Corporate fight breaks out with Dept of Health over new NHS supply chain contracts

Corporate quarreling now truly “disrupts” every layer of the once-public service NHS – including supplies and logistical planning that support hospitals and  NHS  clinics etc.

The rot set in with the New Labour government’s privatisation of NHS Logistics in 2006, when it handed a £3.7bn contract for the hospitals supply service to the union-busting German delivery company DHL. This prompted the biggest NHS staff strike in 20 years.

DHL recently lost out to UNIPART as logistical handler of the NHS Supply Chain. Unipart now runs the NHS warehouses and lorry deliveries. And it’s a fairly big contract… estimated £730million over 5 years…The deal is for Unipart to run a centralised process of:

  • delivering medical devices and hospital consumables ‒ other than medicine ‒ to NHS trusts
  • warehousing
  • inventory management
  • order processing and delivery

DHL are pissed off enough with their new contracts for the NHS Supply Chain to take the Dept of Health to court, claiming that the tendering process is faulty because they haven’t been given a big enough slice of the pie.

(Update 18 Aug: Health Services Journal has reported that DHL has lost its legal challenge to the Dept of Health .)

So Unipart are happy no doubt. And they do have good experience in the “Unipart Way” – the Toyota Car Factory Lean Management System is something they are enormously proud of.

Unipart appoints subsidiary of USA firm as key subcontractor in order to win NHS Supply Chain logistics contract

Here is information from Unipart about their NHS Supply Chain Logistics contract. In order to buy in healthcare logistics experience for their bid, Unipart appointed Movianto as a key subcontractor.

Movianto is a subsidiary of the US firm O&M Inc, which has healthcare logistics experience in USA and Europe.

Movianto UK basically handles the Home Delivery Service bit of Unipart’s NHS Supply Chain Logistics contract. This is worth about 10% of the £730 million, 5 year contract.

In the summer of 2018, the Department of Health and Social Care also handed Movianto UK the £55m contract for the management and the distribution of the UK’s stockpile of personal protective equipment (PPE) for use in a pandemic.

Update: You can read how that turned out, here.

As with so many NHS privatisation stories, this starts under the New Labour government

In 2006 it privatised the NHS Logistics Authority  and awarded the contract for the new NHS Supply Chain to DHL. This was opposed by the biggest NHS strike in 20 years.

This arrangement was shaken up by the 2015 Carter Review of Operational Productivity in NHS Providers. Carter called for the Procurement Transformation Programme .

(Along with NHS campaigners from around the country, we protested against the Carter Review launch at the Birmingham Dept of Health Procurement Trade Show, which was selling the NHS as huge business opportunity.)

Cost-cutting Future Operating Model

The Procurement Transformation Programme has resulted in the confusing Future Operating Model –

‘designed to realise £615m of savings in real terms over the next 3 years (2018-21).’

Starting at the end of September,  this Future Operating Model is a revamp by NHS Procurement, NHS Improvement and Uncle Tom Cobbly and all, of the existing NHS Supply Chain, which DHL have run since 2006. This was despite a warning from the Health Care Supplies Association  in 2016 that

“New NHS Procurement structures may be disastrous”.

They said existing commercial procurement arrangements were working well and should be extended.

Wholly Owned Subsidiary to manage NHS Supply Chain

In the revamp that created the Future Operating Model, in April 2018 the Dept of Health set up a Wholly Owned Subsidiary, Supply Chain Coordination Ltd, to manage the NHS Supply Chain.

NHS Supply Chain Coordination Ltd is meant to be

“a new commercially astute management function”

However, Private Eye (Issue 1520) has pointed out that despite government claims that one centralised buying system would lead to “efficiency”,

“In fact it has led to big salaries at the top and lower pay and staff shortages at the bottom…any ‘savings’ delivered look more like penny-pinching than efficiency: in December [2019], HGV and 7.5 tonne drivers on the SCCL/Unipart contract had to threaten strike action to get decent sick pay and push their rate above an industry low of £10.24 an hour.

