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NPFIT TENDERING PROCESS Page 1 of 12 Guiding Principles The

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					                        NPFIT TENDERING PROCESS


Guiding Principles
The Local Service Provider (LSP) procurement was conducted under The
Public Services Contracts Regulations 1993 and Council Directive 92/50/EC as
amended in each case. The Authority* followed the competitive form of the
negotiated procedure which is provided for under that legislation.

As outlined in the OJEC Notice, the Authority conducted the procurement
process on behalf of itself and other participating bodies in the healthcare
sector, including, inter alia: (a) all health authorities, National Health Service
Trusts and Primary Care Trusts, social care organizations and any other
person(s) or body established or financed under the National Health Service Act
1977 as amended; and (b) the Northern Ireland Department of Health and
Social Services, and any other health and social services body in Northern
Ireland. However, at this stage, the Authority conducted the procurement
process on behalf of itself and such other participating bodies in England only.

This procurement adhered to the principles of procurement as identified in
"Delivering 21st Century IT Support for the NHS".

A set of Key Commercial Principles (see Appendix to Annex 1) were developed
by the Authority to form the basis for the LSP Contract.

The procurement of LSPs was subject to the formal approval process of the
Department, HM Treasury and others.

OJEC
The tendering competition for the procurement of the LSPs was commenced by
publication on 7 February 2003 of the OJEC Notice, together with
Supplementary Notices on 12 February 2003 and 19 February 2003.

Candidates were invited to express an interest in appointment as a LSP.
Candidates also had the opportunity to express an interest in their appointment
as a NASP and were entitled to express an interest in either one or both
appointments.

Following evaluation of 99 Expressions of Interest for both NASP and LSP
opportunities, the Authority selected twenty-two candidates (Longlist) to be
invited to submit Outline Proposals for their appointment as LSPs.

Preliminary Invitation To Negotiate (PITN)
An Output Based Specification (OBS 1), divided into four sections, was issued
to all LSP Longlisted Bidders on 16 May 2003, and represented an overall
statement of the Authority’s requirements.

Following this release, the PITN relating exclusively to the appointment of the
LSPs was circulated to Longlisted Bidders on 1st June 2003, and invited LSP
Longlisted Bidders to submit their Outline Proposal for the appointment as LSP
by 30th June 2003.



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                        NPFIT TENDERING PROCESS

The Authority arranged clarification meetings with LSP Longlisted Bidders prior
to Bidder submittal of their Outline Proposal.

Following evaluation of Bidders responses against pre-determined evaluation
criteria the Authority elected to shortlist a minimum of three LSP Bidders for
each LSP Cluster. As a result of this process, the Authority Shortlisted 9
organisations to compete for the 5 available LSP contracts.

Final Invitation To Negotiate (FITN)
The Final ITN was issued on 1st August 2003 and included the following
components:
   • A detailed indication of the Authority's requirements for the Final
      Negotiation Stage;
   • OBS 2, with each LSP Cluster having different content. LSP Shortlisted
      Bidders only received that part of OBS 2 which related to the LSP Cluster
      for which they had been Shortlisted. OBS 2 also included additional
      information in certain modules to provide detailed requirements where
      this has not been previously stated.

After the issue of the Final ITN, the Authority negotiated a comprehensive LSP
Contract with each of the LSP Shortlisted Bidders. These negotiations were
intensive and detailed in nature, and each LSP Shortlisted Bidders was offered
equal contact time with the Authority.

Throughout the negotiation process the Authority reserved the right to reduce
the number of LSP Shortlisted Bidders at any time up to the issue of invitations
to BAFO.

Invitation For Best And Final Offer (BAFO or IBAFO)
The BAFO invitation was distributed to Shortlisted Bidders for Wave 1 Clusters
(London & North East) on 6th November 2003, and to Shortlisted Bidders for
Wave 2 (Southern, Eastern and North West) Clusters on 21st November 2003.

