£2.3bn NHS IT programme rocked as bidder pulls out

The flagship £2.3bn IT modernisation programme for the NHS has been dealt a major blow with one of the leading suppliers pulling out of the bidding process.

Lockheed Martin confirmed it will not now be bidding for the contract to develop a 'data spine' for a national electronic patient records system. The US defence contractor had been shortlisted along with IBM and BT for the patient record contract, while EDS, Fujitsu and Schlumberger were competing for a national e-booking system.

Lockheed was also part of one of the 11 consortia bidding for five regional local service provider contracts under the £2.3bn NHS programme, along with the likes of Accenture, Cap Gemini Ernst & Young and CSC.

Lockheed would not comment on its reasons for pulling out but sources cited in newspaper reports suggested the firm was not happy with overly demanding performance targets and penalties if deadlines were missed or systems failed.

A spokesman for Lockheed Martin would only say: "I can confirm we have withdrawn from the NHS national programme for IT."

Reports also suggested that IBM and Accenture were close to pulling out of the bidding, but both companies have denied this when contacted by silicon.com.

IBM issued a statement saying: "IBM does not comment on rumour and speculation. IBM states that the allegations made are without merit."

An Accenture spokesman said: "I can categorically deny that Accenture is withdrawing from the NHS IT project...we are confident we will be able to negotiate a fair and equitable contract and we are able to competitively bid to meet those high standards."

Other bidders contacted, including BT, declined to comment while the bidding process is ongoing.

But Richard Holway, analyst at Ovum Holway, said there is concern from those involved in the bidding both at the speed of the process and the levels of fines and penalties for missing performance targets.

He said: "In our experience, screwing suppliers very rarely produces systems that satisfy users. We have had many conversations with CEOs greatly worried about the speed of the bid process and the attendant penalties. However there has arisen an atmosphere where those criticisms cannot be aired without it seriously damaging the chances of success."

A spokesman for the NHS' National Programme for IT would only confirm Lockheed has dropped out.

He said: "We are pleased that they have given us notice of their withdrawal now, rather than at a later stage of the competition and value the efforts they have made and the innovation they have brought to the competition up to the point of their withdrawal."