national treatment purchase fund - 2004

8/14/2019 National Treatment Purchase Fund - 2004

1/4

N ational T rea tm ent Purchase Fund - 2004Supplem ent to Audit R eport

The National Treatment Purchase Fund (NTPF) was set up in April 2002 to purchase treatments forpatients who had been longest o n surgical waiting lists of public hospitals. Th e business of the Fund wasoverseen b y a steering group chaired b y a senior official from the D epartm ent of Health and Children andmanaged by a specially recruited project d irector and an official from the D epartm ent, both of whom werealso mem bers of the steering group.Th e Fund was established on a statutory b asis with effect from 1 May 2004 by way of the N ationalTreatment P urchase Fund Board (E stablishm ent) O rder 2004 but the first Board m emb ers were notappointed until Septemb er 2004. Th e project director was appointed Chairperson of the Board and theDepartment's official became Chief Executive Officer. This ensured a seamless transition to the newstatus of the Fund.E xpenditure incurred from April 2002 up to O ctober 2004 was charged directiy to the Vote for H ealthand Children and, from then on , block allocations made to the Board were charged to the Vote. Und erthe Establishment O rder, accounts o f the income and expenditure of the Board are subject to audit by theComp troller and Auditor G eneral. Issues from the Vote from the outset to 31 D ecember 2004 to meetthe Fund's expenditure totalled 79,069,000.In the course of my audit of die Fund's accounts for the eight-month period to 31 D ecemb er 2004 Inoted two areas where proper procedures were not followed approval of staffing and procurement ofservices.StaffingThe E stablishment O rder provides that the Board requires the approval of the Department of Health andChildren with the consent of the Department of Finance for the num ber and grades of staff it appoints.Immediately prior to the establishment of the Board on 1 May 2004, 18 staff were engaged on the work ofthe Fund. By the end of 2004 this num ber increased to 22 and had further increased to 39 at the end of2005. As my staff had noted in the course of an examination of the Department's records that a limit of17.6 whole time equivalent posts was in place in March 2005 and that there was no indication that thislimit had subsequentiy been increased, I asked the Chief Executive if the required approval had beenobtained for the staffing employed.The Chief Executive informed me that there had been liaison and contact with the D epartm ent of Healthand Children in relation to staffing issues and pointed to letters sent to the D epartm ent in April 2003,February 2004, Jun e 2004 and May 2005. H e stated that the level of staffing for th e Board 's activities wasthe subject of ongoing discussions between the Department and the Department of Finance. Noagreement on staffing levels had been reached by early 2006.


2/4

Procurement of ServicesProcurement of services by public bodies is subject to EU and national rules and guidelines. If the valueof services purchased by a contracting authority is above a certain threshold, the procurement process isgoverned by the E U's Pub lic Sector D irective. Th e main requirement for such purch ases is thepublication of a contract no tice in the E U official journal advertising the services to be procured. Th eparticular information to be include d in a con tract no tice is laid down b y E U law. It includes th e selectionand award criteria to be applied. Th e overall thrust of the directive is to ensure compliance with EU lawprinciples, part icularly tho se of transparency, no n-discrimination and equal treatmen t.Th e thresholds app lying to services in 2002 was 162,293 for those pr ocur ed by central govern men tauthorities and 249,681 for tho se acquired by other public bo dies. Th ese were changed with effect from1 January 2004 to 154,014 and 236,945 respectively. Below those thresh olds, govern men t d epartm entsand agencies and other public bodies are subject to procurement guidelines and circulars issued by theDepartment of Finance. While it is a basic principle of p ublic procu rement that a comp etitive processshould be used unless there are justifiably exception al circumstances, t he guidance p rovides th at purch asesof services in excess of a value of 50,000 should normally be advertised as part of a formal tenderingprocess.Three significant procurem ents of services by the NT PF did not appear to comp ly with E U/ nationalrules:

Pub lic relations and advert ising Management consulting Financial services

Pu blic Relations and Advertising ContractA cont ract for the supply of public relations and advertising services was concluded soon after theinitiative comm enced. Amo unts expen ded on these services were:

2002 2003 2004 T ota lProfessional Fees 122,000 220,000 291,000 663,000Special Promotion and Marketing: Advertisements,Radio and N ewspapers Camp aign, etc. 261,000 1,118,000 331,000 1,710,000Tota l Payments 383,000 1,338,000 622,000 2,343,000From 1 January to 31 O ctober 2005, 291,000 and 331,000 was expended on p rofessional fees andpromotion and marketing etc., respectively.As the total value of the services supplied und er this contract exceeded the G overnmen t D epartmen ts'thresho ld set out in th e EU d irective and as the con tract was extended for a further year, I asked why theNTPF did not comply with the requirement to use the open procurement process in this instance.