Bidders were required to submit –
   • Mandatory Reference Bid
   • Mandatory Variant Bid
   • Optional Variant Bid

The BAFO evaluation process comprised two phases:

    1. Evaluation of Responses to BAFO ("IBAFO Phase"); and
    2. Confirmation and clarification with Shortlisted Bidders ("Confirmation and
        Clarification Phase"), together the "Evaluation Process".
Upon receipt, the Responses were formally evaluated on the basis of the
criteria declared in the original PITN and in accordance with the Evaluation
Methodology developed by the Authority. The Evaluation Methodology was
consistent with the evaluation process used across NPfIT.




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                         NPFIT TENDERING PROCESS

On completion of the IBAFO Phase, the Shortlisted Bidders were invited to
participate in the Confirmation and Clarification Phase to clarify issues that were
not clear in the Response or in other information submitted to the Authority.

The Confirmation and Clarification Phase consisted of a series of meetings with
the Shortlisted Bidders at which their respective Responses were considered by
the Authority.

The Authority reserved the right to exclude any one or more Shortlisted Bidders
at any time after 1 December 2003 should:
    • Such Bidder(s) fail in a material respect to meet one or more of the
       evaluation criteria; or
    • Any such Bidder's Response compare unfavourably with the economic
       value offered by other Shortlisted Bidders.

Call Option Deed
The purpose of the Call Option Deed was to protect the Authority's position
between agreeing the form of the LSP Contract and completion of the
evaluation and negotiation process. The Call Option Deed provided the
Authority with the option (but no obligation) to call for a LSP Shortlisted Bidder
to enter into the LSP Contract in the agreed form.

The Call Option allowed the parties to negotiate in good faith so as to agree all
unresolved issues and to agree all such amendments to the Project Agreement
as a result of the negotiation.

Summary
Contract awards resulting from the processes used in the LSP procurement
were made on the basis of which Shortlisted Bidder offered the most
economically advantageous terms to the Authority.

* the Authority’ is a term defined in NPfIT contracts, and throughout the above
effectively means the Department of Health represented by the National
Programme for IT.




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                          NPFIT TENDERING PROCESS

                                    Appendix 1

                            Key Commercial Principles

                                     30 May 2003
 Any defined (capitalised) terms are taken from the LSP Contract.

Key Commercial                    Authority Requirement                      Contractor
Principle                                                                     Bidder
                                                                             Response

1.   Authority,       The LSP Contract will be awarded on behalf of
     Contracting      the Department and NHS bodies.
     Party and
     NHS Trusts

2.   Parent           The parent company of the Contractor will
     Company          provide a full performance guarantee (including
     Guarantee        financial obligations) for the Contractor's
                      obligations under the LSP Contract.

3.   Service          The Contractor will perform the services in
     Obligations      accordance with the Customer Requirements
                      and the Contractor's Technical Solution. The
                      Customer Requirements will take precedence
                      in the event of conflict or inconsistency.

                      The Authority will not provide a warranted
                      environment. The Contractor will be expected
                      to undertake due diligence prior to contract
                      signature.

4. Implementation     The Contractor shall implement the new ICRS
     of ICRS          solution in accordance with the milestones in
     Solution         the Implementation Plan.           During the
                      Implementation Phase, the Contractor shall
                      continue participation in the National
                      Programme for IT's testing environment as
                      specified in the Implementation Plan.

                      Failure to meet acceptance criteria by the
                      interim or final milestones will result in liability
                      to pay Liquidated Damages for the delay and
                      non-payment of Service Payments until the
                      relevant milestones are met. Failure to meet
                      milestones will also be a material breach.

5.   Service Levels   The Contractor shall meet the Service Levels
     and Service      for the Services, including, in the case of the
     Deductions       LSP Contracts, inherited service levels where
                      the Contractor is taking over existing services.


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                         NPFIT TENDERING PROCESS



Key Commercial                  Authority Requirement                    Contractor
Principle                                                                 Bidder
                                                                         Response

                     During the term of the LSP Contract, there will
                     be     specified      continuous     improvement
                     obligations in relation to the Service Levels.

