HSJ’s expert briefing on NHS finances, savings and efforts to get the health service back in the black. This week by correspondent Nick Carding.

Buying services

What links Ipswich and East Suffolk, Barnsley, and Sheffield clinical commissioning groups?

Football fans may suggest all three organisations cover areas whose teams were either promoted or relegated this season, but that is not the answer this column is looking for.

Rather, they have all received at least a hattrick of challenges to procurement since their inception, as revealed by data collected by HSJ.

Service procurement by NHS commissioners has been a hotly-debated topic for as long as this column remembers.

But the debate has been turned up another notch this year after the NHS put forward proposals for legislative change shortly after the publication of the long-term plan.

These included a section on “getting better value for the NHS”. More specifically, NHS England suggested the section 75 regulations of the Health and Social Care Act 2012 should be revoked and that commissioners and providers are removed from the scope of the Public Contracts Regulations.

The NHSE argued this is necessary to avoid “protracted procurement processes and wasteful legal and administration costs”.

One criticism of the current framework is that it leaves the NHS susceptible to challenges from unsuccessful bidders who miss out on contracts. Challenges can range from questions about the bidding process all the way to legal action. Such challenges eat into NHS managers’ precious time and resource. 

But how often do such challenges occur and what are the consequences? And what sort of services have been the subject of challenges?

The number of challenges

Using the Freedom of Information Act, HSJ obtained details of procurement challenges to commissioners from around 70 per cent of CCGs between 2013-14 and 2017-18.

Of the 137 CCGs that responded to our request, 78 CCGs had never received a challenge to any of its procurements for services and three CCGs said they could not release their data. Forty CCGs had received one or more challenges, of which 30 had received just one challenge.

Procurement challenges to CCGs between 2013-14 and 2017-18
CCG    Challenges received
Ipswich and East Suffolk CCG   6
Barnsley CCG    4
Sheffield CCG    3
Bury CCG     2
Heywood, Middleton and Rochdale CCG  2
North Tyneside CCG    2
Greenwich CCG    2
Northern, Eastern and Western Devon CCG 2
Sunderland CCG    2
South Tyneside CCG    2

Another 16 CCGs had not received a challenge to any of their individual decisions, but they had been part of a group of CCGs whose procurement had been challenged.

The CCGs responding to our request received a total of 57 challenges. However, when asked if the challenge or subsequent legal action had led to the CCG making payments to the other party, only five CCGs confirmed they had done so.

These five CCGs paid out a combined total of £867,000.

Three of these CCGs were part of the group of NHS commissioners which settled with Virgin Care over a £82m contract for children’s services in Surrey.

The two other CCGs (Basildon and Brentwood CCG and West Essex CCG) said they had spent £32,700 in total on legal costs after being challenged by unsuccessful bidders.

It’s important to note a variety of factors can influence a company’s decision to challenge a procurement, and so the number of challenges made against a CCG does not in itself indicate bad procurement practices.

Complex picture

What can we learn from this data?

Based on figures from more than two-thirds of CCGs, the average number of challenges launched between 2013-14 and 2017-18 comes in at just over 11 per year.

Given that CCGs run dozens of procurements every year, that number seems relatively low, as do the amounts paid out to unsuccessful bidders on those rare occasions. It is not known how many of the challenges resulted in the procurement being re-run.

However, this does not necessarily undermine the argument made by the NHS over new procurement legislation, as spending time and money on challenges is only one of several consequences of the status quo.

In terms of the most common types of services which attracted challenges, these were mostly found within acute and community care.

Several challenges were launched over procurements for integrated urgent care services, including Kernow, Greenwich and North Tyneside CCGs.

Other challenges were made for smaller services such as enteral feeds (Portsmouth CCG), assisted conception (Bristol CCG), community ophthalmology (West Cheshire CCG), and even translation and interpretation services for GPs (Sheffield CCG).

One thing this column is certain of is that unsuccessful bidders will continue to challenge procurements, potentially diverting taxpayers’ money away from the front-line and into legal and administrative costs.

Even if the NHS were to be released from public sector procurement rules (which is no certainty based on a read-through of responses from experts to the Health and Social Care Select Committee’s inquiry), the necessary legislation is unlikely to be passed and enacted before 2022.