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UK – Bias towards big business in NHS tender for locum doctors

06 July 2015

A recent court case has highlighted the difficulties that small healthcare agencies face when tendering for NHS contracts to supply locum doctors.

In the case of Medicure Ltd v The Minister for the Cabinet Office; a High Court judge rejected Medicure’s claim that tender documents for the Framework Agreement (FA) for the supply of locum doctors into the NHS in 2012 required the provision of managed services only and did not allow for the direct, or ad-hoc provision of services from the tenderer's own resource pool.

Under the FA, tenderers were invited to bid for two Lots. Lot 1 was purely to act as a neutral vendor, and prohibited the supply of doctors registered with the supplier.

Lot 2, which was the subject of the claim, was for Resource Pool Management and described the services as “awarded suppliers will supply locum doctors (including locum GPs) registered with them as an Employment Business and will make up any shortfall by managing supplementary supply from other high quality Employment Businesses”.

The precise scope of the service to be supplied in any particular case would be defined by the customer (such as the relevant NHS Trust) entering into an individual contract with the supplier. 

Question E16 of the pre-qualification questionnaire (PQQ) asked suppliers to give the total number of hours for which they had previously supplied locum doctors. The claimant was unsuccessful in their bid, in part due to the limited number of hours for which they had supplied locum doctors, despite being in the business of supplying the NHS for the past 18 years. They answered that they had previously supplied between 50,000 and 99,999 hours of locum doctors, which was at the low end of the scale for which potential suppliers were scored.

The second, and main, reason for the rejection of the claimant was they could not satisfy the requirement under the PQQ to “demonstrate the Potential Provider's technical and professional ability to supply the Required Services”; as the examples provided by the claimant of how they had delivered a similar contract “did not describe how the supply chain was selected and managed to deliver successful customer outcomes or how the supply chain activities were regularly monitored and reassessed”.

Mr Justice Coulson held that the claim was misconceived as it was “plainly wrong” that the wording precluded the ad hoc supply of locum doctors registered with the awarded supplier. However he did comment on the length of the FA, which ran to 500 pages, saying: “I question the wisdom of contracts of this length: nobody ever reads the detail until something goes wrong, and then the parties scrabble around trying to find bits and pieces of the small print that help their case.”

He also sympathised with the claimant’s position as a small business in their ability to meet the criteria to be successful in the tender process.

He said: “They had successfully supplied the NHS with locum doctors for 18 years. The new Framework Agreement seems to favour larger organisations (hence the scale of marks available under question E16, about historic supply) and it legitimately raised a question about the management of a supply chain, which the claimant was always going to struggle to answer satisfactorily. All of that appears to have made it difficult for a smaller organisation, like the claimant, to compete for this FA.”

Kevin Barrow of international legal practice Osborne Clarke commented: “Alongside whatever action will flow from the recent comments by Jeremy Hunt, there already appears to be a trend in NHS (and perhaps other UK public sector) procurement exercises which will make it harder for smaller staffing companies to win framework appointments”.

Health Secretary Jeremy Hunt has introduced measures designed to clamp down on what he calls staffing agencies “ripping off the NHS”. The strict new rules will introduce a maximum hourly rate for agency doctors and nurses, ban the use of agencies that are not approved, and put a cap on total agency staff spending for every NHS trust in financial difficulty.

His comments last month were met by strong criticism from Recruitment and Employment Confederation (REC), the Association of Professional Staffing Companies (APSCo), and other bodies representing the staffing industry.