Granger says Failure will be Penalised

NHS IT Director General Richard Granger this week raised the ante for would-be suppliers to the National Programme for IT (NPfIT) in the NHS, making clear that penalty clauses would be invoked and damages sought from suppliers that fail to deliver.

Speaking at Kable’s Government Computing conference in London on 12 June, Mr Granger stressed that any supplier under the illusion that penalty clauses would be quietly forgotten after contracts had been signed should think again. Contracts would not be “stuck in a drawer and forgotten about”.

“I think we not only need to get through the procurement phase and spend real money: we also need to be really focused on what we want and what happens if we don’t receive it,” said Mr Granger.

The confidential outline business specification (OBS1) for Integrated Care Records Services (ICRS) makes clear that prime contractors will have to put up “performance bonds”, and states that “parties shall agree a level of capital liability”. Failure to meet the acceptance criteria set in contracts will result in suppliers having to pay liquidated damages. Such performance bonds are intended to provide a guarantee to the NHS that those awarded contracts actually deliver.

“I believe liquidated damages are a great thing in a contract,” Mr Granger told the audience at Government Computing. “I can’t see the point of negotiating step-in rights in a contract if you don’t invoke them in the event of a failure.”

The potential scale of such damages has yet to be determined, but could in theory be huge. One industry source suggested to E-Health Insider that prime contractors for the National Programme may have to put up bonds of up to £200m.

Circumstances in which ‘liquidated damages’ may be sought are thought to include covering re-procurement costs if it proves necessary to replace systems that have not been delivered to contract. Performance related costs incurred by the NHS through any such failure could be included too.

The NHS IT Director General also emphasised the need to ensure ‘maintenance of contestability’, to make sure that there are alternatives if a supplier is not delivering. “We will be in a situation where, if a supplier is not delivering, we can move capacity.”

To achieve this, a healthy, competitive market will have to be maintained. “I want a vibrant market. I don’t want to be in a situation where in five to seven years there will only be one health ICT supplier,” said Mr Granger.

Setting out his ambition for the NHS, the Director General said that he wanted the NHS to become the most important unified market for healthcare IT in the world, which gets the best products first. “I want us to be at the front of the queue for new functionality, not at the back getting things years after they get them on the East Coast [of the US].”

To realise these goals he made clear that implementation activity will have to be managed just as tightly as the procurement process. “We will need to manage implementation actively and we will do so.”

Elsewhere in his upbeat presentation Mr Granger stressed how far the procurement process had already come in less than a year, stating that the half-way stage had now been reached. He predicted that implementation and delivery would begin within months. “This programme will start to make a real difference on the ground from the back end of this year.”

He went on to re-emphasise his implacable determination to ensure contracts are signed by the end of the year, with the first two LSP contracts to be signed for London and the North East by October, and for the three remaining ‘clusters’ by the end of the calendar year.

Echoing Alan Rickman’s Sheriff of Nottingham in Robin Hood Prince of Thieves he even threatened to cancel Christmas to ensure this target is met: “The remaining three contracts [for local service providers] will be signed by Christmas, or we will not have Christmas.”