The fault is not in tendering but in how the NHS goes about it

The reasons for the disastrous procurement of Cambridgeshire’s older people’s services are beginning to emerge and the debate over their implications is heating up.

Anyone who heard NHS Improvement chief executive Jim Mackey’s warning about “trendy” contracting schemes might conclude that the problem was inherent in the approach, and that big tender exercises or inventing new provider structures are now considered more risky than they are worth.

Potential downside

NHS England’s decision to “pause” and review similar procurements – including an even bigger venture in Staffordshire – also suggests a sharpening focus from national bodies on the potential downside of these large, competitive processes.

So should the NHS simply never try anything like it again? We should be careful before jumping to that conclusion.

‘So should the NHS simply never try anything like it again?’

The independent audit commissioned by the CCG revealed that many of the avoidable failures can be attributed to decisions taken by the parties involved in Cambridgeshire and were not an inevitable consequence of the process.

The three most important mistakes were: 

• UnitingCare’s winning bid was not reassessed after it decided to set up a limited liability partnership. Should it have been? Yes. Could it have been? Yes. Is the NHS capable of not repeating this mistake in future? You would hope so.
• Cambridgeshire and Peterborough CCG was exposed to extra risk because its advisers did not secure parent company guarantees from UnitingCare’s owners – two local foundation trusts. The audit says the CCG’s interests were not protected, and points out the Strategic Projects Team had been contracted to do exactly that.
• Fundamentally, the contract failed because the CCG and UnitingCare had different opinions on whether the £725m contract value was final. UnitingCare thought they could get more money out of the CCG once it was live.

Because of how this tender was constructed, the CCG was always at risk from an unrealistically low bid beating more plausible alternatives.

Finances are tight and commissioners want to contain spending. Any future procurements should tweak the scoring criteria for assessing bids if they want to reduce this risk.

‘Problems arise less from adopting a tendering processes in itself, but from how the NHS approaches the task’

Cambridgeshire also provides another lesson relevant to all big NHS procurements: the approach to the tendering process encouraged the wrong behaviours between commissioner and provider.

UnitingCare and the CCG had a transactional relationship rather than a collaborative one.

They only adopted open-book working once the deal was on the brink of collapse.

A crucial chance to spot fatal flaws may have been missed when the provider would not show the CCG their internal business case.

Collaboration is key

In summary, the clearest conclusion is that problems arise less from adopting a tendering processes in itself, but from how the NHS approaches the task.

Cambridgeshire’s choice was not to work openly or collaboratively: this is symptomatic of the NHS’s inexperience in tendering activity, and a legacy of endless local contracting arguments that has been nurtured in many areas.

‘Cambridgeshire’s choice was not to work openly or collaboratively’

By contrast, health economies developing an “accountable care system” are voluntarily sharing financial risks and effectively establishing a single local budget, rather than committing resource to disputing each other’s claims about the terms and value of a contract.

Such an approach does not rule out the use of tendering, but should make sure that any such activity takes place in an environment of greater trust.

This is not the easy option – it is harder initially to build relationships than argue about a contract – but it is a more productive use of leadership time and energy.