Feeds

NAO kicks DoH for Dr Foster move

Tendering process under scrutiny

Bridging the IT gap between rising business demands and ageing tools

The National Audit Office (NAO) has sharply criticised the Department of Health for an information spreading initiative.

It says the DoH failed to go through proper procedures and could not show value for money in setting up a joint venture between the Information Centre, which collects and disseminates information across the NHS, and Dr Foster, a company working in health data dissemination.

The NAO published a report on the venture on 6 February 2007, Dr Foster Intelligence: a joint venture between the Information Centre and Dr Foster LLP, in which it says the authorities did not go out to tender to encourage fair competition.

The DoH established the Information Centre in April 2005, and recognised that it lacked expertise in publishing, marketing, and producing relevant information products. It saw an urgent need to fill this gap and was aware of Dr Foster's prior success in the field. Before the centre opened it identified the potential for a joint venture, and in February 2006 announced the creation of Dr Foster Intelligence.

The report notes that government is increasing its use of joint ventures, but concludes that, in the absence of a fair competitive tender process, the Information Centre had no fair comparisons or benchmarks to demonstrate this was the best structure to meet its needs, or that it represented good value for money.

The DoH did not hold any discussions with other private health informatics companies to determine their interest or ability to deliver the aims of the joint venture. There were no calls for expressions of interest to identify other possible partners. It decided that Dr Foster provided the best prospect on the basis of market analysis it had commissioned.

The Information Centre paid £12m in cash for a 50 per cent share of the joint venture. This price included an acknowledged strategic premium of between £2.5m and £4m, and was higher than their financial advisers' indicative valuation of the share.

The department also spent more than £1.7m on professional fees, £50,000 of which was paid to Dr Foster for advice about the establishment of the Information Centre and a possible relationship with the private sector.

NAO head Sir John Bourn said: "By taking the decision not to carry out a formal competitive tender process in this instance, the department cannot demonstrate that the joint venture was the best structure to meet its needs or that it represents good value for money."

In a response included in the report, the DoH and the Information Centre said they followed the appropriate legal advice, that a joint venture was the right strategic choice, and that they paid a reasonable price in setting up Dr Foster Intelligence.

They were further criticised, however, by Edward Leigh, chair of Parliament's Public Accounts Committee. He said there was no fair and competitive tendering and that the DoH ignored the rules.

"Not only that: there was an unseemly urgency to complete the deal," Leigh said. "And the department's blurring the lines between adviser and joint venture partner, by paying Dr Foster itself for advice on a possible joint venture with the private sector, was quite wrong.

"To cap it all, the department in its haste to conclude the deal, possibly paid some £4m more than its share was worth. In the absence of the competitive pressure inherent in a tender process, it is quite impossible to say how much it is really worth."

Among the NAO's recommendations are that all government departments should ensure that all future public private partnerships are advertised appropriately within the EU and maintain a competitive bidding process.

The Information Centre should ensure that all future services are procured competitively, and take steps to ensure a level playing field in health informatics, consulting with competitors of Dr Foster Intelligence to understand the reasons underlying any unwillingness to bid for work.

This article was originally published at Kablenet.

Kablenet's GC weekly is a free email newsletter covering the latest news and analysis of public sector technology. To register click here.

Boost IT visibility and business value

More from The Register

next story
UK.gov's Open Source switch WON'T get rid of Microsoft, y'know
What do you mean, we've ditched Redmond in favour of IBM?!
UK government officially adopts Open Document Format
Microsoft insurgency fails, earns snarky remark from UK digital services head
Major problems beset UK ISP filth filters: But it's OK, nobody uses them
It's almost as though pr0n was actually rather popular
US Social Security 'wasted $300 million on an IT BOONDOGGLE'
Scrutiny committee bods probe derailed database project
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Arrr: Freetard-bothering Digital Economy Act tied up, thrown in the hold
Ministry of Fun confirms: Yes, we're busy doing nothing
Australia floats website blocks and ISP liability to stop copyright thieves
Big Content could get the right to order ISPs to stop traffic
Help yourself to anyone's photos FOR FREE, suggests UK.gov
Copyright law reforms will keep m'learned friends busy
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.