Care Quality Commission and McKinsey – is “lessons have been learned” good enough?

The main health procurement story this week is the Carter report on efficiency, heavily trailed in the Sunday papers; we will be back once it is actually out and we can read it properly.

But another story for today. Kudos to the Department of Health and the Care Quality Commission for publishing a report by internal auditors into a whistleblower’s accusations of bad practice in a procurement exercise held in 2013. But a big black mark to the CQC and two of their top executives for the way they behaved when McKinsey was appointed to carry out two consulting assignments for the organisation.

It is well worth reading the full report, or at least skimming through. The whole case is a perfect example of something we all know happens every now and again (which doesn’t make it right) in both public and private sectors. That is, the need to run a procurement process of some sort when the CEO or equivalent has already decided who they want to carry out the work.

That was the case here. The CQC was under a lot of pressure following the Mid Staffs inquiry which had found major shortcomings in hospital care. CQC needed to do things quickly, including these two pieces of work. Now the report suggests that David Prior, the then Chair, and CEO David Behan, had the best interests of the CQC at heart, rather than any personal motives for favouring McKinsey. But in their haste to get moving on these projects, they basically started work with McKinsey, then realised they needed a procurement process to support that.

As the report says:  "A dialogue took place with McKinsey prior to the issue of t he Invitation to Tender (ITT) because they were perceived (by the then Chair and the CEO) as having relevant experience in this area and a track record for doing things quickly".

So the playing field was never level, as McKinsey benefited from their inside knowledge of the work. But in the case of one project, McKinsey then failed to put in a decent bid and "lost” the competition based on the tender evaluation. That was despite the tender panel being told pretty directly what the “right” result should be via an interruption to the tender panel meeting!

But rather than awarding the contract to the "winning" firm, a new element of the competition was introduced, with the three bidders invited in for interview. And guess what? After the interview, the scores were adjusted and McKinsey won the tender – for £1.2 million incidentally, so we are not talking peanuts here.

It is easy to sigh and say, well, that’s what happens in public procurement, isn’t it? And in all likelihood, Behan and Prior were doing it for the right reasons. But let’s be direct here. This was a corrupted procurement process. It cuts through all the EU Treaty principles, and put hundreds of thousands of pounds into the pockets of McKinsey partners (the profit margin) that arguably should not have gone in that direction. It is not the same as if someone in CQC had benefited from it personally – but just how different is it really?

Let’s compare it to the FIFA situation. If South Africa had bribed some of the poorer countries to vote for them as a venue, but all that money had genuinely gone to build soccer facilities in those countries (rather than into the pockets of the officials), would that have been OK? I think not – it would still have subverted the agreed process, and other bidders would have been annoyed, with good reason.

The CQC issue is being treated as a case of “lessons have been learnt”, the CQC now has better processes in place, the protagonists had the best interests of everyone at heart, nothing to see here, keep on walking ... But I’m not sure that’s quite good enough really. This was a willful “fix” to undermine the proper procurement process, in breach of EU and national regulations. That is a bit more serious to my mind than the “procedural error”, which is how it is being presented.

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