Source · Select Committees · Public Accounts Committee
Recommendation 19
19
Accepted
Despite issues with the performance of the first contract, in October 2020 Randox was awarded...
Recommendation
Despite issues with the performance of the first contract, in October 2020 Randox was awarded a contract extension worth £328 million (around two and a half times the value of the original contract), again without competition. At the time, the Cabinet Office questioned why the Department had not used a competitive tender for the extension. The Department explained that the months between March and October 2020 had been “extremely intense” and that it simply had not had time to go through a competitive contract process.36 It did, however, acknowledge that the testing market had matured by October 2020 and there was a more competitive range of suppliers.37 Contract documentation prepared before the extension was awarded noted that a competitive tender was not the preferred course of action for the Department because Randox was considered a fundamental part of meeting testing targets at that time.38 The Department told us that even though a variety of suppliers were providing testing services by then, Randox was “already an important part of the infrastructure” and that government needed to utilise all of the testing capacity available to it.39 Contract price and profits
Government Response Summary
The DHSC outlines best practice methodology and processes which applies to all procurements and contracts, irrespective of the circumstances, including setting performance indicators and using these to hold providers to account via ongoing monitoring and reporting of KPIs.
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.