CCGs Open Up NHS Contracts To Offshore Companies

The NHS is always in the news given its financial situation being on the brink of collapse. One of the other issues that are not widely covered by the media is the contracts put out to tender, which are scrutinised by some as a backdoor to privatisation.

Whether public or private, there’s always going to be a need to put contracts out to tender. It opens up competition and when that’s there, there’s competitive pricing and certainly no comfort blanket once a contract is awarded. If it’s awarded and breached, – or in the case of Leicester NHS trust, which saw a £300M contract terminated early due to being outdated and inappropriate – contracts can be ended early and other options considered.

What is baffling to read is the chaotic way in which the procurement process of the NHS contracts is being handled. A few years back, Clinical Commissioning Groups (CCGs) announced clauses to NHS contracts put out to tender disallowing the award of contracts to private companies based offshore. Its purpose was to ensure that all contracts awarded by the public body to the private sector would have tax coming back into the economy to further invest into the NHS.

Now though, CCGs are looking to withdraw that clause and open up contracts to include companies based offshore, such as in the Netherlands and the British Virgin Islands, which are known to be tax havens for corporations.

The move comes from the possibility of the NHS being legally challenged over discrimination, as it is argued that tax avoidance is not illegal. Tax evasion is but not avoidance.

Virgin Care is one private corporation reported to have been awarded £1BN in NHS contracts, but doesn’t pay tax on those because they claim to be operating at a loss, and not because they are based in the British Virgin Islands.

This latest announcement from CCGs about the legal issues surrounding how contracts are awarded puts emphasis on the tax issues and not so much legal as it would certainly cost a lot in legal expenses to defend the stance of discriminating based on where a corporate head office is located.

What can other businesses take from the debate?

The argument to be had is not so much about legalities but more about the ethical issues and something every procurement process should perhaps include. How ethical are other companies an organisation partners with?

That’s not limited to the public sector but for every company around the nation. It’s the only way to affect change. Change how you do business, with who you do business with and why.

· Does your copier supplier have a toner recycling program?
· Does your stationery provider use recycled material?
· Are your company vehicles of the lowest CO2 emissions?
There’s a lot to be said about business partners and the contracts put out to tender. Get the partners wrong and company policies, mission statements and ethical standards could all be compromised.

Perhaps a way to move forward with change in mind is to include ethics expected when making the business case for whatever service or product is needed within the organisation.

Set clear guidelines on who your ideal business partner will be to be awarded contracts. Of course, there’s always going to be legalities surrounding such contracts, especially in the public sector, and since that’s where most procurement guidelines are set from, it’s going to be interesting to see how the tax situation with outsourced NHS services pan out in the long-term. It’s bound to have an impact on industry guidelines further down the line.