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Final four NHS category tower contracts awarded

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The Department of Health confirm that the Procurement Transformation Programme has awarded the final four contracts for the Capital and Non-Medical Category Towers

  • DHL awarded large equipment procurement contract
  • Process for finding providers for the 11 “category towers” now complete
  • Non-medical procurement providers aim to save £280m by 2021

The company operating NHS Supply Chain has been awarded its third major procurement contract by the Department of Health.

DHL will continue to buy large diagnostic capital devices for the NHS after winning the £30m contract, which is part of the Department of Health’s “future operating model” for procurement in the health service.

The four contracts are for the provision of the non-medical “category towers”, which are among 11 contracts awarded to organisations tasked with delivering multimillion pound savings to the NHS through improved procurement.

These organisations will buy common goods, equipment and services on behalf of the NHS when the current contract for NHS Supply Chain, which is run by DHL, expires in October.

The DH confirmed the other three organisations that have won contracts are: Akeso & Company, North of England Commercial Procurement Collaborative, and Foodbuy.

DHL, which won the NHS Supply Chain contract in 2006, had already won contracts for two medical towers. The combined value of its three contracts is £70m, according to the original tender documents.

The company also makes up one half of a joint venture with US analytics firm Vizient, called Health Solutions Team, which was awarded another medical tower with a contract worth £18m.

North of England Commercial Procurement Collaborative, which was awarded a £12.5m contract to provide the hotel services tower, will also be involved in the three medical towers awarded to the NHS Collaborative Procurement Partnership. It is one of four organisations in the partnership.

Akeso & Company, which submitted a failed bid for a medical tower, has won the tower for diagnostic equipment and consumables.

Foodbuy, part of the Compass Group, picked up the £12.5m contract to provide the food tower.

The non-medical towers will go live on 5 July and have a combined savings target of £280m by 2021.

One tower, office supplies, went live in October 2017 and is provided by the Crown Commercial Service.

No “margin payment” will be paid to tower providers if they fail to meet 50 per cent of their savings target in a given year, the briefing note said.

There will also be “a number of KPIs” to incentivise the providers to “deliver a responsive service to the NHS and to take an overall system savings point of view”.

All the tower contracts are for three years with a potential for two 12 month extensions.

The Department of Health is still to announce winners of three more tenders within the future operating model with suppliers being sought for logistics, IT and transactional services.

The providers for each new category tower:

  1. Ward based consumables: DHL Supply Chain
  2. Sterile intervention equipment and associated consumables: NHS Collaborative Procurement Partnership
  3. Infection control and wound care: DHL Supply Chain
  4. Orthopaedics, trauma and spine, ophthalmology: NHS Collaborative Procurement Partnership
  5. Rehabilitation, disabled services, women’s health and associated consumables: NHS Collaborative Procurement Partnership
  6. Cardiovascular, radiology, audiology and pain management: Health Solutions Team (a joint venture between DHL and Vizient)
  7. Large diagnostic capital devices, including mobile and consumables: DHL
  8. Diagnostic equipment and consumables: Akeso & Company
  9. Office solutions: Crown Commercial Service
  10. Food: Foodbuy
  11. NHS hotel services: NHS North of England Commercial Procurement Collaborative

Following the contract awards, the Procurement Transformation Programme will work with the Category Tower Service Providers through a transition period before the contracts begin on 5th July 2018.