It seems that not a day goes past without a new revelation of wrongdoing or bad practice in the process of signing contracts with the private sector, this includes sub-standard products, products not delivered, huge contracts with small companies that have never worked in the area before, and contracts given to companies with political links.

The Good Law Project has published numerous examples of poorly negotiated contracts and ones given to companies with links to government, MPs or the Conservative party, findings which are now backed up by the recently released report by the National Audit Office.

The NHS signing contracts with the private sector for products and services has been ongoing for many years, but when the Covid-19 pandemic hit things changed. Emergency legislation was enacted in March 2020, which allows for contracts to be signed without going through a competitive tender procedure and it seems that as a result the contracts were also signed without proper scrutiny of the companies, the products or the contract details.

The contracts signed under the emergency legislation included products such as PPE, as well as contracts for services, specifically for the test and trace service and the Lighthouse Laboratories carrying out diagnostics. The contracts for services have been massive exercises in privatisation; test and trace involves Serco, Sitel, Deloitte and numerous other private companies and the current crop of seven Lighthouse Labs involves numerous private companies, including Deloitte, Amazon, Boots, GlaxoSmithKline and AstraZeneca.

Competition rules
Prior to the pandemic, many, but not all, contracts for products and services in the NHS were awarded using a competitive tendering procedure. The NHS commissioners – CCGs, NHS trusts, NHS England etc. – are obliged to open the contracts up to competition. Providers applying for the contracts could be NHS, private companies, or non-profit organisations and the contract was awarded based on a number of criteria (including value for money). This obligation was introduced under the legislation known as Section 75 of the Health and Social Care Bill 2012.

In contrast to the emergency process for the Covid-19 contracts, the competitive tendering process did have a certain degree of transparency. Although, once the contract was awarded, there is no transparency around sub-contracting.

The obligation for competitive tendering has led over the years to a large number of private companies being involved with providing services to the NHS. The fear was that the NHS lose out and in fact the NHS Support Federation calculated that the private sector has won £17bn in NHS clinical contracts since 2013.

Integration sparks change
Even before the pandemic began there were moves away from the competitive tendering process. The publication of the government’s long-term plan in January 2019 sparked moves to find another way of working. The plan had a major emphasis on integrated care, with providers working together seamlessly rather than competing with each other for contracts. The only way integration would work is by reducing the need for competition between providers and by extension the obligation to put all contracts out for competitive tendering.

In the long-term plan published in January 2019, NHS England noted that for integration to work Section 75 of the 2012 legislation needs to be repealed. In September 2019, NHS organisations, including NHS England had published the document ‘Recommendations to Government and Parliament for an NHS Bill’, this included the repeal of section 75 of the Health and Social Care Act 2012, and its replacement with new provisions in legislation and statutory guidance to establish a new NHS procurement regime. The recommendations are that commissioners of NHS healthcare services must act in the best interests of patients, taxpayers, and the local population when making decisions about arranging healthcare services.

The push for the repeal of section 75 comes however, not from concerns about privatisation, but that with the legislation still in place it will be impossible for integrated care systems to function. As for integrated care to function competition must be replaced by cooperation and joint working.

On the face of it the repeal of section 75 is a positive move, but this entirely depends on what replaces it. The recommendations by NHS England don’t remove the use of competitive tendering altogether, if the commissioners consider it to be the best way to award a contract then it will take place.

Less outsourcing?
The changes in legislation could also have little effect on what has happened to certain areas of the NHS, in particular diagnostics and pathology. These have been undergoing reorganization and privatisation for many years. Now the presence of the private Lighthouse Laboratories has become another issue. What will happen to these after the need for them to test for Covid-19 has fallen?

So far the Labs have not worked well with the NHS system.  There have been warnings from the Institute of Biomedical Science that the Lighthouse labs have become “a parallel but disconnected testing stream for COVID-19,” and have “failed to deliver robust data”.  The IBMS warned in June that “Links with clinical systems are still poor and the data generated raises more questions than it answers.” So will the Labs stay private? Or will they be absorbed into the NHS system?

Diagnostics capacity for conditions other than Covid-19 is badly needed in the NHS, as recognised by the 2019 NHS Long-term plan and an independent review commissioned by NHS England published in October 2020. Years of reorganisation and the input of the private sector did little to increase capacity and the independent review found that the “new services will require major investment in facilities, equipment and workforce, alongside replacement of obsolete equipment.”

The government has just announced investment in diagnostics; on 16 November, it announced plans to open two new mega-labs, one in Stratford-upon-Avon and the other in Scotland, which will not only extend diagnostic capacity for Covid-19, but also expand diagnostic capabilities for cancer, cardiovascular disease and others. Health Secretary, Matt Hancock said: “We didn’t go into this crisis with a significant diagnostics industry, but we have built one, and these two megalabs are another step forward.”

However, we are still left with the question of how much private companies will be involved with these enterprises. Only last month, the SE London Clinical Commissioning Group (SELCCG) gave the go ahead for the private company SYNLAB to take over the contract for a huge pathology network contract for South East London. The estimated contract value is £2.25 billion over 15 years (with a 5-year extension option).

So far the legislation needed to repeal Section 75 and put something else in place has gone nowhere – delayed by the pandemic. However, the dropping of competitive tendering during the Covid-19 pandemic, and its rapid replacement with a corrupt and dysfunctional system, should serve as a warning that whatever comes next needs to incorporate full transparency and accountability.

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