Computer Sciences (CSC) will not renew its multimillion outsourcing deal with the Scottish National Health Service.
The services giant, which supplies data centre services to the Scottish NHS, says it has "declined to bid on the new tender" due to begin on 1 April 1999, and blames its customer for its decision to not renew the contract.
CSC said that it disagreed with the Scottish NHS' timing for the new contract, which begins nine months before the millennium. Mojtaba Ghassemian, UK chief executive of CSC. said the retendering process "will significantly impair the ability of Scottish Health to achieve Y2K compliance".
CSC said the Scottish NHS could exercise an option to extend the life of the contract by 18 months.
The Scottish Office, responsible for the NHS in Scotland, said a decision on extending the contract would take place in October.
The problem lies with compliance guarantees given to CSC by third party suppliers which, the company says, cannot be transferred to a new outsourcer. CSC says the actual bug fix itself should not be a problem, because it aims to finish the project by the end of 1998.
But CSC's raising of the millennium spectre was characterised by some observers as an attempt either to escape from a painful contract or extend it without tender.
Dave Watson, regional officer with trade union Unison, said: "CSC took on the contract at a price they couldn't deliver, so all people could see was staff being made redundant. Individual NHS trusts in Scotland brought business back in house or went out to other suppliers."
Over the three-and-a-half-year lifetime of the deal, CSC reduced staff from 500 to 280 as it tried to reduce costs. It was criticised by the Scottish NHS in 1996 for poor performance.
Also under dispute is the format of the tender, which divides services into eight discrete groups. If multiple awards to different suppliers are made, "this will result in significant degradation in service provision", Ghassemain said.
The Scottish contract has been dogged with difficulties:
July 1995: CSC wins contract to run seven data centres for Scottish NHS, worth #20 million a year.
October 1995: 500 staff transfer. Job losses follow.
July 1996: Leaked Scottish NHS memo says CSC "grossly underestimated" the complexity of the contract.
August 1996: CSC admits revenues #3 million short; predicts loss in 1997.
June 1997: Central Scotland Healthcare Trust dumps CSC's financial information services for AT&T. Joins other trusts exercising option to ditch CSC.
June 1998: CSC refuses to bid on a new tender starting in April 1999. There are 280 staff left.
Dan Sabbagh is a reporter on Computing.
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