Trust chiefs deny 'low-balling' bid before major contract collapse

The chief executives from Cambridge University Hospitals and Cambridge and Peterborough foundation trusts, which owned the UnitingCare Partnership company, also accused previous provider Cambridge Communities Services Trust of not being transparent over the running costs of the older people’s services – a charge it has robustly rejected.

The Commons public accounts committee hearing this week followed a probe published in March into the five year contract, which collapsed after just eight months, revealing UnitingCare had asked for an extra £34m just one month into the contract – 23 per cent of the £152m contract value for the first year.

Cambridge and Peterborough FT chief executive Aidan Thomas told MPs: “We made a bid in order to win the contract of course. We bid as low as we thought we could reasonably do, but we also knew there were caveats because there were a range of things that we didn’t know about.

He said the trust had expected to “negotiate” further after the contract was signed, but it had not “deliberately” underbid – a practice referred to as “lowballing” by the committee.

A National Audit Office report in July said UnitingCare had made a “tactical decision” to submit a bid of £726m for the contract.

This was made despite Cambridgeshire and Peterborough Clinical Commissioning Group’s assessment that its “maximum contract price” of £752m was “tight but achievable”, the NAO said.

Even the £752m value had been deemed insufficient by some bidders for the contract. A consortium led by Capita and including Cambridgeshire Community Services Trust and private firm Circle, dropped out the process citing affordability issues in October 2013.

The charge that insufficient costings data was provided by the previous provider was also made by NHS England chief executive Simon Stevens, and Cambridgeshire and Peterborough CCG accountable officer Tracy Dowling.

Mr Stevens said: “My reading of the NAO report is that the data from… Cambridge Community Services Trust was not available to the new folks and therefore they did not actually know what the costs of the services genuinely were. That’s why we need open book [accounting in the future].”

Ms Dowling said: “The CCG did not have a sufficient understanding of the costs of service provision from Cambridge Community Services. The CCG did think that the budget it was spending on those services was covering the costs.

“The work done… after the contract was signed has demonstrated that actually that was not the case, and there was an unknown cost post transaction that was a surprise to all of us.”

Cambridgeshire Community Services strongly rejected all the accusations. It said in a statement to HSJ it had “provided detailed information on direct service costs and activity levels to the CCG throughout the tender process which was made available to all bidders to ensure there were no surprises”.

Chief executive Matthew Winn added: “The trust worked tirelessly pre, during and after the tender process to provide extensive information… to the CCG, bidders and latterly [UnitingCare].

“Any lack of knowledge that the winning bidder had about the community health services portfolio was clearly a minor element in causing the collapse of the contract.”

The trust also rejected Ms Dowling’s claim that the CCG had understood the service costs were adequately covered. It said it had “consistently raised concerns with the CCG over several years that [service costs] were more than the revenue received from the CCG”.

The statement added:

• The community services transferred from CCS only accounted for 38 per cent of the overall contract awarded to UnitingCare.
• CCS’s finance director joined Cambridgeshire and Peterborough FT in January 2015, “which ensured detailed knowledge of the costs… were available to the consortium”.
• ”We freed up a number of full time and part time staff to work solely with CPFT from January 2015, including our then head of finance to continue to provide open information and a safe transfer of services”

Ms Dowling said the CCG would not be looking to create a third party to carry out the services going forward, but would instead look to directly commission providers itself.

Mr Stevens also told the committee that system leaders were drawing up new rules for NHS bodies tendering large contracts.

Procurement rules could change as a result of Brexit, he added.