Cabinet Office officials have blasted attempts by the Department of Health to sign an “unattractive” multibillion pound renewal deal with troubled NHS IT provider CSC.

A leaked memo, seen by Computerworld UK government IT expert Tony Collins, shows CSC is attempting to secure a renewal to its £3.1 billion contract, by offering a “further” £264 million cut to the price, possibly in addition to £400 million already set to be cut.

In spite of the relatively small proportion cut in cost, CSC would potentially slash two-thirds of the work it would have to do by delivering to only 80 out of the 220 trusts originally contracted for, and would take a year longer to do so.

NHS: Cancelling CSC's £3.1bn health IT contract could cost more than continuation

The change “roughly doubles the cost of each deployment”, said the memo.  “Ultimately, we are not convinced the [Department of] Health commercial team are approaching this in the right way.”

The news marks the latest sign of heightened tensions between the prime minister’s lead office and the Department of Health over contract signing for the failed £11.4 billion National Programme for IT. The prime minister has already said he is “very concerned” about the project, and has warned he may choose to block any CSC contract signing following committee reviews. However, the Department of Health has said cancellation costs and potential lawsuits could make it more expensive to cancel than to continue.

BT contract renegotiations were also heavily criticised at a Public Accounts Committee hearing on Monday, after that supplier secured a seven percent reduction in its £1 billion London contract in return for delivering systems to only half as many trusts. MPs have also stated it was charging £8 million to small hospitals in the South for “disaster recovery”, allegedly seven times above other market prices.

At the hearing, CSC UK healthcare president Sheri Thureen was also asked to explain whether patient records would be successfully rolled out to the North, Midlands and East of England, where it has contracts. She said only that she believed the “foundations” were in place.

“So we’re paying for foundations? This £11 billion programme is for foundations, a sort of first step to get us off the mark is it?” replied a visibly angry Richard Bacon, an MP on the committee.

“I believe it’s buying us some core components, you are correct,” said Thureen. “We are seeing some significant progress though.”

Asked repeatedly whether she believed CSC would deliver an electronic record for all patients, at all times, in all settings, by 2016 as contracted, Thureen said: “I believe we have made significant progress... I believe we will have the foundation to provide for much of that through a connected approach.”

Bacon accused CSC of being a “monopolist” in the NHS. He said: “What really worries me is you’ve got your foot in the door, you’re in three fifths of the NHS.”

He added: “In seven years you’ve deployed it in three hospitals, and it’s caused chaos... Why should we have any confidence? ... You’re getting yourself into a position where it would be difficult to get rid of you.”

Shureen did not reply directly to the assertion, but gave an update on delivery so far.

The Tony Collins Blog: Leaked memo reveals CSC's plans for new NHS IT deal