Delays to NHS Future Operating Model Supply Chain Contracts

What’s going on with the NHS / Department of Health “Future Operating Model*” programme?

The NHS Supply Chain website last week published an article titled “Intelligent Client Coordinator of NHS Supply Chain” which if you believe titles should tell you something about what is to come, singularly fails to meet its objective. The article then started by saying that the Intelligent Client Coordinator (ICC) “went live on 1 April 2018. It is the management function of the new NHS Supply Chain operating model, previously known as the Future Operating Model”.

*So we need to start talking about NHS Supply Chain or NHSSC again rather than the FOM, I guess. But tucked away at the end of the briefing,  which in general is a pretty clear outline of what is going on with FOM – sorry, NHSSC - was this.

“The Department of Health and Social Care has decided to extend the current contract, only so far as it applies to the enabling services, Logistics, Information Technology and Transactional Services, with the incumbent DHL, beyond October 2018. The extension will result in phased operational service commencement dates for these services over a period of 6 months. Additionally, the Department of Health and Social Care has decided to perform the Transactional Services in house as a single financial management structure, delivered centrally, post contract extension”.

Those are not insignificant issues, we would suggest. There are often commercial implications with extending contracts; if the new set-up was expected to be more cost-effective, then delays mean those benefits are not realised for some time (and if the new approach isn’t better value, then why are you doing it?).

There could even be a legal complaint; you aren’t supposed to extend contracts unless there is some really good reason.  Generally, it should be only where unforeseen circumstances or events drive an extension – your own incompetence as a contracting authority is not a good enough excuse for extension under EU regulations. However, many public sector bodies (including Crown Commercial Service for instance) regularly ignore that element of the regulations and we can’t remember any real action ever taken by the Commission or unhappy suppliers in such cases.

We’re not quite clear what this business about keeping the transactional services work, chiefly invoicing, in-house means either. Did nobody bid? Or if in-house is the best option, should that not have been sorted out during the previous stage?

But why is all this delayed? That is the main worry. Often a delay indicates some underpinning flaw in the strategy, or a procurement process that has gone wrong and has to be re-run, or some other problem. Has the technology contract proved tricky in some way? I think everyone assumes that DHL will win the Logistics contract – perhaps this is a tactical delay because the Department does not want to announce a DHL win while the Kentucky Fried Chicken fiasco is still fresh in people’s minds.

Anyway, these days are rarely just “we’re running a bit late” in our experience. What is going on behind the scenes, we wonder – anyone like to tell us?

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Voices (2)

  1. NHS Buyer:

    Well, I don’t know what to say.
    Well, actually I do.
    And you’ve touched on it.
    One can well imagine the DoH ‘Procurement Minister’ staring at the final business case for logistics which contains the award of the contract to the bidder that was most likely to win it – DHL.
    The Minister can imagine the disbelieving reactions of colleagues, clinicians, voters, constituents, relatives, close friends [fill in any blanks] when the news is released and the story eventually ends up in Private Eye along the puns and headlines “DoH in a flap as they….” or “Ministers get a grilling as they…” or “NHS trusts about to be completely plucked as they….” or “Poor supply chain strategy coming home to roost as they…” award the logistics contract for the supply of mission critical products to hospitals to the company which ballsed-up the delivery of mission critical chicken giblets to KFC outlets. (Ok, this resulted in near mass starvation in many northern towns, and Southend, but you get my point.)
    One can well imagine that they didn’t build into their contingency plans the Minister’s reaction of “Pluck you, I’m not signing off this” and everything is promptly pushed back.
    He would have to avoid every KFC in the country to avoid being photographed with one.
    Or even crossing the road.

    1. Dan:

      Some great puns there – well done – but I actually laughed hardest at the idea of a procurement minister.

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