Altnagelvin lab contract was not subject to ‘low-balling’

The review, however, did find weaknesses in contract tendering and management in the former Altnagelvin Hospitals Health and Social Services Trust, the Sperrin Lakeland Health and Social Services Trust and Craigavon Area Hospital Health and Social Services Trust.

Two years ago an unsuccessful supplier raised concerns about the award of laboratory contracts at the above Trusts in 2004, specifically in relation to the difference in predicted value of the contract (at the time of tender) and the actual cost of the contracts.

“The suggestion was that ‘low-balling’ had taken place, a strategy in which a supplier submits a very low bid with the intention to seek to inflate prices after the contract has been awarded,” reports the General Report on the Health and Social Care Sector by the Comptroller and Auditor General for Northern Ireland for 2010 and 2011.

A subsequent review commissioned jointly by the BSO and the Western and Southern HSC Trusts was completed by the BSO’s Internal Audit Service with specialist input from the NHS Wales Procurement Organisation.

“The review found that the contract value had increased mainly because: poor quality activity projections, based on out of date information, had been used in the original tender specification; in the case of the Western Trust contract, an existing contract to supply specific tests had been rolled into the new one when it expired; and in the case of both contracts the unit costs per test specified in the successful tender bids were implemented and then increased by an inflationary uplift each year.”

The reviewers therefore concluded that “while neither contract was consistently and effectively monitored both contracts had been tendered in line with EU procurement regulations in force at the time.”

Weaknesses in tender management were identified, however, and a number of recommendations made for the issue of future health service contracts.

Amongst the recommendations are that tender options must be clearly specified in the tender documentation and adhered to consistently and if a decision is taken to alter the financial basis on which the contract is based there must be a contract variation authorised by the Trust.

Tender evaluations must also be evaluated on a similar and comparable basis; usage data must be as accurate as possible at the point that the tender is issued; the Evaluation of Offers from Suppliers must be signed off by the trust prior to the Letter of Award being issued; and all clarifications must be kept to an absolute minimum. In the event they are required, they must be managed in a controlled and formal manner.

Elsewhere in the report the NIAO observe how the report in July 2010 of a backlog of 18,500 x-rays awaiting analysis in the Western Trust was a major cause for concern.

It referred to the Regulation and Quality Improvement Authority’s (RQIA) on-going two-phase review commissioned in the aftermath of the discovery.

“The initial phase of the review involved a rapid assessment of the current arrangements in place for the handling and reporting of plain x-rays in all HSC trusts across Northern Ireland; and the second phase of the review, currently underway, is looking in detail at the circumstances which gave rise to the delays in the reporting of x-rays over the past two years and will identify any action required to avoid such delays recurring,” the report notes.

On a brighter note the Western Trust was praised for best practice in terms of promptly paying suppliers.

Both the Western Trust and Northern Ireland Ambulance Service (NIAS) met the best practice compliance target for both 2009 and 2010.

But the report was again critical of the heavy use of Single Tender Actions (STAs) in procurement across all Trusts - the Western Trust had the heaviest usage with 75 per cent.

“Unsurprisingly, the largest users of STAs are the five non-regional trusts. It is disappointing that three of the trusts increased their usage of STAs significantly (75 per cent increase in Western Trust, 59 per cent increase in South Eastern Trust and 43 per cent increase in Belfast Trust) in 2010-11 when compared to 2009-10,” the auditors report.

Referring to capital projects the report refers to the completion of new mental health facility at Gransha Park by 2010.

“This project was postponed due to capital funding constraints. Design is now complete and construction of the new £10.7 million facility is underway. The revised target date for completion is 2012,” the report states.