Surrey NHS Commissioning – Surely An Avoidable Legal Battle

The county of Surrey is gaining an unwanted reputation for screwing up NHS commissioning-type procurement exercises. After Virgin won £2 million in damages last year, for reasons we still don’t understand, from a group of Surrey commissioners, now we have another case, reported on by the excellent HSJ, that is descending into potential legal battles.

The Surrey Downs Clinical Commissioning Group (CCG) is awarding a contract for community health services. Only one bid was received, from a consortium with the Epsom and St Helier University Hospitals Trust– we will just call them “the Trust” - as the prime, but with most service delivery coming from the incumbent, Central Surrey Health (CSH), a social enterprise.

Several GP federations also formed part of the consortium. All very easy, no competition, and the commissioners awarded the contract. However, CSH then complained that the Trust was trying to “marginalise” them, changing the way the consortium worked, going back on agreements that had been made during the construction of the consortium, and so on.

That ended with the Trust claiming to the commissioners that CSH had withdrawn from the consortium – but saying that the Trust could go ahead and deliver the work without CSH. No we haven’t withdrawn, responded CSH, we’re still trying to sort out the details, and anyway, the Trust can’t possibly deliver the contract without us. But the commissioners wanted to press on – so CSH has launched a legal challenge to stop the contract award.

We would be very surprised if the court allowed the contract to proceed – if the main participant in terms of service delivery is no longer part of the consortium, for whatever reason, it is hard to see that it can go ahead. The Trust does not appear credible as a substitute for CSH, and that would be a material change from the bidder that competed for the work, in effect. Surely that means you have to start again.  So this is a real mess, and of course as soon as we get into legal battles, taxpayers and NHS money will be wasted on expensive professional advice.

Going back to the beginnings though, this looks suspiciously like a “competition” that was always intended to be a stitch-up. We suspect someone very senior suggested to the Trust and CSH that a joint bid might be a good idea. While most procurement professionals would see competition as a good thing, indeed a necessary condition to achieve a successful procurement, this new NHS world is supposedly all about collaboration.

So what are our conclusions?

  1. As we pointed out here, the problem is that the NHS is trying to move towards a new way of working, but without addressing the fundamental regulations and structures that were designed for the Lansley world of competition. The Lansley reforms have been a disaster for the NHS, most will agree, but are still in place. The current approach of just pretending it doesn’t really matter, trying to run non-competitive competitions, or “forcing” separate, independent organisations into collaborations, is bound to lead to trouble.
  2. The CCG must take a fair proportion of the blame. Awarding a contract to a consortium or JV without really understanding how it is going to work, how it is structured, who exactly is going to do what and so on is very poor procurement and indeed general management practice. You would think past episodes in the NHS such as the Cambridge UnitingCare fiasco might have got that message across.
  3. This does look suspiciously like a power grab by the Trust. Win the contract, then start pushing on the power dynamics within the consortium. Recruiting senior staff from CSH (which the Trust has done) doesn’t smell good either, and we’re not clear how a pretty poor Trust (“requires improvement” rating from the Care Quality Commission) thinks it can deliver community services which are not its core business.
  4. However, all the parties in the consortium should be criticised for not getting all the key details sorted out before this stage. The CCG should have insisted on it; the providers should have done it anyway as simple good practice.

So no-one comes out of this well. A strategy designed to bypass real competition. A complacent procurement and contracting process run by the CCG, that didn’t check what should have been checked, a power play by the Trust and poor preparation by all consortium members.

However, we are where we are. So now everyone needs to get around the table, with a facilitator / arbitrator (I have some time available next week, people …), and come up with a solution. Work out the best allocation of activity across the consortium members, based on the needs of patients and a fair allocation of costs, revenue, risk and return. No doubt there are intelligent and public-service focused people in all the key organisations here – so that surely doesn’t seem impossible.


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Voices (3)

  1. David Atkinson:

    “Poor relationship management and leadership skills in this case and sadly it’s not going to end well.”

    “Relationship Management – Who will be the lead commissioner? Who will co-ordinate and manage the other supporting partners if it’s a Service being provided to multiple CCG’s or Local Authorities? Not much attention is ever focused on this element until post contract.”

    Yes, and yes.

    As I say in this piece….

    “Today there are many advocates of partnering and collaboration between buying organisations and their suppliers, and there’s sometimes a whiff of harmony and optimism about it. But it’s not always realistic. I believe at the heart of this mindset is a misunderstanding of business in the real world; a presumption of supplier competence. The premise is if only we (the buying organisation) were to take a more collaborative approach, then willing suppliers will line-up to offer savings and other improvements.

    This mindset is particularly in play at the time of contracting, when the parties smile and shake hands on a new deal, but frequently find the contract unravelling during implementation where value leaks from deal because of failure, delay, cost overruns, those unbudgeted interventions, etc.”

  2. Alec:

    Csh Surrey reap what they sow..

  3. Mr Grumpy:

    Agree with much with what you’ve said Peter, however not so much on the bypassing of real competition as from my experience the competition is not biting like it used to. Look at the £450M Community Services tender being tendered by Eailing whereby North West University Healthcare have withdrawn citing they cannot meet the cost cap and Virgin have been cagey in their comments. The ceiling pricing and risk profile of these Services is essentially driving competition away. You could argue this is massaging the competition, however I see this as encouraging providers on board in a loss leader approach that usually ends with a lot of heartache.

    In this instance with the consortium, it seems there was no agreement on the definition of roles and responsibilities the providers would provide in the delivery of these Services. Poor relationship management and leadership skills in this case and sadly it’s not going to end well.

    The bigger question I guess is what role can procurement play in this rather complex field? My experience in this area is not enough time is afforded to properly plan the procurement exercise and have that EBI to help shape the delivery of the services. Often these projects are managed by 1 person. I for one don’t believe that’s enough. For me it tends to be that the following areas are not thought through properly:

    Market engagement – Is much done beyond the issue of a PIN and open days? Is there an in-depth market engagement process whereby the customers reach out to other sectors such as the third and encouraging aligning with private companies who have the finance to support them in a joint bid?

    Structure of Service Delivery and Contract – Is it to be delivered by a Sole Provider or a Consortium? What would work in the best interest of the Services being delivered?

    Finance – Is the fixed tariff model and annual increase cap really viable? More so when demand and costs will proportionality each year.

    Service Delivery – What realistically can separate the competition in how they deliver the Services as most of is it mandated by regulation? They could use different IT systems, however there is an upfront cost in implementation. It will always come down to price and not cost.

    Relationship Management – Who will be the lead commissioner? Who will co-ordinate and manage the other supporting partners if it’s a Service being provided to multiple CCG’s or Local Authorities? Not much attention is ever focused on this element until post contract.

    Contract Management – Who actually manages the contract? Who ensures the Service is delivered in line with what is agreed in the contract and that the provider/s

    Procurement in this area always takes a kicking, however I don’t believe it is sufficiently resourced to carry out an effective procurement exercise. Often someone is drafted in to put together a contract without consideration for the above areas.

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