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Will looking for blame in the ‘prime contractor model’ end up like one giant “pass-the-parcel”?

Pass the parcel

In a previous article of mine, “Outsourcing has become a policy drug, and they need to kick the habit”, I explained how the aspiration to have a smaller State had led to “reform” of the public services where the situation was now far worse.

Public money is being siphoned off into private sector shareholder dividends. Worse still, some performance monitoring of ongoing contracts is terrible. Furthermore, many outsourcing companies are currently embroiled in criminal allegations of one sort of another, mainly fraud.

It does seem a laudable aim to integrate healhcare (including mental health care) and social care. Indeed, by calling it ‘whole person care’, you temporarily get round the comparison to the ‘integrated shared care plans” of  the United Staes.

The Health and Social Care Bill initially started life as the tr0jan horse of competitive markets into the NHS. Once this approach under Earl Howe blatantly fell apart, Norman Lamb was left to bring up the policy rear by talking about “integrated care”. However, the problem with integrated care is that it is yet again being launched as a launchpad for private providers to rustle together huge packages across a number of different areas through subcontracting.

Of course, one can argue that it’s great that a private provider can take control of so many different diverse services. But remember when the same argument was used to attack the NHS as ‘outdated’, ‘bloated’ and ‘Stalinist’? Such arguments for economies of scale or promotion of a coherent national health policy were jettisoned in favour of a fetish for introducing the market into the NHS at high speed. Unfortunately this policy has been totally discredited.

On the “prime contractor model”, the eminent health commentator Roy Lilley remarks:

Is this novel contacting or dumping the problem on someone else. Imaging trying to unpick a problem in the pathway. Everyone will blame someone else. This is a giant game of pass the parcel, isn’t it? The prime contractor may be accountable but they will pass the accountability up the line, delays will occur in getting answers. They will become a CCG-lite.

The prime contractor model involves a single organisation subcontracting work to other providers to integrate services across a pathway. A proportion of payments is dependent on the achievement of specific outcomes. Dozens of clinical commissioning groups are already said to be devising “innovative” contracts in which a lead provider receives an outcomes based payment to integrate an entire care pathway. For example, if the £120m deal is finalised, Circle ? which also runs Hinchingbrooke Health Care Trust ? will be financially and clinically accountable to commissioners for the whole pathway. The CCG said this previously involved 20 contracts across primary, secondary and community services. That news came after Bedfordshire CCG was named private company Circle as its preferred bidder to be “prime contractor” for an integrated musculoskeletal service.

Outsourcing companies don’t particularly appear to care what sectors they operate in, whether it’s in the running of healthcare, asylum seeking or probation services. Such an approach therefore lends itself easily to each citizen becoming a number not a name. The idea of us all having a special ‘services mastercard’ is not that far-fetched now, and if one day NHS budgeting is linked up with benefits, we’ll be yet closer to this ‘brave new world’.

In March 2012, G4S won a massive £30 million UK Border Agency contract to house asylum-seekers in the Midlands, the East of England, the North East, Yorkshire and Humberside. Using the “prime contractor model”, which G4S tells investors is “attractive”, the company granted subcontracts to UPM and the charity Migrant Help. And yet, in July 2013 Stephen Small, G4S managing director for Immigration and Borders, and Jeremy Stafford, Serco CEO for the UK and Europe were forced to defend their record before the Home Affairs Committee into the asylum system.

Serco’s evidence to the Committee revealed that in the North West it directly manages homes for asylum seekers through what the chair Keith Vaz described as ‘around twenty subcontractors from Happy Homes Ltd to First Choice Homes and Cosmopolitan Housing’.

Jeremy Stafford of Serco claimed this apparent recipe for housing management disaster was in fact a proven way of outsourcing and privatisation. It is ‘a very effective model and we do that in a number of the services we deliver’, he said.

This confidence in the ‘new delivery model’ of privatisation in the COMPASS contracts seems somewhat misplaced in the context of the JRF evidence. For it reveals that Reliance, the other security company with asylum housing contracts in London, the South West and Wales, sold on the privatised contracts after only two months to Capita and Clearel. The new provider, Clearel, did not fulfil the requirements of the contracts as tendered.

Only this week, the Serco boss quit.  Four of the government’s biggest suppliers – G4S, Serco as well as rivals Capita and Atos – have been called to appear before a committee of British lawmakers next month for questioning about the outsourcing sector. Serco, which makes annual revenue of around 4.9 billion pounds, has continued to win deals in its other markets, such as a 335 million pound tie-up to run Dubai’s metro system, though it has encountered some problems abroad.

