Exclusive: Serco withdraws from £800m contract race

Cambridgeshire and Peterborough Clinical Commissioning Group confirmed four out of the initial 10 bidders have now dropped out of the race to be the “lead provider” of the new contract, which is being seen as a novel means of creating an integrated acute and community pathway.

Senior sources familiar with the terms of the proposed deal said some bidders were concerned the value on offer for them falls “very short” of what is currently being spent on similar services.

HSJ has been told the scale of this gap is “tens of millions of pounds” and that it may force more bidders to withdraw from the process.

The CCG, however, said it was “very encouraged” with the dialogue with the remaining bidders for the innovative new arrangements which will see a lead provider asked to co-ordinate a range of integrated older people’s services.

The proposed arrangements also involve a proportion of payments being contingent on achieving certain outcomes.

Chief clinical officer Neil Modha said: “With such a large procurement it is not unexpected that some of the bidders have withdrawn.

“We’re using a two stage dialogue process to ensure that bidders from across the NHS and independent sectors understand what we want to achieve and are able to submit their best first stage proposals in January.

“The level of engagement from the remaining six bidders, and the quality of the dialogue has been very encouraging.”

The first bidder to drop out was a consortium led by outsourcer Capita, including Cambridgeshire Community Services Trust, which provides the lion’s share of the existing services, as well as the independent provider Circle.

Capita cited “affordability” as a reason for withdrawal.

Albion Care Alliance CIC, an alliance of mutuals, North Essex Partnership University Foundation Trust, and now Serco have also since dropped out.

The remaining bidders are:

• Uniting Care Partnership (Cambridgeshire and Peterborough Foundation Trust with Cambridge University Hospitals Foundation Trust)
• Care for Life (Care UK with Lincolnshire Community Health Services Trust, and Norfolk Community Health and Care Trust)
• Interserve with Provide (formally Central Essex Community Services) and North Essex Partnership Foundation Trust as mental health lead
• Northamptonshire Healthcare Foundation Trust
• Optum (formally United Health UK)
• Virgin Care

Virgin this week said it was “happy to confirm that we are still part of the procurement”.

According to tender documents published by the CCG over the summer, the value of the services is expected to be £700m-£800m over five years.

The CCG envisages the lead provider will integrate unplanned acute care, mental health services, end of life care and community health care services.  

Bidders said planned acute care, musculoskeletal services and social services had been excluded from scope.

The CCG said it was open to discussing with bidders how best to structure the contract and that a prime contractor model was a possible option.  

The new arrangements are expected to begin in July.