UK National Health Service (NHS) lead contractor CSC and troubled software supplier iSoft have hammered out new contractual arrangements for the delivery of the Lorenzo care records system at the heart of the NHS's £12.4bn National Programme for IT (NPfIT).

The two firms had been at loggerheads after CSC blocked the £140m sale of iSoft to Australian software firm IBA, with iSoft taking legal action against the IT services firm. (See also: CSC's 'extraordinary' influence on iSoft deal.)

CSC, which is lead contractor in three out of five NPfIT regions, had withheld its consent to the sale because it felt this would not support delivery of iSoft's Lorenzo system, which is already running more than two years late.

But the deal hammered out between the two parties will give CSC more control over the system's development - and includes consent for the software firm's sale to go ahead. A takeover by IBA is now set to be agreed by iSoft shareholders on July 6.

CSC had the power to veto the sale and significant step in rights following an agreement between the two companies made last year after crisis-hit iSoft reported a string of losses and was hit by a Financial Services Authority investigation into accounting irregularities. The IT services firm had also deployed 100 of its own staff inside iSoft.

In the new deal, CSC and iSoft have agreed to integrate their teams involved in the development of Lorenzo, under CSC's leadership. CSC will also take responsibility for the code streams of iSoft's i.Patient Manager and i.Integration Engine - two other products being supplied to NPfIT.

Staff employment and intellectual property rights to Lorenzo will remain with iSoft.

John Weston, iSoft's chair and acting chief executive, acknowledged that the firm's relationship with CSC had "clearly been tested in recent weeks”.

But the new management structure would "streamline the processes to ensure the delivery to the NHS of a quality product on time," he said. "It aligns both management teams with the highest priority of delivering the NPfIT."

Guy Hains, president of CSC's European group said: "We are excited about Lorenzo and believe that the new agreement will successfully support the final stage of its development and delivery starting next year."

Last week, NHS Connecting for Health, which runs NPfIT, explicitly denied any involvement in bringing the supplier companies together. But Hains said: "We are delighted to have successfully concluded these discussions and acknowledge the significant contribution made by Connecting for Health in bringing all parties together to determine a satisfactory outcome."

Richard Granger, director general of CfH, promised MPs last week that the roll-out of Lorenzo would begin next year. A day later, he announced he would quit as the NHS's IT chief at the end of this year, before his pledge is put to the test.