3/4

Th e Chief E xecutive informed m e that a reputable company was asked to do some once-off tasksrequired by the N TP F, as it was an established PR comp any with experience in the health sector. Th econtract was for an initial 3-mo nth period from end June 2002 whilst a Request For Ten der (RFT) wasbeing prepared.The Chief E xecutive told me th at three com panies were subsequently asked to submit a tender under therestricted p rocedure; two respon dents were invited to m ake presentations in N ovemb er 2002, after whicha contract was awarded for 14 month s up to 31 December 2003. Because of staff shortages at the end of2003 and the length of time it too k to bed down procedures in the NT PF it was decided to con tinue thecurrent arrangements with the incumbent PR company to the end of 2004.Tenders for a new contract, using the EU open procedure, were advertised on the G overnmen t e-Tenderswebsite in N ovemb er 2004. Th e resulting contract was awarded to the same comp any in March 2005.The M anagement Consultants' ContractThe Board engaged the services of Management Consultants in Septem ber 2004 to suppo rt it in itsprocurement processes. It had expected at the time that the value of this contract would not exceed15,000. While it sought quotes from two suppliers, one of these did not respon d. E xpenditure und erthe ensuing contract in 2004 amount ed t o'14,500. Ho wever, services to a value of 473,000 wereprovided under this arrangement to end O ctober 2005 without recourse to further tendering.I asked the Chief E xecutive'to explain why the procurement rules were not adhered to in this case.He informed me th at in m id-2004 the Board was operating under heavy workloads and needed to p rocurevarious services. It realised as the year pro gressed th at it would co nt inue to req uire the services of expertsin order to com ply with pro curemen t regulations and, as the Board did not h ave the necessary expertisein-house, it decided to retain the services of the existing Management Consultants to pro vide

Advice and assistance in the creation of Request for Ten der temp lates for the procurement offuture services for the Board Specific technical (IT) and management expertise for the development and implementation of acomputerised Patient Management System Control and managemen t assistance in the developm ent of the National Patient TreatmentRegister including independ ent assessment of Hospital systems.

The rates for the contract were renegotiated when the extent o f assistance required to co mply with theregulations of EU level procurements became apparent.He stressed that the Board had no option without undue risk to the business but to retain the services ofthe existing Management Consultants. Additionally, once the NT PF realised th at the expenditure wouldexceed the relevant EU thresholds, the NTPF put in train (April 2005) a public procurement competitionin accordance with app licable laws which is now comp lete. Thus, th e Management Consultants' curren tengagement is pursuant to a contract awarded after the relevant pu blic pro curement procedures werefollowed.


4/4

T he F inancial Services ContractE arly in April 2003 a firm of accountants was engaged, without comp etitive tendering, to review theaccounting and financial controls in place in the NTPF and to advise on the computer systems needed torecord information relating to treatment prices and the medical procedures. By the end of 2003, some244,000 had been expended on these services.I asked why competitive tenders had not been sought for this work.The Chief Executive stated that it was the intention at the time to engage th ese services for an interimperiod to help in the setting up of intern al controls and financial repor ting and that it would then use opentend ering to pro cure financial services. H owever, once the initial work had b een com pleted it was clearthat there were further tasks that required imm ediate attention.In the absen ce of alternative in-h ou se skills and expert ise, the firm's inv olvem ent increased in line withadditional demands o n the NT PF . Because of the knowledge acquired by the firm and in light of theimminent establishm ent of the Bo ard, it was considered unwise and risky to discontinue the contract atthe end of the first quarter of 2004.In June 2004, an op en p rocurem ent process was held and at its first meeting in Septemb er 2004 the Boardawarded the contract to the existing firm of accountants.The Chief Executive informed me that the services currentiy provided by the firm relate almostexclusively to Intern al Audit. Since mid 2005 the emphasis of the support shifted from operationalsupp ort to purely indep end ent aud it. Th e contract has since reached its agreed con clusion as outlined inthe EU pro curement contract process (of June 2004).Th e amounts paid to the firm for 2003 and 2004 were 244909 and 175,614 respectively for accounting andfinancial support. A further 197,918 was paid to the firm in the period 1 January to 31 October 2005, ofwhich 5,400 was in respect of th e intern al audit function.By way of further background, the Chief Executive informed me that for som e time after inception theNTPF was in an intensive start-up mode and that it was not clear at that stage what its exact requirementswere in terms of resources and expertise. Th e NTP F began with two personn el in April 2002 and startedreferring patients at the end of June 2002.

John Purce l lCom ptro ller and Audi to r Gen era l2.1 Sep tem be r 2006

national treatment purchase fund - 2004

Documents