NHS HDL (2006) 39 abcdefghijklm = eé~äíü=aéé~êíãéåí= = cáå~ååé=aáêéåíçê~íé= Dear Colleague NATIONAL PROCUREMENT: USE OF NATIONAL CONTRACTS FOR AGENCY LABOUR PURCHASE; AND REVIEW OF PUBLIC PROCUREMENT IN SCOTLAND Purpose 1. The purpose of this HDL is to: o mandate the use of national procurement contracts in particular the national contracts for the purchase of agency labour; and o provide guidance on the implementation of the recommendations of the Review of Public Procurement in Scotland, as they affect procurement in NHSScotland. National Contracts for Agency Labour 2. The Strategic Sourcing workstream of NHS National Services Scotland National Procurement (NP) has in place national contracts for the supply of agency nurses, locums, allied health professionals and non clinical staff. The details of National Contract suppliers are summarised in Annex A. 3. To facilitate the development of national strategies for agency labour procurement, track the effectiveness and compliance of existing contracts, and facilitate continuous improvement initiatives, NP is tracking agency labour spend and producing a quarterly management information report which details spend trends by Health Board, category of agency labour purchaser, supplier and national contract compliance. 4. The key points from the second quarterly report for the period January to March 2006 are summarised in Annex B. 5. The use of all national contracts is mandatory for all NHS boards. In the case of agency labour, all future use of noncontracted suppliers should cease with immediate effect and NHS boards should ensure service continuity is maintained by the use of recognised contract staff, if required. 10 July 2006 Addresses For action Chief Executives: NHS Boards, Special Health Boards and NHS National Services Scotland For information Directors of Finance, NHS Boards, Special Health Boards and NHS National Services Scotland Medical and Nursing Directors, NHS Boards, Special Health Boards and NHS National Services Scotland Heads of Procurement, NHS Boards, Special Health Boards and NHS National Services Scotland Enquiries to: Ross Scott Directorate of Finance Health Department Basement Rear St Andrew s House EDINBURGH EH1 3DG Tel: 0131-244 2363 Fax: 0131-244 2371 Email: ross.scott@scotland.gsi.gov.uk Michael Healy Director of National Procurement NHS National Services Scotland Gyle Square 1 South Gyle Crescent EDINBURGH EH12 9EB Tel: 0131 275 6749 Fax: 0131 314 0704 E-mail: michael.healy@shs.csa.scot.nhs.uk
6. By allowing Premium Rate Agencies to continue to receive NHSScotland business ( 2,670,657 in January to March 2006) NHSScotland would be a breach of EU procurement legislation. Whilst this approach is likely to cause operational difficulties in the short term for NHS boards, ceasing to use Premium Rate Agencies will encourage Nurses currently registered with them back to the NHSScotland nurse bank or contracted agency providers. Review of Public Procurement in Scotland 7. Review of Public Procurement in Scotland (also known as the McClelland Report published earlier this year) provides a strategic programme of action to deliver improved procurement in the Scottish Public Sector. The programme will result in delivery of efficiency savings and improved standards in the way the public sector procures goods and services and ensure taxpayer s money is spent wisely. The Report can be found at http://www.scotland.gov.uk/resource/doc/96269/0023302.pdf. 8. Paragraphs 12 and 13 below describe the actions required within NHSScotland procurement to take forward the recommendations from the Review, and to ensure that the NHSScotland procurement community is fully engaged with the process of delivering the required outcomes from the Review. Please note this review relates to all areas of procurement within NHSScotland, not only areas traditionally managed via NHS board and Special Health Board procurement organisations. 9. The work to take forward the programme of work in Health procurement will be centred on NP. Overall responsibility for delivery of the programme is vested in the Chief Executive of NHS National Services Scotland and the detailed responsibility for coordination, and implementation of the programme and associated Action Plans, is vested in Michael Healy, Director of National Procurement. 10. Michael is further tasked with establishing NP as a Centre of Expertise for NHSScotland procurement. To achieve the task, and co-ordinate delivery of the reform programme, a Procurement Implementation Steering Group for NHSScotland will be set up which will drive forward the Action Plans for health procurement. This will be chaired by Michael and will include representation from: o NHS National Services Scotland, NP (representing the Strategic Sourcing, eprocurement & Systems and Logistics workstreams); o NHSScotland NHS board and Special Health Board Senior Management; o Scottish Executive Health Department; o NHSScotland NHS board procurement staff; o Other Service departments. 11. Full details of the composition of the Steering Group and the timescale of the meetings will be issued shortly. The Terms of Reference for the Steering Group are detailed at Annex C. 12. Self-Assessment Exercise. In order to assess the status of procurement processes and best practice in NHSScotland, a benchmarking exercise will be conducted across the procurement spectrum. This will take the form of an NHSScotland Self-Assessment Toolkit. The Toolkit will be disseminated in July 2006 and organisations will be asked to complete the assessment by 31 st August 2006. 2.
