NHS procurement: a towering future?

Source: NHE Jan/Feb 18

Mario Varela, managing director of NHS London Procurement Partnership (LPP), describes the work his organisation has been undertaking in recent months to help manage NHS procurement, all whilst continuing to carry out business as usual.

It is not exactly ‘news’ that the NHS is experiencing huge financial pressures. For anyone involved in NHS procurement, there has been an additional challenge: the introduction by the Department of Health & Social Care (DHSC) of the ‘Future Operating Model’ for a number of strategically important product categories. The FOM, as it is known, replaces what was the contract with DHL to supply product and logistics to the NHS, which ran for 12 years. That contract has been disaggregated into four distinct functions: logistics; transactions services; IT prime to deliver supporting technology; and the 11 ‘Category Towers,’ run by specialist providers.

Under this new model, the Category Towers are the procurement function of the FOM. They are designed to manage all NHS procurement in 11 areas – six of which are of particular interest to LPP, as they cover medical and surgical procurement which is the focus of one of LPP’s workstreams. The medical and surgical tower providers will undertake the clinical evaluation of products and run compliant procurement processes on behalf of the NHS. All NHS organisations are encouraged to transfer all related procurements to the independent providers who will run each of these towers.

LPP has, in recent years, supported significant investment in the expertise of its medical and surgical team. When the DHSC tender was published, the LPP steering board (chief executives, directors of finance and heads of procurement from within our membership) delivered a very clear message that, as LPP had the strength and expertise in procuring medical and surgical supplies and services, that expertise should not be lost to the NHS. LPP could, should – and did – bid.

In order to bid, LPP, in conjunction with the other three NHS regional procurement hubs – North of England NHS Commercial Procurement Partnership, East of England Collaborative Procurement Hub, and NHS Commercial Solutions – created a new legal entity, Collaborative Procurement Partnership (CPP) LLP.

The CPP bids in the first tranche of tenders issued by the DHSC were successful, and CPP will operate three of the six Category Towers which replace the medical and surgical elements of the original DHL Supply Chain contract. The three-year contract awarded to CPP LLP gives it control of £1.7bn – around 50% – of the NHS Supply Chain medical and surgical product spend from May 2018, and the opportunity to influence significant procurement savings for the NHS.

It is an affirmation of the strength and capability of NHS procurement that the CPP bid scored highly in all six medical and surgical categories. In the interests of introducing ongoing competition to the process, the DHSC limited the maximum number of categories which could be won by any one organisation to three. Those three towers are:

  • Tower 2: Sterile intervention;
  • Tower 4: Orthopaedics, trauma, spinal and ophthalmology;
  • Tower 5: Rehabilitation, disabled services and women’s health.

The contract has now been signed, and the transition work is proceeding with a deadline for go-live of 8 May.

Winning the bid is a great opportunity for the medical and surgical staff of each of the hubs, who will transfer to and lead the development and success of the towers. With control of around 50% of supply chain spend, winning the towers is an opportunity to grow that influence, keep our expertise in NHS hands, and redirect profits to the NHS frontline.

Procurement of these complex ranges of clinical items is one element of LPP’s portfolio of services and products provided to its members.

Use it or lose it: getting value from the apprenticeship levy

Business as usual continued while the work on the bid for the Category Towers was underway – and a major piece of work LPP supported was to put in place a procurement which would enable NHS organisations to make best use of the apprenticeship levy they are now mandated to pay. At 1% of each organisation’s pay bill, it is a sizeable sum – but if it isn’t used by putting apprenticeships in place, it is lost to the organisation.

By 1 April last year, LPP had succeeded in going live with a Dynamic Purchasing System (DPS) for apprenticeship training providers, in time to meet the deadline for public sector bodies to begin participating in the apprenticeship levy programme.

Within the first two months 20% of NHS organisations across the country had signed up to use it – and now, 10% of NHS organisations have contracted with training providers and are making sure they are getting full value from the levy we are all mandated to pay. Nearly 3,000 apprentices are now in place.

The use of DPSs is being promoted widely where appropriate by LPP. A DPS differs from a traditional framework agreement by enabling would-be suppliers to apply to join at any time during the life of the DPS. It is particularly useful at facilitating access for SMEs to public sector contracts – something we have all been tasked with doing. LPP has now introduced five different DPSs, and as an example the number of SMEs now able to bid for public sector work, the percentage of SME suppliers on our three construction-related DPSs, is 81.1%.

LPP in a post-FOM world

The steering board spent time in recent months considering how the changes brought by the FOM will free LPP to provide additional support for members with their procurement activities. As a consequence, LPP is now developing a programme of work to establish a much-needed apprenticeship and graduate training scheme for the membership. Work is already underway, with a view to offering the first apprentices and trainees to members from summer 2018.

An ‘Advisory and Contingent Resources’ DPS and a Contract Management service will also be added to LPP’s portfolio in the coming year.

So, for LPP, it is business as usual: we will continue to provide the procurement support and services which our members want. At the same time we will take pleasure in watching how our protégé, the CPP LLP, managed by LPP’s medical and surgical experts, develops.




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