NHS procurement rules under attack

5 Apr 19

Rigid rules on procurement in the NHS have led to a “huge waste” of time and money, MPs have heard.

Legislation that requires NHS bodies to put contracts out to tender has been costly and has caused commissioners tender contracts for fear of legal action, the health and social care committee has been told.

The select committee heard from two separate panels on proposals to change NHS legislation including plans to scrap section 75 of the Health and Social Care Act that requires NHS bodies to put contracts over a certain value out to tender.

Katherine Checkland, a GP and professor of health policy and primary care at the University of Manchester, told the committee: “We found procurement regulations in particular have been a real problem.”

Checkland added: “We found people doing what you might call ‘defensive procurement’. They feel like they have to [put contracts out tender] because they are not sure whether they are going to be subject to legal challenges.”

She noted that where there have been legal challenges this has led to a “huge waste of everybody’s time and effort”. 

Legal action has been taken in places such as Surrey and Lancashire where challenges were raised over the procurement process.

Simons Stevens, chief executive of NHS England, who proposed the changes, told MPs: “We think that commissioners should be able to exercise discretion over when to run a formal procurement process but that there needs to be safeguards to ensure that taxpayers’ interests as well as patients’ interests are protected.”

Stevens noted that procuring contracts that represent a small aspect of patient care can prove disproportionately costly.

“What we have seen through experience is the way the rules are currently structured – we often end up either having to run quite administratively expensive procurements for very small services that are a sliver of a patient pathway,” he told MPs.

He said the plans were aimed at “injecting some discretion into the service” rather than reverting to a “closed shop”.

Stevens suggested a “best value test” could help commissioners decide whether to put contracts out to tender and said that NHS England was having a “detailed discussion” about this.

Ian Dalton, chief executive of the watchdog NHS Improvement, said: “We are not saying that this is an end to any use of procurement.

“What we are saying is that the experience – particularly in community services – has become almost an expected part of the way business is done.”

Current legislation dictates that contracts to the value of more than £615,278 must be put out to tender.

PF reported last year how CCGs were being sued due to a lack of clarity around procurement rules.

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