                     Service Deductions will apply in relation to a
                     failure to provide the Services in accordance
                     with Service Levels. Service Deductions will
                     be payable at a higher rate for Critical Service
                     Levels or a persistent failure to meet Service
                     Levels.
                     Service Deductions are separate from and
                     shall not erode the limitations of liability.

                     Service Deductions may be re-allocated by the
                     Authority once in every Contract Year in
                     accordance with its strategic requirements.

6. Subcontractors    The Contractor may not appoint, amend or
                     terminate any material subcontract without the
                     prior written consent of the Authority.
                     Material subcontractors may be required to
                     enter into collateral contracts directly with the
                     Authority.

7.   Novation of     The Authority may at some stage novate
     legacy          certain legacy contracts.      Where legacy
     contracts and   contracts are not novated, the Contractor shall
     Managed         provide management services on behalf of the
     Services        Authority in relation to the legacy contracts.
                     This will include monitoring and reporting on
                     the managed contractor performance and
                     using all reasonable endeavours to ensure the
                     managed contractor performs its obligations.

8. Change            The Contractor shall have available designated
Control              resources to undertake changes.

                     Certain categories of change may be called off
                     from a pre-agreed catalogue. Other changes
                     will be discussed by the parties through the
                     change control procedure and the charges for
                     these changes will be calculated in accordance
                     with an agreed pricing model. Where the
                     Authority proposes a change through the
                     change control procedure, the Contractor will
                     undertake the change if it is technically
                     capable of doing so.

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                            NPFIT TENDERING PROCESS



Key Commercial                   Authority Requirement                      Contractor
Principle                                                                    Bidder
                                                                            Response

9.   Regulatory       The parties shall comply with all regulatory
     Compliance       requirements.      The Contractor shall be
     and              responsible for the costs of general changes in
     Regulatory       law including NHS changes in law.
     Change.

10. Technology        The Contractor shall undertake a programme
    Refresh and       of technology refresh and continuous
    Continuous        improvement. The Contractor shall ensure that
    Improvement       at all times it is using supported versions of
                      software and hardware to enable the Authority
                      to continue to receive services post
                      termination.

11. Non               The Contractor is not the exclusive supplier of
Exclusivity           services to the Authority.

                      The Contractor and other IT suppliers will not
                      enter into exclusive or restrictive arrangements
                      which prevent IT suppliers providing software
                      and/or hardware to any other supplier of
                      services to government bodies providing health
                      or social care.

12. Interoperability The Contractor will comply with the
                     Interoperability  Requirements       for  ICRS
                     Contractors, NASPs and NISPs, including the
                     requirement for applications to exchange data.
                     This will include obligations to integrate local
                     services and systems with NASP services such
                     as ebookings and NISP services such as N3.

                      ICRS Contractors, NISPs and NASPs will
                      participate in a Technology Forum to ensure
                      effective service delivery and the development
                      and implementation of innovation for the
                      National Programme for IT.          All disputes
                      between ICRS Contractors, NISPs and NASPs
                      regarding the delivery of service to the National
                      Programme for IT will be subject to the
                      authority of the National Programme for IT and
                      the dispute resolution procedure.

13. Authority         The Authority's obligations and Contractor
    Responsibilitie   dependencies will be clearly set out in the LSP
    s and             Contracts.
    Excusing
                      The    Contractor   will   be   relieved   of   its

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                        NPFIT TENDERING PROCESS



Key Commercial                  Authority Requirement                    Contractor
Principle                                                                 Bidder
                                                                         Response

    Causes          obligations to provide the Services in so far as
                    it is unable to do so as a direct result of the
                    Authority's failure to perform its obligations
                    which cannot be mitigated by the Contractor.
                    This shall be the Contractor's sole remedy for
                    the Authority's failure to perform its obligations
                    other than non payment of fees.

14. General         The Authority will require cost transparency
    Pricing         and menu pricing. More details on the pricing
    Principles      requirements will be set out in the separate
                    pricing paper.

15. Key Personnel   The contract will identify the Contractor's Key
                    Personnel. Any replacement Key Personnel
                    must be appointed in agreement with the
                    Authority.  The Authority may require the
                    removal of Key Personnel.

