Hospitals in turmoil as deal collapses

28 February 2002
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28 February 2002 | Robin Parker

A multi-million pound deal to maintain vital hospital equipment has been thrown into chaos after the breakdown of talks over a national contract.

Hospital trusts have been given just weeks to do their own deals after the NHS Purchasing and Supply Agency (Pasa) failed to reach an agreement with US-based multinational General Electric Medical Systems over the renewal of a five-year contract.

The contract was due for renewal on 1 April, but NHS supply managers told SM they were either in the early stages of negotiations or had yet to begin.

They fear being forced to negotiate on their own could be far more expensive than relying on a national contract and have accused Pasa of reneging on its responsibilities.

The £4 million maintenance contract covers the servicing of diagnostic medical imaging equipment, including ultrasound scanners, heart monitors and x-ray systems, at more than 70 major NHS trusts.

Pasa said GE's bid for the renewed contract was unsatisfactory but would not comment further. The trusts will have to secure new deals for only the forthcoming year, which is likely to be more expensive than a longer-term centralised contract.

NHS purchasing managers have reacted angrily to the move. Many fear they will not complete the deal in time as the re-tendering will place huge demands on their workload.

One supply manager branded it "anathema to good procurement practice".

He told SM: "There are about half a dozen suppliers in this field but we haven't got time to assess them all.

"It's almost impossible to compete the contract legally by 1 April. It puts into question the agency's role, and the supplier pressures brought to bear on it."

Another manager said that with just over a month left, his trust was unlikely to complete the tendering process in time.

To avoid missing the crucial deadline, some trusts are likely to have to form new short-term arrangements with GE for extensions to current arrangements.

Pasa replaced NHS Supplies two years ago as a central purchasing body to cut healthcare costs by negotiating collective national deals on behalf of trusts. In its first annual report, it pledged to increase the value of the contracts it would co-ordinate by £400 million to £2.6 billion.

Pasa said it would provide trusts with help in negotiating new maintenance deals, but supply managers said they had not received enough assistance so far.

European procurement directives mean that as each deal will be worth more than £101,000, trusts must open them to competition in a formal tendering process. Purchasers said Pasa has given legal advice about placing notices for tenders under EU rules, but had left detailed specifications up to each trust.

The crisis could put extra pressure on an already cash-strapped NHS and will raise the political temperature of the debate over healthcare. Tony Blair, the UK prime minister, said last week that higher taxes might be needed to deliver improvements.

The agency insists that decentralising the contract was a one-off incident that will be quickly resolved. The agency is confident that trusts will be able to meet the immediate target and that relations will be repaired with GE within a year.

Pasa said in a statement: "We believe that in this particular case, any extra work for trusts in the short term will be outweighed by benefits in the long run. We will continue to work through a new tender process for a result that will demonstrate added value and shared savings for all parties by April 2003."

GE Medical Systems was unavailable for comment.

SMfeb2002

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