Examination of Witnesses (Questions 1-104)|
PATRICK O'CONNELL AND SHERI THUREEN
23 MAY 2011
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?
Personally I was not here in 2003, but, to answer your question,
I would guess or speculate that in 2003 the needs of the useras
perceived at that timethe 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.
So if you had been around in 2003 would you have told Government,
"This is not doable"?
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
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 countrythis was never
deliverable. I cannot understand why professionals signed it
in 2003 saying, "We can deliver."
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 todayin the sense of a centrallylocated
system versus a clinically-led systemI think they would
have approached it differently. It looks like the need has evolved.
I am not sure that I accept that, but given the shortness of
time, Ms Thureen. Am I pronouncing your name right?
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 frontin
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.
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?
I believe that we have made significant progress to date.
Can you deliver it?
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
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?
I believe we will have the foundation to provide for much of
that through a connected approach versus a replaceallmoving
to a connectall versus a replaceall.
Q8 Mr Bacon:
So we are paying for foundations? This £11 billion or £12
billion programmeI know the number has moved a lotis
buying us some foundations, a sort of first step to get us off
the mark, is it?
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?
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?
It is true that we have
Q11 Mr Bacon:
It that true, yes or no?
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?
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?
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?
And we did that in the interim
Q15 Mr Bacon:
So what's the number?
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?
I believe that it was always our intention to provideI
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?
No. I am not aware that that was ever the case.
Q18 Mr Bacon:
You do not think that that was the case?
I do not.
Q19 Mr Bacon:
Well, the Report itself says that that is the case. Are you
disagreeing with the Report?
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.
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 stagesas suitable for the
national programme. That is correct, isn't it? Just like it
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
Q22 Mr Bacon:
This was not what you were contracted for. What interests me
is that you have just bought iSoft, have you not?
We are in the process of acquiring iSoft.
Q23 Mr Bacon:
So, once you have iSoftassuming all the regulatory hurdles
are cleared and you get it, as it were, under your beltyou
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
The acquisition of iSoft is a strategic decision of CSC to expand
our global healthcare sector business.
Do you think Lorenzo will ever work?
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?
It is release 1.9.
Q26 Mr Bacon:
In how many of those 10 is it release 1.9?
Q27 Mr Bacon:
In three; sorry three.
One Mental Health Trust pulled out of the contract completely,
because it had no confidence in it. So, out of your 97
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
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?
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
But hang on a minute. Unless our Report is wrong, our Report
says you tried to introduce it in four; the Mental Health Trustwhich
Trust was that?
Mark Davies: Pennine.
Mr Bacon: Pennine.
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 fourone
has rejectedand in those three, nobody is yet satisfied
with the software to be able to roll it out within their organisation.
It has been accepted at one of those Trusts. The second Trust,
Bury, has accepted
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?
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.
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?
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:
And how much do you believe you are actually owedthat
is the contractout of work done to date?
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?
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?
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?
I am not aware of what that cost is.
Q40 Stephen Barclay:
Not even an estimate
I am not.
Q41 Stephen Barclay:
You are in negotiations with the Department without knowing what
the termination costs would be.
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
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?
It is at least $500 million, and I cannot go into any specific
Dollars? Is it all in dollars?
Pounds, okay. So £500 million out of the contract at leastit
could be more?
It is more. And presumably that is because you are reducing
scope and functionality?
I would not be able to talk to the terms of that deal as it is
still under evaluation.
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?
It is general knowledge that it is a reduction in the volume.
By how many?
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?
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?
I believe that was 7 February.
Q50 Mr Bacon:
And was it implemented by then?
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 declaringwe will say
dollars, because they are American quotedlosses 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 sitestwo hospitalsper 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 itthere is somebody nodding over
there, which is always dangerous, but I think this is correctyou
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?
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
Q52 Mr Bacon:
Yes, this is a bit of a red herring, isn't it, because you are
talking about release 1.0?
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
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.
One more question, then I am afraid, Mr O'Connell, we are going
to have to ask you some questions.
Come on in.
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 contractswhether
it was BT or anybody elsethey 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.
Just answer that very briefly, and then I think we have some
questions for Mr O'Connell.
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.
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.
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
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
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.
I have to say to youI will do it as a comment, because
otherwise we are going to run out of timethat 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 billionI can't remember
what the figure wasyou 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.
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 reportit was an Accenture and CSC joint review
of Lorenzowhich 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
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 yourwhat we would
callCV, 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.
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?
I believe we have a joint understanding that the contract as
it stands today is not working for anyone.
So it cannot really be delivered the
way it is now?
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 thosethe
demand and the deliveryare not working for either side.
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
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
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
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?
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
Yes, but in the end it is a care record. What we are dealing
with here, right, is the detailed care record systempart,
I accept, of your IT system. You can tell me thisis 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 wethe taxpayerare spending
nearly £1 billion to get an IT system to support healthcare
in just over 50 healthcare settings. Is that value for money?
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
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?
Knowing what I know, yes. I think it is value for money.
You think that is value for money?
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
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?
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
Q67 Ian Swales:
I would like to explore the basics of this. I am sure thatI
do have some experience in this field, by the waythe 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 thisnot the software, but
the management of the programmebecause, 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
You mean the BT management of it?
Q68 Ian Swales:
The management of the projectyes, 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 wrongbadly wrong.
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 LSPthere 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.
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.
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 thathow
well has that been going, and how much has it been the source
of the cost and the delays in this project?
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?
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.
Why did you not know that in 2003?
In 2003 there was only one domain. There was only one domain
ordered in 2003.
Yes, but presumably the user community at that point wanted the
same sorts of things as it wants today. I do not think clinicians
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?
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?
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?
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.
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
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'Connellit may be because the
Department of Health is shambolic and you keep good records; that
is a possible explanation for thisbut it is not the case,
is it, that your version of events and the Department of Health-CFH
version are the same?
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?
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?
Q85 Mr Bacon:
So that works out at £8,972,000 per site. That is right,
It depends on the economic conditions; you usually guess about
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?
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 applesthe 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
duplicatedfrom 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 aboutthe
domains and whatnot, and the programme managementyou 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?
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?
Yes, you can
Q89 Mr Bacon:
And they do not charge £9 million do they?
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
Q91 Mr Bacon:
And companies are always sensitive about their costs, as well.
But they confirmed to me that for a typical Mental Health Trustnot
a very, very, very small deployment, and not an enormous unusual
one, but a typical run of the mill deploymenta 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
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
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
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?
Approximately £2.8 billion.
How much is left as contractually committed?
Approximately £1.3 billion.
And how much do you reckon is the value of the work you have done
so far that you're owed?
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.
Well, we have a contract with what is labelled the greenfields.
Oneand then there is another contract, which needs to be
let pretty soon if it is going to be delivered by 2016.
That is competitive. But the greenfields was a
And are you bidding for the competitive one?
Some elements of it, yes.
Chair: Thank you.
Q98 Mr Bacon:
Can I very quickly ask Ms Thureen, you mentioned 20 million records?
Q99 Mr Bacon:
What system are they on?
Q100 Mr Bacon:
Is that the GP system?
GP and community health services.
Q101 Mr Bacon:
Yes. So those 20 million are not hospital recordsthat
is correct, isn't it?
Community health services connected to GPs.
Q102 Mr Bacon:
They are not hospital records?
They are not acute.
Q103 Mr Bacon:
That is what I meantthey are not hospital records?
They are not acute. But they do include community hospitals.
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
Lorenzo Release 1.0 has been implemented in 7 trusts and Release
1.9 in 3 trusts Back