Telecare Soapbox: NHS procurement - bad news and good news for suppliers

By Steve Hards, Editor, Telecare Aware.

Back in November, Telecare Aware dug around a little in the procurement practices of (mostly) local councils in the UK. (Dirty tactics in the telecare/telehealth market) The bad news for companies wanting to sell into the NHS is that there is emerging evidence that NHS organisations are not highly competent in commissioning innovative services and may also frequently flout good procurement practices. The good news is that this is increasingly being challenged and there may be new opportunities not just to challenge tenders, but for the NHS itself to seek redress from companies that misrepresent their capabilities and what they will provide.

First, the headline: NHS not following procurement rules

Indicating that all is not well in NHS procurement, the body of this Health Service Journal article is available to subscribers only, but the summary flags up the issue.

Second, the context of NHS commissioning

I'm avoiding a rant here about the fatuously-named 'World Class Commissioning' initiative started in  2007, but here are some articles that provide the financial and procurement context.

For contrast with what comes next, and to indicate the range of opportunities that the NHS has for contracting with non-NHS service providers, here is an article from May 2007 when the world looked a lot more rosy. Outside Investors Eye Up the NHS

The next item indicates the gloomy outlook for NHS finances in coming years. It's specifically about capital spending, but with inflation in the NHS continuing to outstrip the remnants of the generous funding it has received in the past few years, and with public finance belt tightening on the way everyone expects - and are already seeing in many places - a very tight financial regime in the NHS for the foreseeable future regardless of the Government's positive pronouncements. (There is a general election due in the next few months.) NHS infrastructure spend to fall by 21%

The following item gives insight into the world of procurement in primary care trusts (PCTs). PCTs hold the local NHS purse strings and commission and/or provide community-based services, such as where telehealth services might be focused. It was published in the British Medical Journal in early 2009, so was probably written in the still relatively positive days of 2008. It mostly talks about the procurement of clinical services, but read the revealing paragraphs about commissioners' experience. Opening up the primary medical care market

Third, procurement rules

It is not possible to describe here the whole complex regime of procurement rules that are enshrined in UK and EU law. They are, of course, designed to protect all interested parties from corruption, fraud and unfair practices. Two important facts that non-EU readers may need to know is that tenders for services over quite low thresholds have to be advertised across the whole EU and that there are some - a few - legal exceptions by which it can be justified to not go through normal procurement routes. Some of these concern innovative services where construction of a clear commissioning brief is difficult at the outset.

The document in the following link throws some light on the prescribed alternative procedures used to handle the exceptional circumstances. It was written in connection with something called the LIFT programme, but it is not necessary to know about that, the lesson from the document is clear. The exceptions should be used very exceptionally!  Procurement issues... (PDF)

Finally, for this item, a note that the Secretary of State for Health recently advised NHS organisations to break procurement rules by regarding NHS provider organisations as 'preferred providers'. Burnham faces private healthcare sector challenge over NHS 'bias' (Guardian article)

Finally, the good news

The good news is that, as these issues are becoming more widely known, NHS commissioners are more likely to pay attention to the probity of their procurement processes. More than that, it has become increasingly open to unsuccessful biders to challenge procurement decisions they believe were arrived at unfairly.

In January 2010 the NHS Confederation published a briefing The new EU Remedies Directive: prudent procurement is of the essence (PDF). The summary says: "Revised EU rules will improve access suppliers have to a review when it is alleged that public authorities have breached procurement rules. The aim of this Briefing is to raise awareness amongst NHS managers involved in procurement of the key changes to the rules and to highlight new provisions in the law which public authorities can use to protect themselves from the risk of challenge."

Not only that but, in a new UK legal case, a large company successfully sued another to overturn a contract and seek damages on the grounds that the contracted company fraudulently misrepresented itself in the procurement process in order to win the contract. From CIO.com: IT Outsourcing: Landmark ruling against HP's EDS gives customers new power.

How long will it be, I wonder, before organisations such as the NHS start taking this route if they perceive that they have been mislead by suppliers?