NAO points out the DoH broke EU regulations

8 Feb 07
A £12m Department of Health joint venture might have broken European Union procurement law and overestimated the potential size of the market by a factor of 16, the National Audit Office has found.

09 February 2007

A £12m Department of Health joint venture might have broken European Union procurement law and overestimated the potential size of the market by a factor of 16, the National Audit Office has found.

The Department of Health set up a joint venture with the private heath informatics company Dr Foster in 2005. It paid £12m for a 50% share in a new venture to package and sell health commissioning data to the NHS. But the DoH's financial advisers only valued the anticipated venture at between £10m and £15m, the NAO found.

The NAO report Dr Foster intelligence, published on February 6, also found that part of the DoH's valuation of the joint venture was based on an assumption that the market for health informatics was worth £325m a year. However, the NAO found that 'a prudent estimate' would be £20m — some 16 times less.

Andy Fisher, audit manager at the NAO, told Public Finance the DoH's failure to advertise the contract in line with EU regulations had left it vulnerable to legal challenge by competitors in the health informatics market.

PFfeb2007

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