The company pulls out of the upgrade for Britain's National Health Service, terminating $3.75 billion in contracts and handing work to CSC
Accenture has pulled out of the £12.4bn NHS IT programme and terminated the £2bn-worth of contracts it was working on to deliver new patient and GP systems.
Accenture was awarded the two contracts to be the local service provider (LSP) for the Connecting for Health (CfH) programme in the East and North East regions back in 2003 but will now hand over the work to CSC, which is already an LSP for the North West and West Midlands regions.
As part of the agreement Accenture will get to keep £110m of the £173m it has been paid by the NHS to date for its work on the CfH contracts.
Accenture will hand over its delivery obligations for CfH to CSC by 8 January 2007 but will retain responsibility for delivering the Picture Archiving and Communication (Pacs) digital X-ray systems to the NHS.
Accenture warned in its financial results earlier this year it expected to take a $450m hit on its NHS IT contracts over the next three to four years because of delays that led it to miss the deadlines for delivering working systems.
Accenture has blamed some of those delays on one of its main software suppliers, iSoft, over the delivery of key clinical records software called Lorenzo. A leaked document last month revealed there is "no believable plan" from iSoft for the Lorenzo product to be deployed in the NHS and that it is unlikely to be ready before the middle of 2008 at the earliest.
iSoft itself recorded pre-tax losses of £343.8m last month and is being investigated by the Financial Services Authority after admitting potential accounting irregularities had been discovered in its books.
One NHS IT director in the North East region, who did not wish to be named, told silicon.com there is a mood of "anger" within the NHS at the lack of progress.
The IT director said: "Accenture have done absolutely nothing in the North East and for the past nine to 12 months they have been invisible. They have been here for nearly three years and they have done nothing, yet it has put planning blight on any progress that was being made before.
"All the money that has been spent could have been making a difference to patients now. We've wasted years of potential development and improvement."
The IT director also added that the basic architecture put forward for the CfH programme for hospitals - where thin clients connect to a central remote system - is wrong: "The problem is the basic fundamental strategy for secondary care is wrong. You don't have the same system.
"While it may be sensible to run GPs remotely it is certainly not sensible to run hospitals remotely using dumb terminals down a wire. It's an idiotic idea. It is never going to work for hospitals."
Tola Sargeant, analyst at Ovum, said Accenture's withdrawal will damage its reputation in the UK public sector IT market but said the situation validates the NHS IT procurement strategy and the strict penalty clauses for missing delivery deadlines.
She told silicon.com: "To a degree it does justify the procurement approach, which split it into five regions in case of one supplier failing to deliver. At the end of the day Accenture signed up and other suppliers are willing to step in, so the contracts can't be that onerous."
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