Virginia-based tech giant
Computer Sciences Corporation
) finally saw the end to its long-drawn dispute with the U.K.
government's National Health Service (NHS), which agreed to renew
the existing contract for a period of four years. Computer Sciences
will therefore continue to provide technological support to
healthcare organizations under the NHS trust.
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The NHS is a government-funded healthcare system to serve citizens
of England and other parts of the U.K. Contracts to support the NHS
with technological products and solutions are delegated by the U.K.
Department of Health (DoH). In 2002, the DoH initiated a program
(NHS National Programme for IT) to enhance the scope of NHS.
Computer Sciences was selected as one of the prime contractors to
support the program.
But in September last year the government decided to scrap the
whole program as the contractors were found incapable of delivering
the necessary IT services required for the NHS program. Computer
Sciences was also held responsible due to its inability to meet the
Though the contract was not terminated at the time, the U.K. DoH
reduced the scope and value of the contract for Computer Sciences.
The revised terms required CSC to install IT systems in the
Midlands, North and East of England.
The issue has been under consideration for the past few months.
Now, after securing approval from related government officials, it
has been finalized that Computer Sciences will deploy and implement
an electronic patient record system within the NHS, through its
Lorenzo Regional Care software products. Computer Sciences will
also be allowed to serve the NHS across England, instead of the
previously determined areas of the Midlands, North and East of
The uncertainty regarding the NHS issue was actually weighing on
Computer Sciences' shares, which have been on a decline over the
past few months. But now we believe that the contract revival will
act as a catalyst, driving up share prices.
Despite strong European exposure, strained federal budgets and
stiff competition from
), Computer Sciences retains a Zacks #2 Rank, implying a short-term
Buy rating, mainly on the resolved NHS issue.