EDS given £9m compensation for NHSmail contract
- 17 August 2004
EDS is to recieve £9m in compensation from the Department of Health for the cancellation of its 10-year contract to supply NHSmail, originally awarded in September 2002.
The news comes a month after Cable & Wireless was awarded a nine-year replacement contract worth £29.3m for supplying NHSmail’s existing 65,000 users with email and related services, rising to £50-90m when the planned total number of users throughout the NHS in England is reached.
Back in March, EDS had threatened to sue the National Programme for IT for £10m after the programme terminated its NHSmail contract, citing the low take up of the service.
Many users had also reported difficulties with the service; the FT had reported that the decision was taken “after complaints about difficulties logging on to the system and other problems." Furthermore, initial take-up was disappointing, with only 25,074 NHS staff (2.3% of total) signing up to use NHSmail in the first six months of its life.
A spokesperson for the NPfIT told E-Health Insider that they had settled the dispute around EDS’ E-mail and Directory Service (EMDS).He said: “The settlement, facilitated by the Centre for Effective Dispute Resolution, has been achieved amicably without any attribution of blame to either party."
According to a 17 August report in Computer Weekly, the £9m will mainly be coming from government money, but C&W will also be contributing towards the fee by buying from EDS the assets and equipment they need to take over the running of NHSmail. A clause reportedly existed in EDS’ original contract that gave the NHS leeway to cancel the contract at short notice for a cost of £11m.
The NHSIA originally awarded a £62m contract to EDS in September 2002, just before director-general Richard Granger was appointed. EDS will continue supply e-mail services to the NHS until October, when C&W will take over.
The NPfIT told E-Health Insider: “Arrangements for continuity of service and handing over the service to Cable & Wireless have been agreed so there will be no interruption of service to the NHS."
