Open-source software vendor Novell has started work with the U.K. National Health Service (NHS) on a £21.8 million ($38.6 million), three-year contract to improve its IT systems, a spokeswoman for the health agency said Friday.

The agreement is with Connecting for Health, a program under the Department of Health started in April to modernize the health service's IT systems. Connecting for Health has 12 other system-upgrade contracts, according to the NHS.

The NHS estimated earlier this month that the contract with Novell will save the organization up to £75 million over three years. The contract is an extension of one Novell previously had with the NHS, a Novell spokeswoman confirmed.

As part of the agreement, some NHS IT departments will evaluate and use Novell's SuSE Linux Enterprise Server for running clinical and nonclinical applications. Novell will also support desktop products already in use.

The NHS will also use Novell Identity Manager for security and access control. The company's Open Enterprise Server will be used in parts of the NHS as NetWare operating systems are switched to Linux.

Connecting for Health is aiming to ensure the NHS gets the "best possible deal" for IT systems, said Richard Granger, director general of NHS IT, in a prior press release. Connecting for Health has "punched the bottom out" of pricing arrangements "suffered by the NHS," he said.

The NHS has been under close scrutiny in how it is progressing with its 10-year IT project, viewed as the biggest in Western Europe, as cost estimates have ballooned. Major projects include an online appointment booking system and centralizing patient records on a standard IT system.

The IDG News Service is a Network World affiliate.