The Parliamentary and Health Service Ombudsman has handed its board the role of reviewing and approving deals over £100,000 after admitting a contract tender last year had “left room for perceptions of conflicts of interest”.

Ombudsman Dame Julie Mellor revealed the strengthened governance policy as she gave evidence to the Commons public administration committee last week.

Julie Mellor

Dame Julie Mellor said her actions had ‘still left room for perceptions of conflicts of interest’

Dame Julie was responding to questions about a £120,000 contract that was awarded to her former business associate. This historical association had not been declared by Dame Julie to the panel members who selected the successful contractor.

As revealed by HSJ last month, a National Audit Office investigation into a number of procurements at the ombudsman – including the £120,000 deal – pinpointed “significant failings”  in its procurement policy, practice and effectiveness.

The committee chair, Bernard Jenkin, asked Dame Julie how she could reassure the committee “there was nothing untoward”.

She replied: “We have been very open and transparent.

“Our external auditor did look at whether there were conflicts of interest and assured us that there were no conflicts of interest.

“However, prior relationships can create the risk of a perception of conflict of interest, and it is just as important to manage that.

“Certainly where I was involved in procurement, where I had a prior relationship, I put some distance between myself and the decision making but, with hindsight, the actions I took still left room for perceptions of conflicts of interest.

“That is why, as soon as I understood there were concerns, and prior to the NAO investigation, I put in place really detailed protocols for identifying prior relationships, for identifying whether there were perceived or actual conflicts and for managing those conflicts.”

Responding to earlier questions she told MPs the “weaknesses” identified by the NAO related to the transitional year for the ombudsman as it improved its response to patient complaints.

She said changes to senior management at the time meant “there was a lack of both continuity and capability at the top of the shop”.

The ombudsman has pledged to publish the NAO report once the board has considered it.

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