16. Intellectual    The Contractor shall grant the Authority an
    Property        assignment or a non-exclusive perpetual,
                    irrevocable and royalty-free licence to use
                    Specially Written Software for any purpose and
                    to use all other Contractor IPR and Software
                    for the purposes of the LSP Contract. The
                    Contractor shall also procure a perpetual sub-
                    licence or direct licence for the Authority to use
                    Third Party Software that the Contractor uses
                    in the provision of the Services (including the
                    right to obtain maintenance and support from
                    subcontractors post termination and the right to
                    use for a replacement Contractor).

                    Where appropriate, the IPR licences for the
                    Authority set out above may include certain
                    rights for all government bodies, including
                    those providing health or social care.

                    In the case of certain Specially Written
                    Software, the Contractor shall also provide the
                    Authority with access to and the right to amend
                    source code upon termination or expiry of the
                    contract.    All source code for Specifically
                    Written Software will be held in escrow.

                    Where the Contractor exploits Specifically
                    Written Software with third parties, this shall
                    result in a reduction in Service Payments

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                       NPFIT TENDERING PROCESS



Key Commercial                Authority Requirement                    Contractor
Principle                                                               Bidder
                                                                       Response

                   payable by the Authority to reflect the benefit
                   realised by the Contractor or other benefit
                   sharing mechanism.

                   The Contractor shall not acquire any
                   Intellectual Property Rights in Data relating to
                   the NHS or patients.

17. Contract       The parties will establish a Liaison Committee
    Governance     for joint review of performance issues, strategic
                   developments and dispute resolution.

                   Bidders are encouraged to propose additional
                   governance structures and processes to
                   facilitate effective communication and value
                   generation for both parties and to manage any
                   project issues as they arise.

18. Benchmarking   Benchmarking     shall    apply    to   service
                   performance, service levels and Service
                   Payments, and shall apply to individual service
                   elements and not just the Service as a whole.

                   The Contractor shall implement any reduction
                   in Service Payments specified in the
                   Benchmarking Report immediately, and shall
                   implement any required improvements in
                   service performance and service levels within a
                   specified period.

                   Benchmarking may include the use of data
                   from one or all of the other four LSP Contracts
                   and, subject to the appropriate maintenance of
                   commercial confidentiality, may be used to
                   determine whether the Service Payments to
                   the Contractor and service performance
                   constitute value for money.

19. Management     The Contractor shall monitor and audit its own
    Information    performance of the Services and shall provide
    and Audit      the Authority's Representatives and designated
                   bodies with access to all reports from such
                   internal audits and monitoring.

                   The Contractor shall also provide the
                   Authority's Representatives and designated
                   bodies with specified management information
                   and an annual Certificate of Costs at the end of

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                          NPFIT TENDERING PROCESS



Key Commercial                     Authority Requirement                Contractor
Principle                                                                Bidder
                                                                        Response

                      each year.

                      The     Authority's  Representatives      and
                      designated bodies shall have rights of access
                      to the Contractor's premises to monitor
                      performance of the Services and to verify the
                      Service Payments.

                      The     Contractor   shall ensure   that
                      subcontractors grant the same audit and
                      monitoring rights.

20. Confidentiality   The Contractor will not have any access to
    & Security        patient specific information.

                      The Contractor shall comply with the
                      Authority's    Confidentiality  and   Security
                      Requirements and shall notify the Authority of
                      any breach or potential breach of the
                      Confidentiality and Security Requirements.

21. Business          The Contractor shall comply with the provisions
    Continuity        of the Disaster Recovery Plan and shall ensure
                      that the Disaster Recovery Plan is capable of
                      implementation at all times. The Contractor
                      shall make regular risk assessments in relation
                      to the Services.

