NHS outsourcing contract collapses due to 'catalogue of failures'

A "catalogue of failures" resulted in the collapse of an £800 million NHS contract to outsource care of older and mentally ill people, the Commons spending watchdog warned.

An influential committee of MPs concluded that the NHS lacked expertise in procurement and it was "worrying" that untested contracting arrangements could form part of the plans being drawn up for further changes to services across England.

The Public Accounts Committee was scathing about the doomed deal between Cambridgeshire and Peterborough Clinical Commissioning Group (CCG) and UnitingCare Partnership, which collapsed after just eight months.

The cash-strapped CCG awarded a five-year contract to UnitingCare, an NHS consortium of Cambridgeshire and Peterborough NHS Foundation Trust and Cambridge University Hospitals NHS Foundation Trust, but the deal was scrapped in December 2015 after it ran into difficulties.

The MPs said: "The procurement exercise was undermined from the start by poor commercial expertise, a lack of realistic pricing, and weak oversight.

"The CCG accepted the lowest bid on the table, without seeking proper assurance that the two trusts, which had combined to form the UnitingCare Partnership, could deliver for that price.

"It was then grossly irresponsible of the trusts and the CCG to rush ahead with the contract without having resolved significant differences in their understanding of the contract price or indeed the scope of services that were included in that price."

In a strongly-worded report the committee said the "astonishing array of errors" in the contract showed that the health sector was not "getting the commercial basics right".

The committee called on NHS England and NHS Improvement to ensure that safeguards are put in place to avoid similar problems in the wave of changes currently being planned.

Health managers in 44 areas of England have been ordered to draw up sustainability and transformation plans (STPs), setting out how they will reduce costs, change services and improve care in the wake of a record £2.45 billion deficit.

The MPs said that the "elaborate" UnitingCare deal "exposed gaps in regulatory and oversight arrangements" which could reoccur in local initiatives proposed as part of STPs.

The committee has already warned the NHS that it needed to improve its commercial skills but the UnitingCare fiasco showed it "still lacks the expertise to ensure that patient services are procured effectively".

"This is all the more worrying as local initiatives proposed in sustainability and transformation plans may still include CCGs using new or untested contracting arrangements.

"With the NHS budget so stretched, innovative solutions are likely to be part of attempts to make the NHS financially sustainable.

"NHS England and NHS Improvement must improve the oversight and supervision of contracting arrangements and avoid such catastrophic failures in future."

The Public Accounts Committee found that the termination of the contract led to unfunded costs of least £16 million, which had to be shared between the two NHS trust partners and the CCG.

The committee's Labour chairwoman Meg Hillier said: "It beggars belief that a contract of such vital importance to patients should be handled with such incompetence.

"The deal went ahead without parties agreeing on what would be provided and at what price - a failure of business acumen that would embarrass a child in a sweet shop, and one with far more serious consequences.

"Services for patients are likely to suffer and we will be expecting the clinical commissioning group to come clean about precisely how much damage has been done in terms of future service provision and finances."

She said it was understandable that health chiefs were looking for new ways of providing services but "what is not acceptable is for services to be farmed out to the lowest bidder without due regard for the interests of patients and taxpayers in general".

Press Association