The Department of Health is concerned that Fujitsu, CSC and BT would team up against it in a multibillion pound legal fight, should it decide to scrap the disastrous NHS National Programme for IT (NPfIT).
Fujitsu walked away from a £709 million contract in 2008, and remains locked in legal wrangling with the government over claims for the majority of the value. Today, MPs urged the government to seriously consider abandoning the programme and therefore to consider terminating the remaining CSC and BT contracts, worth £3 billion and £1 billion respectively.
In unprecedented language, health officials wrote in a memo to the Public Accounts Committee that there were serious risks associated with a possible move to terminate BT and CSC's contracts. They said: "Legal advice provided to the department indicates there is a risk of some unquantifiable 'collateral damage' to the Fujitsu existing claim, and the risk of suppliers working in unison against the department is significant."
Officials revealed that both BT and CSC "have been clear" they were "not willing simply to walk away" from the work.
It was "safe to assume that some form of dispute will occur and that both suppliers will seek to recover costs", the officials stated.
CSC declined to comment. BT said it was "committed" to its work on the programme.
Prime minister David Cameron has already publicly warned CSC that he is considering preventing it signing a new contract on the NHS national programme, dependent upon the verdict of an ongoing government review. The Public Accounts Committee today told the government that it was so unimpressed with CSC's NHS work that ministers needed to reconsider whether it was fit to bid for other government contracts. It also said that BT was overcharging for work.
The Department of Health declined to tell the committee what the maximum cancellation payments would be in the event of cancellation, claiming it could "lead to suppliers expecting those amounts".
But it argued that "maximum payments could be in excess of the currently anticipated costs to complete the BT and CSC contracts".
The notion that cancellation costs would exceed contract value was rubbished by public sector analysts speaking to ComputerworldUK.com in recent months. They advised the government to "cut its losses" instead of delivering an increasingly delayed system to fewer trusts.