French JV wins contract to upgrade NHS Oracle finance system

After four years of talks, competition goes to incumbent supplier

NHS England has awarded a £108 million ($139 million) ERP contract – without competition – to the incumbent supplier, a joint venture between the NHS and French outsourcer Sopra Steria.

In a contract award notice, the non-departmental public body of the Department for Health and Social Care said the deal started in October 2022 and is set to run until March 31, 2031.

The baseline whole-life cost was set at £301 million ($373 million) by the Infrastructure and Projects Authority (IPA), a Whitehall watchdog which, in its 2021 report, gave the project a "red" risk rating due to areas which need "urgent" addressing including "sufficient resource in some key areas such as commercial strategy and project management support." The IPA also noted delays to the outline businesses case but said the procurement project end date remains as October 31, 2024.

The deal is to upgrade the financial management system responsible for handling England's health sector spending, amounting to around £150 billion ($186 billion) annually, from Oracle E-Business Suite 12.2 to Oracle Fusion Cloud Financials.

A spokeswoman for NHS Shared Business Services said: "The contract is for the provision of the next generation Integrated Single Financial Environment (ISFE) for NHS England and commissioning organisations. The new Cloud-based system will be based on Oracle Fusion and other best-in-class technologies and will provide secure, consistent and best practice finance processes nationwide."

The competition for the deal was limited to seven suppliers named on a £3.5 billion ($4.3 billion) framework deal for outsourced business services, led by the Crown Commercial Services, the central government buying arm. The generic framework was awarded in August 2021, with outsourced business services suppliers named as Accenture, CRM provider Arvato, Capita, public sector outsourcing specialist Liberata, DHSC and Sopra Steria JV NHS Shared Business Services, outsourcing provider Serco, and Shared Services Connected, a JV between Sopra Steria and the Cabinet Office.

The procurement process began in 2018, when a prior information notice (PIN), designed to gather intelligence from suppliers before the formal competition started, priced the project at £200 million ($248 million) and said that a contract notice would be published by March 18, 2019.

Another PIN was issued in 2020, and imagined an integrated finance and HR system. "To provide some idea of the scale and complexity of the integrated ERP solution, the current systems are used by over 450 separate organisations (which includes all elements of the NHS in England, e.g. all arm’s length bodies, trusts, foundations trusts, integrated care systems, etc.) and over 1.7 million employees. The potential functionalities required are recruitment, HR, payroll, learning, talent management, finance, procurement, planning and budgeting," it said.

In April 2021, NHS England was forced to extend the contract with NHS Shared Business Services for the ISFE to accommodate delays to the procurement, at a cost of £59.2 million ($73.3 million).

"The ISFE re-procurement project is a large and complex project which will deliver a replacement for the current service," the document said. "During the planning stages for the reprocurement, it was identified that short term uncertainties regarding Group structure posed significant challenge to finalising a tender specification during 2019 with a review to implementing a replacement service by April 2021. The outbreak of the COVID-19 pandemic has meant that the project team and other key colleagues have had to focus their resource on keeping critical business processes running and work on the procurement of the new contract has inevitably been delayed."

NHS England decided to go to market for an HR and payroll system in a separate £2 billion ($2.48 billion) competition, which it launched in August this year.

NHS England officials told The Register its decision to use a pre-existing framework for the finance system deal meant there was "not the opportunity" to publish a competition notice as it was only open to framework suppliers. The official said tender documents were only made available to framework suppliers, although it told suppliers responding to the 2018 pre-market engagement of its plan to procure via a framework.

The government has moved ahead with a deal for a new technology vital to the smooth running of England's health system. The legal use of a pre-existing framework deal may have saved time and got the project back on track, but only when the supplier gets its hands dirty with the complex upgrade will taxpayers know whether the government could have done with wider market expertise. ®