Department of Health Spends Millions for Contract Management Advice

The Health Service Journal (HSJ) reported recently  that Ernst and Young (EY) has won a major contract with the Department of Health to provide advisory services around the creation of the intelligent client function to manage the 11 “category towers” that will replace the current NHS Supply Chain arrangement. According to the HSJ, “EY saw off two other bidders for a contract worth between £7m and £20m from the Department of Health to assist in the design of the “intelligent client coordinator”.

We’ve written before about the “towers” approach here.

So EY are not doing the procurement of the items that fall into this pan-sector initiative (such as medical equipment, consumables, etc). Nor are they going to be managing the providers who are selected for these contracts – that will be this new intelligent client coordinator (ICC) entity. The EY contract is to provide support to the ICC and perhaps some “staff substitution” hands-on work while the new organisation gets into gear. But the Department of Health was very vague when HSJ asked them some sensible questions about the intelligent client.

“A DH spokesman said the ICC will comprise 220 staff by the time it is fully operational in autumn next year. No chief executive nor any other members of staff have been hired so far. Governing arrangements for the body are still being approved and the DH was not able to say when a chief executive would be appointed or what their pay would be. EY’s contract to help design and set up the ICC lasts until 2019. The deal includes “providing backfill to any areas where recruitment does not occur fast enough”, the DH spokesman said”.

We understood that the ICC was likely to be mainly people TUPE’d across for the current Supply Chain operation. Maybe that is still under debate, but it was the value of the contract that made us sit up.  When you see “£7 million - £20 million”, and knowing how consulting firms work, the cynic of course will assume it will be £20 million, and it does seem like a lot of money just to advise on setting up a contract management function!

I can’t help thinking that a copy of the various relevant National Audit Office works and maybe Andy Davies’ excellent guidance for London Councils, “You and Your Contractor”,  plus a bit of input from a few people (like me …), this could have been done for approximately 1% of that amount.

I’m also surprised to see EY win that contract. I like the firm, indeed, have done work for them in the past. But I’ve never seen procurement and contract management as one of their core strengths. Back in 2013, the firm was successful in winning a place on 13 of the 15 lots within the central government ConsultancyONE framework. Procurement was one of the two specialist lots for which they did not get a place!

So some will say this cost is just a drop in the ocean if the new procurement strategy can save the odd billion out of the huge NHS third-party spend. But in these times of austerity, this EY deal doesn’t feel quite right. We’re also hearing that many of the expected bidders for the “towers” themselves are not expressing interest, which might raise a few eyebrows too.

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Voices (3)

  1. Secret Squirrel:

    There once was an intelligent client coordinator
    EY helped set it up; sooner, not later
    What was to be the ICC
    Turned into a framework factory
    EY’s bill just got greater and greater

    No massive but I hope meets the criteria sufficiently…..

  2. life:

    If ever we needed to know more about a contract win this is right up there just for pure interest – what the hell is it for?

    And Peter surely that bid ought to be 1% – 5%? Get with the programme!

  3. Sam Unkim:

    £10* awaiting, the best limerick rhyming “ICC” with “massive framework factoryee”
    Must NOT mention “PASA” of course.

    *Donated to charity of choice

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