DHL Fails to Halt NHS Supply Chain Logistics Contract Award

We featured here the DHL challenge to the Department of Health / NHS (the contracting authority is “Supply Chain Co-ordination Ltd” - SCCL) over the logistics contract which forms part of the new NHS supply chain operating model. The contract was provisionally awarded to Unipart, but DHL claimed that the decision was not fair, and the procurement process was not executed in a proper fashion.

This came to court the other day and the hearing saw SCCL petitioning to go ahead and award the contract anyway, saying that damages would suffice if a later hearing finds that DHL was in the right. DHL on the other hand, as the incumbent supplier, argued that the award should not proceed, because damages won’t recompense them properly.

But on Friday, the judge decided that the contract could be awarded to Unipart – however, that does not mean the Department has “won”. The fairness of the decision will be discussed in a further hearing, but even if DHL wins, they will be compensated with damages rather than getting the contract award over-turned. There is an appeal to be heard later this week too, so nothing is absolutely clear yet.

We haven’t seen the whole judgement, but Logistics Manager website reports the judge as saying; “In conclusion, the balance of convenience lies in lifting the automatic suspension and permitting DHSC to enter into the contract with Unipart. Accordingly, DHSC’s application is granted.”

Let’s go back to the court discussions - and thanks to the HSJ (Health Service Journal) for being as usual the source of all the best information on this, as it is for most health matters.

The NHS side, represented by the excellent Sarah Hannaford, argued in court that the whole NHS world would end if they weren’t allowed to go ahead with the new contract – huge savings would be lost, children would die screaming in hospitals for want of bandages… etc. Well OK, we’re exaggerating a little. But you get the idea. DHL said – what’s the problem? We’re doing the work already! Which is true but of course the new “towers” model for NHS Supply Chain does have different pricing mechanisms for a start, so there are some issues around just rolling on with the current contract.

The court discussion about the procurement aspects were interesting though. DHL claim that Unipart, the winners, should not have even got through the pre-qualification stage because they don’t have the experience in the health sector that was demanded by the PQQ. The Department says that Movianto, who were a key sub-contractor to Unipart, does have that experience. We’re still not clear whether Movianto also bid under their own auspices actually – there is some suggestion that  they did, but then withdrew to become just a sub-contractor to Unipart.

One negative for the Authority came with the admission that they had made an untrue claim in their first challenge response to DHL. The statement was that the references and experience of Unipart / Movant had been checked – “appropriate steps were taken to verify the experience claimed …”

A later letter admitted that no, this wasn’t the case. In fact, “no steps had been taken before the contract award was made” according to DHL’s lawyers. That’s bad, on two counts. Firstly, judges really don’t like “errors” like that, which even if it was genuine, make it look like the Authority is trying to pull the wool over failed bidders’ eyes.

But more importantly perhaps, as we have said in previous articles, it does seem amazing that capability was not checked more thoroughly here. It is not even as if there were dozens of bidders, we’re pretty sure. If you have clear statements in your PQQ about capability, and thresholds that drive elimination from the competition, you would think it is pretty important to explore that aspect thoroughly. Taking up references, maybe a site visit or two, interviews, verifying at least the key claims from the bidders … these seem like procurement basics really. A quick glance at the Movianto website is not enough.

DHL also complained that they still haven’t been given full access to bid responses, so they can’t assess whether Unipart was marked fairly and properly. Even documents that were only to be shared with DHL’s inner circle legal team were heavily redacted, so they couldn’t really assess how the evaluation was carried out. But these points obviously weren’t quite enough to persuade Justice O’Farrrell to suspend the contract award.

Let’s see what happens at the next stage …

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Voices (16)

  1. James Farrell:

    What happens next -please see Mills&Reeve update of 29 August at

    1. Final Furlong:

      You mean this one

  2. Werewolf:

    It’s actually going to the dogs. I live within 10 mins of a big new shiny warehouse that is being constructed here in Bury so there may be something in the Suffolk comment.

    1. warehouseman18:

      bury as in 3 hours away from suffolk ?

      1. Therewolf:

        All I know is the current warehouse buildings being built in Bury Saint Edmunds are being constructed very quickly. Tried to get info from the construction workers there but was not allowed on site. The vans on site have ‘for all your NDC needs’ emblazoned on the sides. Not sure what that means though.

        1. Sam Unkim:

          Photos please Therewolf

  3. Trevor Black:

    How ironic. For those with short memories you should be aware that the previous Labour Government when Patricia Hewitt was the Health Minister awarded the contract to DHL. The award winning in-house provider lost the contract. The contract required everything from medicine, equipment and furniture to be delivered into the wards. The basis of DHL’s bid was to drop deliveries at the hospital entrances and the in-house staff to then distribute. The award was clearly political and not based on the tender submission. If you think privatisation is just a Tory policy think again. I clearly remember this as I won the letter of the month based on this award in Supply Management magazine and won a portable DVD player.

    1. Final Furlong:

      Trevor, there was a lot more to it than “clearly political and not based on the tender submission”. A lot more.

      But it is fair to say that, incredulously, no other bidder challenged the procurement process during Alcatel, given that they awarded a contract worth £3.4bn per annum against one that that had been advertised (OJEU) at £730m per annum. A drop in the ocean. Why would they.

      1. Sam Unkim:

        TBF it was pretty political. Blair had famously stated that “If you don’t contact patients daily , you should not be working for the NHS” and the BSA were running with that.

        1. Final Furlong:

          Yes, pretty political, but that wasn’t the sole reason. When, in the history of the NHS have you ever seen a complete absence of political interference? A team was brought in to run (as a programme) the rollout of ISCTs. It was a bit boring for them, so they brought in McKinsey,, and then ATK, and then the market testing of NHS Logistics became a full-blown outsourcing exercise, blended with the ‘redesign’ of NHS PASA. Politicians wouldn’t dream that up.

  4. Warehouseman01:

    Do you know where to move, warehouse from Rugby? Because DHL is not saying anything and people are worried

    1. Warehouseman02:

      It’s going to Suffolk.

      1. warehouseman3:

        what makes you say that as weve heard its staying put as dhl dont own the warehouse the nhs do

        1. Sam Unkim:

          Rugby is a weird one . Owned by DHL & Leased to DHL/NHS-SC

      2. warehousewoman:

        it’s going to zimbabwe

  5. Secret Squirrel:

    That sounds like a fairly plain and simple American Cyanamid judgement. It’s only assessing that damages would be an adequate remedy. The argument is an easy one for DH to win. All they have to do is show that damages is an adequate remedy. Once that happen, the conclusion is inevitable.

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