Matt Hancock - acted unlawfully over contract transparency

 Second good article from Supply Management.

This time it is about the controversy over the failure of Matt Hancock (Health Secretary) to publish contract award notices within 30 days of award.

A few points about this.

Firstly, publishing late is not evidence of corruption, collusion, or "money for mates" as was suggested by some commentators.

Secondly, publishing late does raise eyebrows because if you were indulging in unethical/illegal behaviours in awarding contracts you would probably try to hide it (e.g. by publishing award notices either very late or not at all).  This is not saying there is no smoke without fire, but you can understand why people do say it.  This is why transparency has to be at the heart of public sector procurement - only if we can see what is going on can we be reassured that our taxpayer's money is being spent in the best way.  Late publishing of award notices may seem a minor issue, but it undermines public trust in government procurement.

Thirdly, there is no good reason for the late publication.  It is a relatively minor effort and should be undertaken as a matter of routine.  It is unconnected to the reasons why we may have gone for direct awards of contracts during the Covid-19 crisis (which may or may not be justified - it is a separate issue).  Personally, I suspect the hand of a well known provocateur at the heart of government who celebrated cocking a snook at the rule of law, standards and processes.  Thankfully he has gone (you know who I mean).

Finally, what is clearly wrong is that Matt Hancock authorised the use of government funds to fight a legal case it clearly had no chance of winning, and in which the government was unquestionably in the wrong.  This is an abuse of the legal system, and a waste of taxpayer's money.  The government's own legal team must have told the minister he had no chance of winning.  Instead Mr. Hancock decided to waste time and money during a health crisis.  

Whether the government was prudent or unwise in not having competitive tendering for PPE is something quite separate, and should be studied by an independent review.  It genuinely could be either case.

NAO - PPE Procurement: the threat for Public Procurement

There are many things going on at the moment, and so the procurement of PPE is not making as much of a splash as it should.  Though there is still a lot of coverage in the media;

ITV

Guardian

even Dentistry online!

And this should be a big issue.  At a time of national emergency procurement has to move fast, and decisions have to be made quickly.  But this is also the time when unscrupulous suppliers (and even conmen) can take advantage of the situation for gain.  So we have to temper the need for results with a little prudence.

The idea of having "fast track" suppliers is no doubt meant with the best intentions by senior figures in the government, who want to speed up the process - but this approach is fraught with opportunities for graft, corruption and fraud.  None of which have necessarily taken place, but it is a vulnerability.  

If you don't lock your car doors but it isn't stolen, that is not an indication that you were doing the right thing.  It means you got a way with it.  Time will tell if that is the case for PPE procurement.

What IS clear though is that public confidence in public procurement has been further eroded by the failure to deliver, the failure to ensure value for money and the perception of contracts for "mates".  The government should act quickly to restore its reputation.

Sad to say, I'm not holding my breath.

HS2, Covid-19 and complexity

The news is that the government has given the go-ahead for construction work on Highspeed 2 to start, even though much of the country is still in lockdown.  There are a lot of people quite vociferous that this is not a good time to start, and some arguing that this is a good time to drop the whole HS2 project.

Well there is an argument for HS2 that it will free up more space for rail freight, which is a good thing.  And I'm more of a fan of HS3 (which if it ever happens, will be at such a future date that it will do me personally no good).  But those are discussions for another day.

What I wanted to do is discuss is why one factor in this decision is rather unexpected, and an example of the interconnectedness and complexity of our economy.  Yes, starting work keeps some people in jobs and keeps some money flowing in the economy and it is probably better to get some building done for that money rather than pay people 80% to be furloughed.  And yes, it is a big project so might as well get started.  And yes, having started people will be reluctant to stop because of the sunk cost fallacy.  But I'm not thinking of any of those.

Not starting HS2 now might have an impact on the NHS and our fight against Covid-19.  How so?
Well, when we start the construction work we will need concrete - which means that the cement kilns need to be kept going when otherwise they might shut down because of low demand.  And if you know about cement kilns, they are not as quick and easy to shut down and start up as a gas fire.  But we need to look further down the supply chain.  Cement kilns use a lot of fuel.  Where do they get it from?  They use a variety of sources, but one of them is re-processed chemicals that where originally used in the pharmaceutical industry as solvents.  These can be reprocessed to some extent but they can also be blended up as fuel for cement kilns.  What do we do with them if they aren't sent there?  There are only 3 choices - storage, incineration, and shutting the pharmaceutical production.  Storage capacity is not huge, there isn't enough incineration capacity, and it has to go somewhere if you produce it.  So, you say - build more storage.  Why?  We don't need it when the virus is over.  Burn it - well we'd love to have more incinerators, because we are already at maximum capacity, but do you want one in your backyard?  And building incinerators is quick and easy compared to the process for getting permits.  So, if there is nowhere to dispose of the waste (short term), the option left is to close pharmaceutical production - which is obviously not ideal during a pandemic.

