NHS buyers face outsourcing threat

10 May 2006
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11 May 2006 | Rebecca Ellinor

More than 1,350 employees of the award-winning NHS Logistics Authority and up to 80 staff from NHS Purchasing and Supply Agency (Pasa) will be relocated or lose their jobs this summer if the plans to outsource their operations go ahead.

The Department of Health (DH) has selected its preferred outsource bidder DHL/Novation, a consortium made up of the German logistics company and a US healthcare contractor.

The contract is expected to be awarded at the end of this month and staff are likely to transfer in July. But unions representing employees of the two NHS organisations told SM the arrangements for the transfer of staff remain unclear and Unison said its members were pushing for industrial action.

DH told SM it is outsourcing the work because it anticipates the private sector will be able to "enhance the service already provided" by "harnessing the proven experience of two global players: DHL for supply chain and Novation for procurement".

It expects the deal to give it better control of NHS purchasing, more leverage and "focused management of the business: from procurement to delivery".

It also hopes it will produce savings that can be invested in other parts of the health service.

Questions have been raised over the decision to take the work away from NHS Logistics which in 2004 returned £3 million in cash efficiencies to the NHS and last year won three major industry awards for its work - to a private supplier.

In a statement, John Wilkinson from the Association of British Healthcare Industries, said: "Much of the progress in taking the cost out of supply chains has been achieved so far using close collaboration with suppliers. A single 'for profit' intermediary may not be incentivised to continue that progress."

At the end of March, Labour MP John McDonnell questioned health minister Jane Kennedy about what risk assessment had been undertaken of the outsourcing deal.

She replied that market testing of DHL/Novation had taken place since August 2004 and there had been a "thorough examination of risk at every stage". She added that DH's risk register had been reviewed by the Office of Government Commerce's gateway review team who were satisfied that it is "robust".


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