A teaching trust’s contract management was “poor or non-existent”, thanks to a fractured relationship with its own subsidiary, a review has found, according to HSJ.
The report, commissioned by King’s College Hospital Foundation Trust, said a “culture of blame” had arisen between the trust and its subsidiary KCH Facilities Management (KFM) due to “poor understanding of commitments to each other”.
It said this “lack of understanding regarding roles and responsibilities… has the potential to give rise to material risks in key areas such as contract management”.
The review was carried out by PwC in December and January, “in the context of significant financial pressure” on the trust, to find out whether its wholly owned subsidiaries are fit for purpose.
HSJ obtained a copy this month through a Freedom of Information request.
It raised concerns about “poor or non-existent contract management” leading to “confusion in responsibility and tension on relationships as well as in some cases to poor value delivery or operational failures”.
It said a lack of capacity and capability in contract management teams “was raised as a concern”. It found people “with limited procurement experience are managing contracts without the appropriate support and input”.
The report also highlighted issues in the procurement and supply chain, as well as contract management services provided by KFM.
While it said procurement and supply chain performance “has mostly been noted as strong”, it added “there are perceptions amongst certain teams that procurement processes are slow, inefficient and result in more expensive outcomes”.
It also found the number of procurements awarded to individual suppliers without going through a competitive process, using single quote waivers to authorise this move, means the trust was at risk of breaching public procurement regulations.
It said the value of single quote waiver procurements was estimated at almost £17m over the past four years, though it noted the use of these instruments had been decreasing.
The review was produced before the new chief executive of NHS England, Sir Jim Mackey, told all trusts they will need to introduce or consider wholly owned subsidiaries, or subcos, for their support services.
Overall, it found the trust’s subcos are “fit for purpose currently but there are opportunities to maximise value delivery”.
KCH’s board has accepted the report’s findings and will continue using the subsidiary model. In March, it appointed Preeya Bailie as KFM’s new managing director. She is due to take up the post on 1 July.
A KCH spokesperson said: “We commissioned a review of our wholly owned subsidiaries as part of our ongoing work to ensure they are delivering the best possible service for our hospitals, and the patients we treat.
“The review highlighted many areas of good practice but also made a series of recommendations to deliver improvements, which we are already in the process of addressing.”
Date: 26 May