Accenture takes $450m charge from NHS deal

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The Independent Online

The Department of Health has rebuffed an attempt by the IT provider Accenture to start renegotiating a multibillion-pound contract to computerise patient records for the NHS.

Accenture was forced to take a $450m (£250m) charge for the contract with its second-quarter financial results, released late on Tuesday night.

The company also admitted it swallowed a loss of $140m over the deal last year, will see a similar loss this year, and a "moderately higher" loss in 2007.

As well as software delays and higher-than-expected development costs, Accenture pointed out the NHS had "changed the circumstances" of the contract by allowing GPs to choose from a range of IT providers. This would result in "slower and lower" future demand for the service.

Accenture put some of the blame for the delays on iSoft, the London-listed group which it said had been late in delivering crucial software. Shares in iSoft dived 16 per cent to 148.5p.

Accenture was awarded the contracts in late 2003 and early 2004, for the north-east and east of England, to put all patient records on the same computer system. It should mean any hospital is able to call up records of any patient registered at a GP's surgery. The NHS Care Records Service project, which aimed to "make records as mobile as patients", was supposed to be worth £2bn to Accenture over 10 years.

However, as part of a government announcement made this month, GPs were allowed to go to other IT providers in their area.

Bill Green, Accenture's chief executive, told analysts in a conference call: "We can't and won't continue under the current terms, which aren't going to yield ... and treat Accenture and the shareholders fairly. That said, we're prepared to step up to our responsibility and work closely with the NHS to get this thing right."

In its results statement, the IT group said: "Accenture is actively exploring all options with respect to the contracts and expects to work with the NHS to accommodate, in the contracts, the changed circumstances."

However, the Department of Health, which is struggling to get a grip on a financial crisis in the NHS, indicated it would not be prepared to share any extra costs. It said in a statement: "Rather than the taxpayer covering the cost of failure to deliver - as has been the case in some previous government IT projects - Accenture are themselves having to cover that cost. This demonstrates the robust nature of the contractual arrangements we have put in place under the National Programme for IT to protect taxpayers' money."

System error

* Capita created a database for the Criminal Records Bureau in 2004, but costs were double the initial budget of £200m.

* Electronic Data Systems' computer system caused the Inland Revenue to over pay £2bn to tax claimants in 2004.

* Siemens installed a £77m computer system to reduce the backlog of asylum-seekers' applications in 1998. The Home Office gave up on it in 2001, saying it didn't work.

* Siemens Business Systems also won the contract for the computerisation of the Passport Agency, whose failure in June 1999 resulted in 530,000 passport applications not being processed correctly.

Emma Wall