The multi-billion-pound programme to upgrade NHS computers is likely to suffer further delays and turmoil as BT haggles over providing electronic records for millions of patients, The Times has learnt.

A report by MPs today will confirm that the risks to the £12.4 billion National Programme for IT (NPfIT) are as “serious as ever”. Parts of the project are running at least four years behind schedule following the departure of two major contractors, the Commons Public Accounts Committee says.

But the telecoms group is understood to be renegotiating a contract worth £1 billion to provide medical records systems for all NHS hospitals in London, while seeking to expand further expand its role into the south of England.

The deal would see it take responsibility for eight more hospital trusts, filling a void left by Fujitsu, the Japanese IT copmpany, which left the much-delayed project after incurring large losses last year.

The programme - reputed to be the largest civilian computer project in the world - aims to create a single electronic records system for 50 million patients in England by 2010, as well as connecting hospitals to GP surgeries across the country.

Hospitals may now purchase rival systems in the absence of receiving an upgrade from the authorised suppliers.

BT holds three major deals in the scheme, worth a combined £2.4 billion, according to the National Audit Office, and is one of only two contractors left from an original four. But in four years it has earned only £191 million of the estimated £1.08 billion value of the 10-year IT contract for London, according to the NAO.

Accenture walked away from the project after failing to make a profit in 2006, and Fujitsu was effectively sacked in May last year when renegotiations of its own deal fell apart.

Meanwhile, not a single hospital trust had successfully installed “Lorenzo” records software supplied by CSC, the American consortium, by the end of last year.

BT said it may have to accept losses of “hundreds of millions of pounds” against contracts believed to include the troubled NHS deal. Only last week, BT’s Global Services Division where the NHS contract lies, was forced to reduce it's profit forecast by £350 million, prompting analysts to question the long-term future of the project.

Despite this, the company appears to be the only serious contender to take over the patients’ records schemes left by Fujitsu. The company is said to be using the extra work as leverage to renegotiate the terms of its original contract.

One analyst, who asked not to be named, said: “This is interesting timing given the £350 million write-down on BT’s other IT contracts and the fact they are rumoured to be renegotiating their contract with the NHS. Taking some of Fujitsu’s contract could act as leverage and help them renegotiate their own deal. Who are Connect for Health going to go to? Virtually all the others players have left. It may take longer but they can rely on BT to hang around.”

A BT spokesman confirmed it was “currently in discussions” with NHS bodies in the South of England, but said it was “too early to comment any further at this stage.

Edward Leigh MP, Chairman of the Public Accounts Committee, said it was doubtful that patient records system would be functional by a revised date of 2014-15. "The Department of Health must determine what this means for the strength of its negotiating position and whether the remaining two suppliers can continue to meet their substantial commitments,” he added.

Stephen O’Brien, the Conservative health spokesman, accused the Government of incompetence and criticised the lack of transparency and due process over the contract negotations.

But the Department of Health replied that it was welcomed the PAC’s report. "We can confirm that we are in an advanced stage of discussion with BT in relation to taking over the eight live trusts in the South which are currently using the [patient record software].

“We have absolutely adhered to the intention, outlined during the original procurement process and documentation, and within the contracts themselves, to transfer business between suppliers in the event of a supplier leaving the programme.”

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