Procurement Woes

In many parts of the world eHealth initiatives are run or funded by government organizations. As a result, they are subject to greater public scrutiny than most ICT projects. Procurement is one area rife with risk for government project managers and project sponsors. These risks include:

• Conflicts of interest - should there be any real or perceived linkages between the vendor and project principals - no matter how small or insignificant
  
• Competition - or lack thereof - especially in cases where the procurement is system-wide such as selecting a system for GPs where the procurement decision alters the marketplace perhaps putting some unsuccessful vendors out of business and limiting choice for end users
  
• Immature business models where the roles and functions of the vendor, purchaser and users are poorly defined leading to breakdowns that undermine project success
• Criticism and censure by public oversight bodies
• Inflated costs due to a poor understanding of the risks and liabilities
  

Once again the NHS has been singled out for criticism by the British Parliamentary Public Accounts Committee for a major procurement action in a report titled Dr Foster Intelligence: A joint venture between the Information Centre and Dr Foster LLP. The conclusion and recommendations included the following statements:

• By failing to advertise the deal or hold a competition, the Department and Information Centre let it appear that the joint venture offered an advantage to one company at the expense of others.
• Without an open competition, the Information Centre cannot demonstrate that it paid the best price for its 50% share of the joint venture, as there are no tenders or other benchmarks for comparison.
• In developing the joint venture deal, the Department's Commercial Directorate did not follow established good practice in public sector procurement.
• The cost of professional advice on the joint ve£nture (Dr. Foster Intelligence) increased from an initial estimate and contract for £284,000 to between £1.75 and £2.5 million on a £12 million investment.
• The Department and Information Centre could have reduced the need to rely heavily on professional advice by making use of wider government experience on forming public private partnership.
• It is unclear what benefits the Information Centre will receive from the joint venture.
• In the first year the joint venture made a loss of £2.8 million compared with the expectation that it would make a small profit.