Avoiding the mistakes of NPfIT in new NHS IT contracts

What are the contracting experiences of NHS Trusts who have started their own IT procurement, and how can mistakes of the past be avoided?

Building on health secretary Jeremy Hunt's vision of a paperless NHS by 2018, NHS England recently published its vision of how access to digital data across care settings might be achieved: Safer Hospitals Safer Wards - Achieving an integrated digital care record. It acknowledges the NHS has been slow to adopt new developments and this must change.

This new vision of the future comes in the same month that it begins a consultation on a proposal to require a much larger dataset to be electronically provided by hospitals from April 2014 - something that will require many hospitals to implement new systems.

There is little new money available to deliver this vision and a sense of déjà vu for many. The NHS National Programme for IT (NPfIT), set up in 2002, was intended to run for 10 years; its cornerstone being an electronic patient health record which - except for a handful of organisations - has yet to be delivered

As a result, the government drew a line under NPfIT in 2009 and reverted from centralised procurement of technology to more local Trust-level buying. As NHS England begins to consider the procurement “artefacts” that it will make available to support the latest strategy, what are the contracting and procurement experiences of NHS Trusts who have started on their own procurement journey, and how can mistakes of the past be avoided?

Use public procurement law effectively

In addition to general EU Treaty principles of transparency, fairness and equal treatment, the Public Contracts Regulations 2006 require that for IT procurements with a value over £113,057, one of four procedures must be used when buying. Many Trusts will opt for the paper-based “restricted” procedure relying on its appearance of being quicker and simpler than the “competitive dialogue” process.  

A process is run, bids evaluated and a preferred bidder selected; all without the NHS Trust having had any real opportunity to engage with bidders to understand the detail of a proposal. The outcome results in loss of competitive tension and because the Trust is often not able to determine the necessary detail from the paper response alone, it may later find itself having discussions on fundamental issues of risk allocation which are way beyond the fine tuning anticipated by the regulations - and therefore risk third-party challenge. 

In our opinion, use of the competitive dialogue procedure is a more comfortable fit for complex, larger-scale technology procurements and need not be all that onerous to manage.  It anticipates engagement with bidders and actually offers Trusts a great deal of latitude to design their own procurement process.    

Collaborate and consider a framework

A framework agreement is “a general term for agreements with providers which set out terms and conditions under which specific purchases can be made”. These “specific purchases” are the subject of further agreements commonly known as call-off contracts. 

A framework can allow a number of Trusts to together run what is, for the most part, a single process instead of them each having to adopt one of the four procedures required by the regulations and run their own separate procurements.

With many NHS organisations looking at some form of integration with their neighbours in coming years, appointing a single supplier to a framework under which the same (or a similar) system might be bought by each of them will clearly make sense to many.    

Use the right form of contract

NPfIT was characterised by a massively complex contracting regime that arguably matched its scale and ambition. Echoes of this can be seen in the Office of Government Commerce (OGC) Model IT Services Contract. However, as a document designed for delivery of a managed or hosted service, it is unsuitable for a system integration project. Even where a hosted service is anticipated it may still not be wholly suitable and is certainly unwieldy.

While a specific form of contract is not mandated for use within the NHS, Trusts should consider using updated and tailored versions of MSCON (managed  services contract)  SYSCON (systems implementation contract) and other templates from the CON (contract) family of contracts produced by the former NHS Purchasing and Supply Agency.

Don't lose sight of deal essentials

Before getting lost in the detail of contract drafting, focus on some basic and universal principles, such as: 

  • What is being delivered (products and services)?
  • What does the Trust think it is buying and what does the supplier think it is selling?
  • Do these match? The truth may be inconvenient to both.
  • How is it being delivered? What are the parties' responsibilities during implementation and who has the primary role in enabling tasks?
  • What does it cost? What is the payment profile and, when the system is live, what level of service can be expected? 
  • Are there assumptions which underpin the supplier's proposal – what happens if they change?

Every contract should tell a story, and the parties involved should remember it is not possible to eliminate all risk from a deal. 

Helen Simpson is a partner and Andrew Rankin an associate at international law firm DAC Beachcroft (both pictured above).

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