BT under-bid on the NHS National Programme for IT (NPfIT) in order to win a contract, and as one of only two suppliers on the programme has the NHS “over a barrel”, according to a damning analysis by Ovum of government procurement.

ComputerworldUK.com , the sister title to CIO UK was first to report this week that BT had been awarded more than a 50 per cent jump in its patient records contract, an extra £546 million, taking its deal to £1.57 billion.

Work on the programme by BT is covered only by a non-binding Memorandum of Understanding, rather a full contract. It is one of two suppliers on the £12.7 billion programme, serving London and some southern trusts, while CSC serves the north and east of England.

Tola Sergeant, senior analyst at Ovum, said BT has the NHS “over a barrel”.

“As one of just two remaining LSPs, BT’s very public threat to walk away from the contract carried real weight,” she said. If BT had quit the programme, after booking £1.6 billion writedowns – reportedly attributable to the NHS work and a Reuters contract – the project “would have faced a very bleak future”.

She said BT had under-priced its original contract bid, adding that “at the time a rival IBM bid for the London contract was rumoured to have been £1.4 billion”, over £400 million higher.

The NHS and BT refused to comment on any matters relating to the negotiations and the final price.

The extra £546 million in the BT contract, only paid on delivery, is attributed by ministers to BT implementing a patient system in only four more large trusts, dubbed a “hefty price tag” by Sergeant. BT will also run the system in eight live trusts, and 25 small community and mental health sites.

Richard Holway, chairman at TechMarketView, said BT needed the rise in contract value in order to combat the money it was losing on the programme. “This was all required so that BT could finalise its accounts for the year and put in realistic contingency for its NHS contract exposure”, he said.

BT has used the extra sites in the south of England, he explained, “as a powerful bargaining tool to get better terms for its contract”.

But Holway said no-one had got a good deal from the NHS IT contracts. “It seems that in the NHS IT programme, all parties are losers.”

Meanwhile, a senior figure at doctor’s body the British Medical Association, today called for the programme to be scrapped, according to E-health Insider.

Dr Jonathan Fielden, chair of the BMA Consultants Committee, said government ministers and the “management consultants” they hired had damaged the NHS. “When MPs regain probity, regain trust, then perhaps they can join our crusade to further improve healthcare; until then don’t stand in our way,” he said.