EDS presses NHS for loss of contract

EDS turned to the press, the Financial Times of course, to turn the screws on the NHS when it abruptly cancelled a 10-year £90m contract to provide email services last week.

A week to the day since it lost the contract, out popped a story that it plans to sue over the cancellation of the contract that provides a directory and email service for 65,000 health service staff. EDS claimed to be going for almost £11m in compensation in respect to set–up costs and other charges.

The FT article suggests the director general of NHS IT, Richard Granger, was looking for a chance to exercise his 'step-in' rights – to appoint another supplier in a service deemed to be failing.

Granger is known to favour very strict supplier contracts.

Monday was spent in frantic negotiation, with both EDS and the NHS National Programme for IT (NPfIT), promising a statement at any moment.

The negotiations obviously failed and no peace has been declared.

At the end of the day, EDS issued a 'more in sorrow than anger' statement that confirmed it had lost the contract and went on to state: "The NPfIT has chosen to terminate EDS' contract, despite it being praised in March 2003 by Sir John Pattison (the Senior Responsible Owner, NHS Information Authority) as one of the two best examples of IT implementation in the NHS."

And the company wondered why the dispute resolution parts of the contract had not been used. It added that it would do its best to "minimise the impace on the 62,000 NHS staff who currently use the service" but "responsibility for ensuring continuity of services rests with the terminating authority".

EDS said it would be seeking compensation.

At the time of writing the NHS response - long-promised - has not appeared from the appropriate committee.

EDS has been going through a bad contract year or two. Last year it wasn't reappointed to the £3bn Inland Revenue project and it failed to capture other parts of the multibillion pound NHS IT programme. It has problems elsewhere and its shares have sunk accordingly.