So, starting work on HS2 keeps the kilns fired up using fuel from the pharmaceutical industries, which helps the NHS.  A complex web... isn't it?

P4H - 13th July 2016 Birmingham NEC

I shall be presenting the Supplier Training Zone at P4H, the leading Procurement event supporting Operational productivity in the NHS run by BIP Solutions.  Which is a bit of a mouthful, but does describe what it is about.

It is free to the Public Sector, and £95 for private sector - but hopefully the training sessions alone compensate for that (not necessarily mine, of course - there are 3 other training zones as well).  The sessions I am running are not only applicable to the NHS, so there would be value in popping along if you supply other Public sector bodies too.

Hope to see you there.

NHS Pricing on labels

Jeremy Hunt, the health secretary, is leading an initiative to put indicative prices on all NHS medicines over £20.  Though I have been negative about some government initiatives, this is one I support - though before you swoon in surprise I have to point out that I think the strapline "paid for by the taxpayer" is cheesy and unnecessary.  (I am though quite in favour of the proposal of a chap on BBC Question Time that MPs should have to wear the same line on a badge on their suits - but maybe it doesn't go far enough and we should insist they all wear HM Parliament boiler suits branded with that as a logo.  But I digress)

People are very unaware of the costs of the NHS.  A prescription costs £8.20.  I am not sure how much of that is actually administration costs (and I cannot find it - perhaps you know?) but given that a private prescription from a doctor may cost £15, and according to CIPS a Purchase Order typically costs £50, I believe that in fact ALL that charge is administration cost (and probably does not cover all of those costs).  So we literally do not pay for the pharmaceutical at all - just contribute to the administration of the process.

Which of course leads to the usual complaints that is is cheaper to buy Asprin over the counter than to get it through prescription.  People do not realise what they are actually paying for.

Let's do some back of a fag packet assessments.  (now that few people smoke, what can we use instead of fag packets?  Just asking)

Nearly 20 years ago my wife was taken ill in the USA.  Though we had medical insurance the bills we received (and had to pay before claiming back the money) where a real eye-opener.  The initial 5 minute consultation with a doctor was $50 - he said "go to hospital".  Kerching.  We went to hospital, where my wife had a 5 minute consultation ($150), and got a prescription for antibiotics, which cost us $80 at a nearby pharmacy.  Total cost $280 plus a bit of driving around.

Recently my son broke his ankle here in the UK.  A NHS doctor's consultation (she said "go to hospital"), a 5 minute consultation with a nurse, an x-ray, 5 minutes with a doctor, plaster clinic, and loan of crutches cost us £2.50 in car parking fees.  Subsequent new rubber ferrules for the crutches, x-ray, removal of cast, 5 minutes consultation with doctor cost us a further £2.50 in car parking fees.  A total of £5 and a bit of driving.

Looking on the internet the cost to the NHS might be £4 for the ferrules alone.  (Ferrules was a new word for me, so I am getting maximum mileage from it)  Based on salary cost of £50/hour that is £25 of staff time at minimum.  We haven't even considered overheads, infrastructure etc.

Based on my US experience I would expect that the cost might have been say twice what we paid 20 years ago, so $560 or £350.  According to this website that might be the lower end of a range that could run from $520 to $1000, or even $2500.


If you get something free you tend not to value it, but to take it for granted.  The NHS is free at the point of use, which is great because I did not need to consider the cost or call my insurance before taking my son to the doctor.  However I then did not actually value the service accordingly.

Incidentally my kids were born by emergency Caesarian section back in 2002.  The average bill for that in the USA according to a 2011 study by Truven Health Analytics was $50 000.  For that operation, and a month in Intensive Care Baby unit we paid just some car parking fees.   I call that a bargain.  How much of a bargain, I only realised by doing some research.

If I had been presented with an indicative bill for that service, then perhaps it would put the complaining about the price of parking into a bit of perspective.

The illustration incidentally is for a US bill for treating a snake bite.  Ouch and ouch again.

UK Government Spending

My friends at BIP Solutions have just sent round an e-mail highlighting their Tracker Spend Analysis service.
The most interesting part of the e-mail is too look at how much money the government has spent so far this year - see quotoation below

With a total spend so far from January 2011 of £146,003,754,510.17 – it is anyone’s game!

So who has spent what?

Central Government £99,389,430,852.30 Local Government £15,682,819,570.67 Emergency Services £78,629,500.56 Non-Departmental Public Bodies £3,114,832,048.07 NHS £27,738,042,538.57

So year to date we are at £146billion, (or £146 000 billion if you are in the US), and on track for round about £200bn by the end of 2011.  That is a lot of money.  But is only about £2.5k (at the moment) for each person in the UK.  Note that the NHS spends almost twice as much as all the councils put together, and that Quangos (while spending a hefty £3bn) are really only a couple of percent of the total - getting rid of them will not make a big difference.

So, if you are a small business interested in supplying the UK public sector, remember there is a lot of opportunities to target - even if the total spend is due to come down in future.

And if you are not then it is worth trying to understand where the money is going.