Manchester Health Services Contract – Why It Is Concerning

In our article last week we looked at Dr Albert Sanchez-Graells from Bristol University and his comments on the recent Manchester health services contract. The opportunity advertised attracted only one bidder, a consortium of multiple local health providers. Sanchez-Graells suggested that this was the desired outcome by the commissioners, and we went further and describes this as a stitch-up.

But does it matter even if it is? After all, the 2012 Health and Social Care Act which introduced the purchaser/ provider split in heath provision is widely seen to be a disaster, and the moves now towards a more planned health economy are supported by many politicians, clinicians and commentators.

Well, Dr S-G thinks it matters and we tend to agree. He gives three reasons. Firstly, he says that he is “concerned that its design is anti-competitive and potentially breaches the requirements of the principle of competition established in reg. 18(2) and (3) of the Public Contracts Regulations 2015 … which requires contracting entities not to artificially narrow competition, in particular by favouring or disadvantaging certain economic operators”.

The way this contract was designed seems to have been a deliberate and successful attempt to make it impossible for 99.99% of organisations who might conceivably have been interested in bidding to do so feasibly. As such, it could be “illegal” in the terms of those regulations.

Secondly, he says that this contract is “not merely aimed at streamlining the functioning of the existing NHS market for the provision of out of hospital health and social care services, but rather at setting aside that market altogether”. In other words, this is about getting around or subverting the legislation on the purchaser / provider split. Now even if we don’t think that legislation helps the NHS, shouldn’t this very significant change in approach be debated properly, in Parliament, rather than using this frankly dodgy approach to public procurement to circumvent it? We agree, and share Sanchez-Graells' concerns that at some point this could lead to the contracting authority being challenged.

Finally, he is worried about the manageability and deliverability of this contract, that “the delivery of this macro umbrella contract will be highly challenging and difficult to achieve within the terms of the original contract … It seems clear that such a long-term and broad contractual object will require permanent adjustments and modifications, which may trigger litigation down the line. The fact that a single contract has such a large scope creates legal risks of its own, in particular if it was to be set aside or terminated in the future”.

Again, we agree, but would go further, and this really is our area of biggest concern. There are many cases in public procurement, not just in health, where issues have arisen because of the inherent complexity of consortium-type contracts. In this case, if the “buyer” still wants this to be delivered on a contractual basis, then every party in the delivery consortium will have to make sure it is happy with the provisions of the contract and any parallel sub-contracting agreements. Think of the complexities around risk allocation, how the revenues (and investment requirements) are split, liabilities and responsibilities – it is potentially hugely complicated.

The problem is really that the authorities are trying to move back to the old public delivery model – where money was allocated to providers in return for a non-contractual agreement around services – yet still have a contractual framework overlaid on this. That feels like a major tension, and the experiences around the UnitingCare contract, which was much smaller than this but had a consortium of two public providers and fell apart over income arguments, does not bode well.

In fact, we will go out on a limb here and say that either this contract will not be awarded – or not to the consortium in its current form – or if it is, it will collapse within two years of award or change dramatically in design, scope or supplier profile. Let’s hope we’re wrong but this all just doesn’t feel right. And - I know we have said this a number of times recently in other contexts - perhaps the National Audit Office should start reviewing this now rather than once things have gone wrong.


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Voices (3)

  1. Stephen Heard:

    I think I predicted that this contract would be awarded this way when it was first advertised.

    The challenge is that the NHS Five Year Forward View Next Steps recommends the implementation of Accountable Care Systems (ACS) across Sustainable Transformation Plan (STP) geographies.

    This is, in the nine test STP’s, the first rigorous test of abolishing the provider/purchaser split first signalled in the Five Year Forward View. The spectre of all public sector organisations in one STP being given a single financial control target could happen as early as 2019/20.

    More to come on this and the legality of side stepping the 2012 Health and Social Care Act unless it gets repealed which, with the parliamentary Brexit log jam, has little chance before the next General Election.

  2. Sam Unkim:

    Hmm. Dicing things up into bite sized bits for the Virgin & Serco bid-team wallahs to salivate over doesn’t feel right to me..

    Since the consortium is just going about business as usual I see no reason for it to fail

    1. Peter Smith:

      I have no desire to see Serco et al gain. But this is not business as usual. There is a material difference between the CCG letting and managing individual contracts with each (public sector) provider compared to the the new situation with the CCG equivalent letting one master contract with some sort of “Prime” and then lots of complex partnership / sub-contracting agreements with organizations that still have their own governance, responsibilities, financial situation etc. That is what will put this in jeopardy imo.

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