Under the terms of the contracts let by NHS Connecting for Health, the agency which is delivering the national health service national programme for information technology, a significant proportion of the completion risks have been transferred to the supplier. Payment to the supplier depends on system deployment, which incentivises deployment. NHS Connecting for Health has retained extensive rights under its contracts to defer payments, receive compensation for missed milestones and, if necessary, to terminate contracts, for failure to achieve the required performance levels.
In the early days of the new national network (N3) contract some early milestones were missed and clawback of £4.5 million was agreed with BT. N3 performance has since recovered and is now ahead of schedule.
Relevant contractual levers have also been applied on a number of other occasions where local service providers have failed to meet specified performance or deployment activity.
While not classed as penalty charges, these sanctions have been in the form of the withholding of payments.