But back to G4S. There is even some reference to problems in the past on the G4s Welfare to Work website:

G4S Welfare to Work knows that most of the services needed to support workless people into meaningful, progressive employment in the UK already exist. What has been missing is an effective structure for managing and coordinating that provision.

… We are:

Operating a unique model for the delivery of welfare-to-work services that learns from mistakes made in previous Prime Contracting models, and builds on what works.

As I have described also in a previous article on this blog, one facet of globalisation is that it has become extremely difficult to regulate the behaviour of multinational corporations involved in healthcare.

G4s has now been ‘accused of “shocking” abuses and of losing control at one of South Africa’s most dangerous prisons‘. The South African government has temporarily taken over the running of Mangaung prison from G4S and launched an official investigation. It comes after inmates claimed they had been subjected to electric shocks and forced injections. G4S says it has seen no evidence of abuse by its employees. However, the BBC has obtained leaked footage filmed inside the high security prison, in which one can hear the click of electrified shields, and shrieking. It also shows a prisoner resisting a medication.

I have previously on this blog described the legal problems with the “prime contractor” model.

I have said before, and I will say it again. Especially since these contracts can be of such a long duration (for example, ten years), it is absolutely essential there are rigorous mechanisms for ongoing and continuous monitoring of performance. This way commissioners can spot easily and early on when providers are running into difficulties.

The English law gives a complex message on whether a private provider can still take the money and run, even if it doesn’t fulfill part of its side of the bargain in a contract.

Take for example the case of Sumpter v Hedges [1898] 1 QB 673 in the English Court of Appeal.

This was a matter where the plaintiff was contracted to erect certain buildings on the grounds of the defendant for a lump sum of 565 pounds, but the plaintiff was only able to do part of the work to a value of 333 pounds, with the defendant subsequently completing the rest of the work. As a result, the plaintiff sued on quantum meruit (as much as he or she has earned) appealing from the judgment of the trial judge who awarded the plaintiff for the value of the materials used, but nothing in respect to the work done.

The Court of Appeal upheld the trial judge’s decision and held that the plaintiff could not recover from the defendant in respect to the work done as part of quantum meruit due to the fact that the contract was for a lump sum, and there was no evidence that an agreement for part performance was formed.

While spinners are giving themselves multiple orgasms over ‘transparency and disclosure’ in the new Jerusalem of the NHS, it appears that “the fair playing field” of private and public health providers regarding basic patient safety is a complete fiasco.

Grahame Morris MP recently reviewed the gravity situation on the influential “Our NHS” website:

While public services are being outsourced to the private sector, especially in the NHS, Freedom of Information responsibilities are not following the public pound. Private health care companies can hide behind a cloak of commercial confidentiality when barely transparent contracts are awarded.

At the start of the bidding process private providers already receive a competitive advantage due to unequal disclosure requirements.

Private companies are free to use the Freedom of Information Act to gain detailed knowledge of a public sector provider, which can then be used to undercut or outbid the same public body when the contract is put out for tender.

NHS bodies must answer Freedom of Information requests relating to costs, performance and staffing. Yet a private provider has no similar duty of disclosure despite the fact they could have treated private patients for many years.

Once a contract is awarded, there is little that can be done if a private provider refuses to supply details to allow commissioning bodies to answer Freedom of Information requests. As they are not subject to Freedom of Information laws, the Information Commissioner has no power to investigate private contractors. They cannot serve notices for an investigation, and neither can they take enforcement action if a contractor destroys information or fails to comply with a request.

As a result of the decision in Sumpter and other similar decisions, the common law had subsequently recognised some exceptions to the general rule other than that performance of a contract must be exact and complete according to the terms. Furthermore, there is nothing preventing parties to a contractual relationship to vary or discharge the agreement, and can do so in a few ways.

One such way is “mutual discharge”, where both parties agree to release one another from what was agreed upon before either party has performed any of the acts promised. Another way is “release by one party”, where one party has completed their contractual promise, and agrees to release the other party from further performance of the contract.

Anyway, the “pass the parcel” analogy may not be entirely accurate.

It more be of the case that someone is holding a highly explosive bomb eight years into a ten year “prime contractor model” contract when it suddenly blows up.

And you can bet your bottom dollar that the Secretary of State for Health will definitely not be to blame.

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