Dáil debates

Wednesday, 27 September 2006

Other Questions

Departmental Expenditure.

3:00 pm

Photo of Pat RabbittePat Rabbitte (Dublin South West, Labour)
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Question 114: To ask the Minister for Health and Children her views on the current situation with a company (details supplied) in relation to its recent financial difficulties; if she will provide an update of her understanding of the difficulties faced by the company and its effect on the software roll-out here; if she will provide an update on the Health Service Executive's payment terms with the company; the systems that are provided by the company; where these systems are in place; the timeframe of any further roll-out; the cost so far and expected total cost involved; and if she will make a statement on the matter. [29550/06]

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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The Health Service Executive has confirmed the position in relation to the company in question to be as follows. The company is a major supplier of information technology systems to the health services in Ireland, the UK and several other countries. Financial difficulties at the company, combined with changes at senior management level and staff lay-offs in the UK have been widely reported during the course of this year. Although the company's latest financial results for the year ended April 2006 reported a significant net loss, it made an operating profit on revenues for the year. The net loss was primarily attributable to a substantial goodwill impairment charge associated with the goodwill valuation attributed to a company it merged with three years ago.

The company's difficulties in the UK have not impacted on services to Irish customers. The company has met its contractual obligations to the HSE and has advised that it will continue to do so. The company supports many IT systems that have been in place for years in various hospitals in Ireland.

The HSE awarded the national contract for new hospital systems to the company in 2005. The total ten-year value of the contract is €56 million plus VAT. Under this contract, phase one of the roll-out of the company's existing hospital software, which will meet HSE requirements for the short to medium term, is under way. The system has been successfully deployed in Cork and Kerry and is expected to be implemented in hospitals in the north west and north east over the next few months. A total of €11.6 million, including VAT, has been paid to date.

The national contract also entitles the HSE to deploy the new software that the company will develop over the coming years. Further engagement with the company is planned in the near future to determine the implications for the HSE of the company's revised software development programme arising from the difficulties the company has experienced in the UK.

The HSE is confident that the contract protects its position appropriately against poor performance and non-delivery of software and services. The contract was prepared by the HSE's legal advisers and explicit provision was made to protect the HSE against a series of eventualities. Payments to the company under the contract are dependent upon the receipt of identified deliverables. The contract also provides for financial remedies in the form of payments to the HSE to deal with possible problems with quality, performance and-or availability of software or with the quality, responsiveness and availability of support services.

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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Is the Minister for Health and Children not concerned that the UK company we are discussing has declared a net loss of €500 million? Is she suggesting that not only has this company been paid for services, she intends to complete the contract with a €59 million payment without expressing concerns about the current situation? The company's chief executive officer has resigned and there has been a late declaration of an enormous loss. There are major concerns in Britain's National Health Service regarding the possibility of this company delivering services.

I acknowledge the change of status of the Minister for Health and Children and acknowledge also that she is one of the very few women Members of the House and is unique in having led a political party and having been Tánaiste.

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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I thank Deputy McManus for her kind comments. One would be concerned when we have contractual arrangements with any company that gets into difficulties, but the banks, in the case of this company, have reconfirmed the borrowings and that is encouraging. The HSE believes that its legal position is protected. As the company has a major contract with the NHS, we therefore believe that if it were not in a position to continue, its products would be taken over by a competitor and the services would continue to be supplied. The HSE remains confident that the company can continue its contractual obligations.