Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
The Department failed to hold Randox to account for its performance against its first contract...
Recommendation
The Department failed to hold Randox to account for its performance against its first contract and awarded it another £328 million extension without competition. The Department did not set out any key performance indicators for Randox in its first contract and only introduced performance measures such as test turnaround times from July 2020 – a month after that contract was originally expected to end. When awarding the first contract, the Department saw Randox as a market leader and one of the few providers able to expand testing, but Randox still needed government support to fulfil the contract. The Department says that it was not surprised at Randox’s request for government help to secure necessary testing equipment, but details of the expected support were not clearly set out in the contract or considered when agreeing the contract price. Despite the performance issues with the first contract, which meant Randox took longer than expected to Government’s contracts with Randox Laboratories Ltd 7 increase its testing capacity, the Department still awarded a £328 million extension to Randox without competition in October 2020 and appeared by then to have already become heavily reliant on its services. Recommendation: We expect clear and definitive assurance from the Department that even where contracts are awarded in exceptional circumstances, it will set performance indicators and use these to hold providers to account.
Government Response Summary
The government agrees with the Committee’s recommendation and states that DHSC Commercial Policy outlines best practice methodology and processes which applies to all procurements and contracts, irrespective of the circumstances, and all contracts are subject to DHSC’s contract management operating standards.
Government Response
Accepted
HM Government
Accepted
5.1 The government agrees with the Committee’s recommendation Recommendation Implemented 5.2 DHSC Commercial Policy outlines best practice methodology and processes which applies to all procurements and contracts, irrespective of the circumstances. 5.3 Contract performance begins from the outset of a procurement project where the business captures its requirements and success (performance) criteria. These requirements are further detailed within the procurement strategy and are developed to specify the exact Key Performance Indicagtor (KPI) deliverables the supplier is expected to achieve. Success criteria are included in award criteria and evaluated throughout the tendering processes. The commitments made by suppliers are ratified into the contract as obligations, alongside a clearly defined KPI and performance management schedule which provides the terms on which the relationship and performance will be governed. 5.4 All contracts (including those awarded in exceptional circumstances) are subject to DHSC’s contract management operating standards; including a range of contract governance requirements such as ongoing monitoring and reporting of KPIs via a scorecard. 5.5 Each contract is assigned an Operational Contract Manager from the relevant business area and the OCM and Commercial review supplier performance against KPIs (frequency being determined by value and risk level of the contract). Where KPIs are not being achieved a performance management discussion is had with the supplier. Discussions may result in informal measures or more structured interventions resulting in a remedial action plan being implemented and monitored to ensure contractual obligations are met, and that providers can be held to account – particularly where there may be contractual service credits which impose financial penalties on suppliers who do not meet their contractual KPI obligations.