22. Remedies for      The Authority's remedies for breach by the
    breach            Contractor may include:

                      Re-performance by the Contractor of its
                          obligations;

                      the service by the Authority of a Warning
                           Notice     providing   for    increased
                           monitoring, including monitoring of
                           subcontractors where appropriate;

                      a survey by the Authority of the Contractor's
                           asset maintenance;

                      withholding of Service Payments;

                           payment of Liquidated Damages for
                           failure to achieve milestones, or Service
                           Deductions, as appropriate;

                      exercise of step in rights;

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                             NPFIT TENDERING PROCESS



Key Commercial                    Authority Requirement                     Contractor
Principle                                                                    Bidder
                                                                            Response

                     partial termination or full termination;

                     (viii) requiring the Contractor to work with
                            another    Supplier/Contractor in   a
                            designated capacity; and

                     (ix) general damages.

23. Step in Rights   The Authority may step in, or appoint a third
                     party to do so, in certain circumstances,
                     including where:

                     (i)      a Contractor act or omission (i) creates
                              an immediate and serious health or
                              safety risk, (ii) creates a material
                              interruption or delay in the provision of
                              the Services or any other service to the
                              Authority or (iii) is prejudicial to the
                              Authority's ability to provide Clinical
                              Services to a material degree;

                     (ii)     a fixed level of Service Deductions or
                              Liquidated Damages is accrued in a
                              specified period;

                     (iii)    the Authority needs to step in to
                              discharge a statutory duty or satisfy the
                              requirements of a Regulator;

                     (iv)     the     Authority    considers     the
                              circumstances to be an emergency; or

                     (v)      a benchmarking exercise reveals
                              unsatisfactory     performance   in
                              comparison to other Contractors.

24. Termination      The Authority may terminate the LSP Contract
    Rights           for Contractor Events of Default including:

                     (i)      insolvency;

                     (ii)     failure to meet the Commencement
                              Date or the key milestones in the
                              Implementation Plan

                     (iii)    material breach of the LSP Contract,
                              failure to perform Critical Service Levels,
                              or the award of a specified amount of


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                            NPFIT TENDERING PROCESS



Key Commercial                   Authority Requirement                  Contractor
Principle                                                                Bidder
                                                                        Response

                             Service Deductions in any contract year;

                     (iv)    change of control of the Contractor,
                             guarantor or a material subcontractor to
                             a Restricted Person or where, in the
                             Authority's reasonable opinion, the
                             change of control results in a material
                             reduction in the performance of the
                             Service Levels; and

                     (v)     material breach by the Contractor of any
                             other contract with the DoH or NHS.

                     The Authority shall have the right to require
                     termination of a subcontract on the occurrence
                     of any of the above Events of Default by a
                     subcontractor.

                     The Authority may also terminate for
                     convenience or on the occurrence of Force
                     Majeure Event.

                     Where the Authority can terminate the
                     Agreement, it may also exercise a right to
                     partial termination of service elements.

                     (i)     The Contractor may only terminate the
                             contract for non-payment of undisputed
                             Service Payments which has been
                             notified to a designated person.

25. Consequences     Following notice of termination, the Contractor
    of Termination   may be required to continue to perform the
                     Services for the Termination Period. The
                     Contractor shall also provide termination
                     assistance during the Termination Period and
                     shall transfer assets to the Authority to ensure
                     a smooth transition of the Services back to the
                     Authority or a replacement Contractor. The
                     detailed     requirements     for    termination
                     assistance will be set out in the Exit Plan,
                     which shall be capable of implementation at all
                     times.

                     The costs of providing termination assistance
                     shall be calculated in accordance with the
                     pricing model.



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                     NPFIT TENDERING PROCESS



Key Commercial               Authority Requirement                      Contractor
Principle                                                                Bidder
                                                                        Response

26. Liability    The parties shall agree a general cap of liability
                 for the LSP Contract. In addition, separate
                 caps may apply to specific categories of loss.

                 Service Deductions and Liquidated Damages
                 paid or payable under the LSP Contract shall
                 not reduce the Contractor's limitation of liability.

                 Neither     party   shall    be    liable  for
                 indirect/consequential loss although certain
                 categories of foreseeable loss relating
                 specifically to the provision of the Services
                 shall be recoverable.




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