our numbers were reconciled with the NHS.

Q84   Mr Bacon: Mr O'Connell, I just wanted to ask you briefly about RiO. Could I ask you to turn to page 29 of the Report? You will see there that it says the delivery of RiO at Mental Health Trusts and the community health services, including service management, until 2015 is £224.3 million. That is for 25 sites, isn't it?

Patrick O'Connell: Yes.

Q85   Mr Bacon: So that works out at £8,972,000 per site. That is right, isn't it?

Patrick O'Connell: It depends on the economic conditions; you usually guess about right.

Q86   Mr Bacon: But basically just under £9 million per site. Now, it says in paragraph 3.14   on the next double spread, on page 31, that in London, "Prior to the Department agreeing for RiO to be provided as the strategic solution for 37 sites in London, BT purchased software and services from the supplier of RiO in 2006", and I have just checked this with the National Audit Office, "amounting to £46 million". That was for 37 sites, and it cost £46 million. That is about £1.24 million per site there; £8.9 million per site for the 25 sites in the South on the previous page. Try as I might, I cannot find a way to account for the discrepancy between the two: you are charging the taxpayer nearly £9 million per site for something that costs less than £2 million and a bit above £1 million, depending on the circumstances, to deploy. Why?

Patrick O'Connell: That is the part of the numbers that I cannot reconcile. By my own numbers, we charge basically £8.5 million, roughly, in London for a RiO site; we charge £6.5 million in the South for a RiO site. If one does apples to apples—the reason I say apples to apples is because what is required in London is a little bit different, and the reason the South is cheaper than London is because things such as programme management are not duplicated—from my standpoint, our costs are relatively straightforward. They follow the basic idea that the second time round should be cheaper. They have been audited by Ernst & Young, they have been audited by Gartner, they have seen OGC assurance, so our costs are reasonable. Part of the issue is that costs often get taken out of context.

Q87   Mr Bacon: With all these different things you are talking about—the domains and whatnot, and the programme management—you are asking us to believe that the cost of that is something like £6 million or £7 million, between the roughly £1 million to £2 million it costs to go out there and buy RiO and what you are charging the Government?

Patrick O'Connell: To buy a RiO á la carte, and buy it in the package sense, are two different things. You buy it á la carte, you buy it from somebody in a pub, you are not going to get—

Q88   Mr Bacon: You are not going to buy it from somebody in the pub; you can buy it directly from its supplier, CSE Healthcare, which makes it. You can buy it directly from it, can you not?

Patrick O'Connell: Yes, you can—

Q89   Mr Bacon: And they do not charge £9 million do they?

Patrick O'Connell: That is an á la carte offering. We are having a package offering. If you add disaster recovery in, if you add the things in that are required for this programme, you get to the cost that it costs us.

Chair: Á la carte means it costs more; it is not less.

Q90   Mr Bacon: I have just met with CSE Healthcare, and they tell me that it varies, of course it does—

Patrick O'Connell: Of course.

Q91   Mr Bacon: And companies are always sensitive about their costs, as well. But they confirmed to me that for a typical Mental Health Trust—not a very, very, very small deployment, and not an enormous unusual one, but a typical run of the mill deployment—a number somewhere between £1 million and £2 million, depending on the bells and whistles, including, typically, five years of service and support, would be typical. You are charging £9 million and no matter how you cut it, no matter which bells and whistles you pretend to add on, or which number you divide it by before adding the number you first thought of, it is impossible to me to see how you get to £9 million as a value for money number. It just does not make sense. This is a relatively straightforward system.

Patrick O'Connell: No, it does. Disaster recovery, the amount of SLAs that we have to add to it—

Q92   Mr Bacon: I would hope there was disaster recovery anyway. I mean, this is standard; everybody has disaster recovery if they have any sense.

Patrick O'Connell: No, they do not. They have backup. Backup means that within some weeks you can stand a system up; disaster recovery means that in two hours you are back and up running just like it was before with no data lost. It is a very industrial strength, highly robust system with significant failovers in it—

Q93   Chair: Which justifies that scale of difference? We are going to have to move on folks, so I am just going to ask you what I asked Ms Thureen: how much have you been paid so far under the contract?

Patrick O'Connell: Approximately £2.8 billion.

Q94   Chair: How much is left as contractually committed?

Patrick O'Connell: Approximately £1.3 billion.

Q95   Chair: And how much do you reckon is the value of the work you have done so far that you're owed?

Patrick O'Connell: I am not sure about that. I do not want to guess on that, so I would prefer to—

Chair: Are you bidding for the other South contract, the second contract to deploy some sort of IT in the South? We haven't covered it all.

Patrick O'Connell: Well, we have a contract with what is labelled the greenfields.

Q96   Chair: One—and then there is another contract, which needs to be let pretty soon if it is going to be delivered by 2016.

Mark Davies: The ASCC

Patrick O'Connell: That is competitive. But the greenfields was a—

Q97   Chair: And are you bidding for the competitive one?

Patrick O'Connell: Some elements of it, yes.

Chair: Thank you.

Q98   Mr Bacon: Can I very quickly ask Ms Thureen, you mentioned 20 million records?

Sheri Thureen: Yes.

Q99   Mr Bacon: What system are they on?

Sheri Thureen: TPP.

Q100   Mr Bacon: Is that the GP system?

Sheri Thureen: GP and community health services.

Q101   Mr Bacon: Yes. So those 20 million are not hospital records—that is correct, isn't it?

Sheri Thureen: Community health services connected to GPs.

Q102   Mr Bacon: They are not hospital records?

Sheri Thureen: They are not acute.

Q103   Mr Bacon: That is what I meant—they are not hospital records?

Sheri Thureen: They are not acute. But they do include community hospitals.

Q104   Chair: Thank you very much. We will move on now.

1   The correct figure for Trusts where the Lorenzo system is being delivered is 166. The 97 Trusts refers to the acute trust only. Back

2   Lorenzo Release 1.0 has been implemented in 7 trusts and Release 1.9 in 3 trusts Back

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Prepared 3 August 2011