Exclusive: Months of delay to new NHS procurement model

Contracts for logistics, IT and payment services currently provided by DHL have been extended by the Department of Health and Social Care, according to a briefing note from the NHS Business Services Authority.

These contracts were due to end on 1 October and be replaced by new contracts as part of the new NHS procurement model going live.

The “future operating model” aims to deliver hundreds of millions of pounds of annual savings by addressing how the NHS buys £5.7bn worth of goods and equipment every year.

The model replaces the NHS Supply Chain contract, which was outsourced to DHL in 2006.

The three contracts are the last of 14 that the DHSC tendered last year. The other 11 have already been awarded and their implementation is not affected by the delays to logistics, IT and payment services.

HSJ has been told by several senior sources the process of completing the last three procurements has been held up partly due to health minister Philip Dunne being replaced in January by Stephen Barclay.

The extension to DHL’s contract means winners of the new contracts will have more time to phase in their service from October.

The timescales for implementing the contracts are:

• IT (four months from October);
• logistics and support services (five months); and
• transactional services (six months).

The briefing note said the DHSC has decided to bring the transactional service element of the model in-house as a “single financial management structure, delivered centrally, post-contract extension”.

The department put this service out to tender last October. The contract had an estimated value of £47.1m.

The winners of the new £730m logistics and £250m IT contracts are yet to be announced.

Asked why the DHSC had extended DHL’s contract a spokeswoman said it was right to make “any necessary adjustments to the model rollout”.

She did not say why the DHSC had decided to bring the transactional services in-house.