Fujitsu said to be preparing £700m LSP claim

Fujitsu may be preparing to seek up to £700m in compensation from the Department of Health for the termination of its £1.1 billion NHS IT contract in May.

The Japanese company had its contract cancelled by NHS Connecting for Health after year-long contract re-negotiations to deliver new electronic patient record systems more flexibly broke down.

Fujitsu said the requested changes would cost more significantly more money. When the NHS baulked at the extra cost, Fujitsu ended negotiations, triggering the cancellation of its contract by NHS CfH.

According to a weekend press report in The Independent Fujitsu, which had been the local service provider in the south of England, is now seeking to recoup the bulk of the £1.1bn it would have been paid for full delivery of the contract.

The paper quoted "sources close to the negotiations" as saying that Fujitsu was ready if necessary to go to court to press its claim. Sources close to the programme however suggested to EHI that it was expected the DH and Fujitsu would settle before ever going to court.

Of the 41 NHS acute hospitals in the South of England Fujitsu was to have delivered new EPR systems to it had by May installed the Cerner Millennium system at just eight NHS trusts. Better progress had been achieved in other areas of the programme including delivering of picture archivinga nd communications systems.

In June the National Audit Office reported that by 31 March this year Fujitsu had received part of some £1.3 billion of advance payments CfH had made to suppliers, but the ex-LSP had yet to repay £143m of their share.

Fujitsu has not confirmed the £700m figure. The company told The Independent, "At the moment we are in dialogue with the NHS and we hope to come to a satisfactory outcome."

An NHS Connecting for Health spokesperson said in a statement: "Under the terms of a joint confidentiality agreement with Fujitsu, we are not able to enter into discussion about these allegations. NHS Connecting for Health and NHS Strategic Health Authorities are working closely with Fujitsu to ensure a smooth transition to future arrangements for trusts in the south of England.

The statement added: "The recent National Audit Office report confirmed that the vision of the National Programme for IT is both intact and achievable.”

Commenting on the reported legal action Liberal Democrat shadow health secretary, Norman Lamb, said the disclosure was further evidence that the NPfIT was hopelessly flawed. He said it was a "centrally-imposed project that has not been properly thought through from the start and was never subjected to a proper cost benefit analysis".