Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Accepted
The Department did not include key performance indicators (KPIs) in its first contract with Randox...
Recommendation
The Department did not include key performance indicators (KPIs) in its first contract with Randox against which it could judge how the company was performing. The Department said the reason it had not set performance measures in the contract was because its focus at the time was on building the system of testing capacity and understanding how to get that system to work most effectively. It added that there were a number of performance metrics that it did monitor on a frequent basis, some of them daily, as well as conducting weekly calls with Randox to discuss performance. However, the Department did introduce contractual KPIs for Randox’s subsequent contracts.32 25 C&AG’s Report, paras 11, 13 26 Qq 41–42 27 C&AG’s Report, paras 13, 2.6–2.7 28 Qq 44–46, 128 29 Q 47 30 Qq 86–88, Letter from the Department of Health & Social Care and the UK Health Security Agency, 13 June 2022 31 Q 111; C&AG’s Report, para 1.18 32 Qq 52–53; C&AG’s Report, para 17 Government’s contracts with Randox Laboratories Ltd 13
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: PAC conclusion: The Department failed to hold Randox to account for its performance against its first contract and awarded it another £328 million extension without competition. 5: PAC 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. 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.