13. Post Self-Assessment Action. Once the Self-Assessment exercise is complete, the Steering Group will action the following: o Review data from exercise; o Establish priorities for improvement; o Focus on improvement tasks by establishing Task & Finish Sub Groups; o Produce a Quality Report for the Chair of the Public Procurement Reform Board and SEHD; and o Manage the work to deliver the Terms of Reference and prepare a comprehensive project plan by October 2006 14. Delivering an improved procurement service for NHSScotland is high priority in the Efficient Government programme and will deliver benefits and savings for patient care. The McClelland Report has set the target to attain those improvements and it will be the task of all within NHSScotland to work towards delivering a world-class service by achieving the implementation programme. Action 15. NHS board and Special Health Board Chief Executives should ensure that: o all national contracts are used and, in the case of agency labour, all future use of non- contracted suppliers should cease with immediate effect; and o staff work with NP to take forward the recommendations from the McClelland Report. Yours sincerely ALEX SMITH Interim Director of Finance 3.
ANNEX A Category Contract Reference Expires Suppliers Nursing (North & East) WOT 505 October 2006 Scotnursing, Allied, Acorn, BNA, Raeburn Nursing (West) WSP001-006 October 2006 Scotnursing, Allied, Acorn, Advantage, Prestige Locums WOT 501 May 2007 Medacs & Reed Allied Healthcare Practitioners WOT 502 May 2007 Reed, Medic International, Jenny Reeves
ANNEX B The key points from the second quarterly report for the period January to March 2006 are summarised below: o The National spend on Agency provision of Allied Health Practitioners grew by 82% to 2m for this quarter compared to last quarter. The majority of this spend is with our contracted Agencies. o The National spend on Agency Locums reduced by 20% to 3.6m for this quarter, compared to last quarter. Approximately 67% of this is spent with contracted Agencies. o The National spend on Agency Nursing increased by 26% to 6.8m for this quarter, compared to last quarter. Compliance to National Contracts was 34% (-12% on last quarter). o Agency Nursing providers which pay premium rates of pay to Nurses and high commission rates are the main source of off contract spend and accounted for 55% of the total spend (a 63% increase in Premium spend Nationally) o One supplier which charges approximately 80% commission on the Nurse s pay accounts for 39% of the total spend in this quarter and have a near monopoly position in some NHS boards. o Data on Premium usage from this period last year shows a comparable spike in premium rate usage (-2% on last year). Eliminating the reliance on premium rate agency usage is difficult as staff are attracted to the high pay rates which distorts the supply market by concentrating nursing staff over a few Premium rate Agencies: o However NHS boards have or are deploying strategies and forming working groups to tackle this issue. o Anecdotal usage data collected for April and May 2006 is already showing significant reduction on Premium rate usage, which should be reflected in the April to June quarter s data. o The National spend on the provision of Agency staff in Non Clinical roles increased by 15% to 1.5m for this quarter compared to last quarter. Presently no National contract is in place, however there are several regional contracts being used. A National contract is in the workplan for 2006-07.
ANNEX C The Terms of Reference for the Procurement Implementation Steering Group to implement the recommendations of the Review are: o To review the governance of health procurement to ensure that future delivery is of the highest ethical and accountable order; o To assess current levels of maturity in the procurement process within health, to identify gaps and make recommendations as to making improvements and ensure that Business Conduct Guidelines are issued to the procurement community; o To assess current performance levels across health procurement and ensure that these attain best-in-class status, and are linked to realistic and achievable Performance Indicators; o To assess current standards across health procurement and ensure that all procurement meets the highest standards, commensurate with world class standards; o To understand current processes across health procurement and ensure that best practice is being applied; o To assess current data holdings, requirements and usage and determine the best application and processing of data for the future management information needs; and o To identify training needs for staff in NHSScotland procurement to raise standards and ensure a professional workforce