“At the start of April, union Unite said warehouse staff were exhausted and struggling to keep up with demand. In a cuts-driven system, there was no slack to deal with the extra burden of a pandemic. The government’s solution was to send in the army to help in the warehouses.”

Private Eye, PPE, Issue 1520

The official blurb says that the NHS Supply Chain is responsible for sourcing, delivery and supply of healthcare products and food for NHS trusts and healthcare organisations. It provides a single point of access to over 316,000 nationally available, transactable lines ranging from bandages to sutures, from gloves to implants, and surgical equipment. In addition, it can help plan investments in medical capital equipment such as MRI scanners, linear accelerators and patient monitors.

NHS Supply Chain’s management of the procurement process negates an NHS organisation’s need to tender through the Official Journal of the European Union (OJEU).

I FOI’d to ask for explanation of this and to ask if it means that NHS Supply Chain’s management of the procurement process also negates the need for NHS organisations to comply with EU competition regulations about procurement.

Update: I did not receive an answer.

Revamped NHS Supply Chain has 11 Category Towers – all managed by the Wholly Owned Subsidiary, Supply Chain Coordination Limited

The Department of Health has divided NHS supplies into Eleven Category Towers, all managed by Supply Chain Coordination Ltd. The Wholly Owned Subsidiary’s management function went live on 1 April 2018. It oversees the performance of the 11 category tower service providers along with the logistics and IT providers.

Here are all the companies that are contracted to provide the various categories of supplies to the NHS

11 NHS supply chain category towers contract holders
Source: NHS Supply Chain Supplier Newsletter, Issue 3

The Health Care Supplies Association (HCSA) says

“the eleven tower system is hard to understand” –

but suppliers shouldn’t be alarmed because 200 very intelligent people have been employed to become the Intelligent Client Coordinator…

The Dept of Health also thought it best if procurement companies were only allowed to take hold of THREE CATEGORY TOWERS of NHS supplies at a time. (Which Lord of the Rings numpty came up with the idea of calling them TOWERS?)

DHL already have three towers – the procurement of large diagnostic capital devices, ward-based consumables, and infection control /wound care.

Update 30 July 2019:

NHS England/NHS Improvement will support Supply Chain Coordination Limited (SCCL) to develop the 11 national category towers and double their market share to 80% by 2022. (Source: NHS Long Term Plan Implementation Framework: system support offer)

And what happened next? Check out this update…

National efficiency scheme costing ‘an arm and a leg’, say trusts

By Katherine Hignett10 December 2019

money efficiency

Trust procurement leads have expressed serious concern over savings reports provided by a flagship efficiency model, with one saying the scheme was “costing [them] an arm and a leg”.

Update 20 Sept 2020:

What the hell are we doing letting all these multi-national businesses scramble our public services in search of ever-more profit?

There is a better way. It’s not the Unipart Way. It’s not the 11 Category Towers Way. It’s the Reinstatement of the NHS Way. There has never been a more urgent time for campaigners and public alike to understand that we are  handing over the NHS to a bunch of piranhas.

The only way now is renationalise the NHS – safeguarding the values of a healthcare system based on equality and the improvement of people’s lives. In that there is hope of a better society and future.

(Much of this is reblogged, with permission, from Steve Carne’s blog post The Feeding Frenzy on the 999 Call for the NHS website)

Updated 30 July 2019 with info about:

  • The NHS Supply Chain,
  • The Dept of Health and Social Care’s Wholly Owned Subsidiary, Supply Chain Coordination Ltd, and
  • Unipart’s appointment of Movianto as a key subcontractor for its NHS Supply Chain Logistics contract.

Updated 27 Nov 2020 with info from Private Eye Issue 1520

One comment

  1. This a disgrace the nhs is not for sale the general public have paid for this already . So all you private companies hands off out nhs


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