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UnitingCare contract collapsed after company asked for extra £34.3m

The collapse of the contract for outsourcing elderly people’s services between Cambridgeshire & Peterborough CCG (CPCCG) and UnitingCare Partnership was caused by a mismatch in expectations over the value of the contract leading to UnitingCare asking for an additional £34.3m, according to an internal audit.

The report, from West Midland Ambulance Services, says that although both parties agreed that the contract to improve older people’s healthcare and adult community services was worth £725m, UnitingCare believed it could negotiate on other aspects of the contract value later.

There was no requirement within the evaluation process for bidders to confirm whether there were regulatory requirements to be satisfied, and when CPCCG asked to see UnitingCare’s business plan, they were refused because of commercial concerns. Stakeholders expressed concerns about the financial viability of the project as early as September 2014, a Department of Health Gateway report shows.

In May 2015, UnitingCare requested an additional £34.3m from CPCCG. The CCG offered a smaller amount in exchange, which was rejected by UnitingCare in August. Negotiations failed to resolve the dispute and the contract was dissolved in December last year.

Dr Neil Modha, chief clinical officer at CPCCG, said: “We welcome the review and would like to thank West Midlands Ambulance Service for undertaking the investigation.

“We are glad to see that the review has acknowledged that the procurement process and financial evaluation undertaken by the CCG for this innovative contract was of a high standard. We have carefully considered the lessons and recommendations the review makes. It has identified a number of lessons to be learned, by us and by the wider NHS.

“We will reflect on the findings of this review, as well as the NHS England review when it is published, and will build the learning into our procurement policy.

“The innovative new model of care, which was based on seeing improvements to people’s health outcomes, and the type of organisation that was chosen to deliver services were different from the traditional NHS models. This meant that there were areas that needed additional questions to be asked or types of reassurance to be sought which were new to the CCG. However, we accept the report’s view that there was a mismatch between the CCG and Uniting Care’s assumptions relating to the finances.

“We hope that today’s review will provide useful learning for the wider NHS, and other organisations conducting complex, high value procurements.”

The collapse has cost CPCCG £9.97m and contributed to its deficit.

The report also finds that UnitingCare did not resubmit its pre-qualification questionnaire, completed during the bidding stage, despite changing to a limited liability partnership (LLP), and therefore a different legal entity, after its preferred bidder status was announced in October 2014.

The report says UnitingCare considered it did not need to resubmit the bid because it had already informed CPCCG about the change, but it meant that a formal assessment of the risks of contracting with an LLP was not carried out.

CPCCG is now seeking independent legal advice to agree a parent company guarantee to protect its interests.


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