Press release: report blasts “fundamentally dysfunctional” system for sourcing PPE

20 May 2020

A new report [1] launched today reveals that privatisation is at the centre of the “ongoing fiasco” of PPE shortages in the face of the coronavirus pandemic. According to the report, the privatisation of the NHS Supply Chain and its break up into 11 outsourced contracts has contributed to the failure of the NHS to acquire and distribute sufficient PPE to medical staff. 

The report shows how the procurement process itself has been entirely outsourced. Instead of being handled by civil servants directly employed by the NHS, companies like DHL [2] are in charge of selecting suppliers for the NHS. These suppliers in turn select other private companies to make specific items, like PPE gowns for them, and then hand them to yet another private logistics company to deliver them to the NHS trusts. NHS trusts have been told not to source PPE from local suppliers, but to use this centralised system. In doing so, every piece of equipment goes through four separate layers of profit-taking. [3]

The report authors [4] - including campaign group We Own It, and Professor David Hall, of the Public Services International Research Unit at the University of Greenwich - show that the privatisation of the process of sourcing of NHS supplies has created a “fundamentally dysfunctional system” [5] and that this has “severely undermined the national effort to protect NHS and care staff”, which has “helped turn the pandemic into an utter disaster”. [6]

Professor David Hall said:

“Privatisation of the NHS supply chain has created a complex, fragmented, unresponsive and bureaucratic mess which has left us unprepared and ill equipped to tackle the current crisis. So much responsibility has been outsourced to so many contractors that the secretary of state literally cannot know what he is doing. It is shocking that DHL, the parcel delivery subsidiary of Deutsche Post has been deciding how to spend over £4billion of the NHS budget.

“The entire system must be simplified and brought under direct NHS control, with clear lines of accountability. This is work which should be done by civil servants employed by the NHS, responsive to the needs of their fellow-workers in the NHS, with a public service culture of prioritising safety, long term planning and smart use of skills and resources within the NHS, local communities and the local manufacturing sector.”

A central problem the report identifies is the “just in time” business model used by logistics contractors such as Unipart [7] in the stocking and distribution of PPE. The “just in time” model is common in industries such as car or electronics manufacturing and is designed to reduce stock levels. However, the report argues that this creates risk for the NHS that sufficient supplies are not available to manage unforeseen events, such as the current pandemic. [8] Stocks of key PPE items were not maintained by the contractor responsible for the pandemic stockpile, [9] the government only ‘paused the rundown’ of stocks in February,  and NHS trusts were warned that their orders for PPE might be treated as ‘excessive’ which “may be subject to automatic system reduction...or cancelled’. [10]

A number of private companies also face specific criticism in the report, including those involved in the procurement process such as DHL and Foodbuy; [11] logistics companies including Unipart, Clipper Logistics [12] and Movianto [13] and others awarded special contracts by the government, such as Deloitte [14] which has been criticised for its coordination of coronavirus testing centres, along with the companies it has contracted to run them including the outsourcing giant Serco. [15]  

Speaking on the failures of these companies, We Own It Director Cat Hobbs said:

“It is beyond scandalous that so much of the coronavirus response has been handed over to private companies - companies that have failed time and time again to deliver. Whether it is Unipart or Deloitte, Movianto or Clipper Logistics, these companies should be kept well away from our NHS.

“This crisis has shown us that the NHS is made far more vulnerable by privatisation, and so many failings - from the failure to distribute sufficient PPE to the ineffective approach to testing  - lie at the door of private companies. 

“From now on, we need to ensure that our NHS is run in the interest of public health, not private profit. In doing so, the government needs to reinstate it as a fully publicly owned and run health service.”

The report comes off the back of a campaign launched by We Own It which calls for the NHS to be put in charge of managing its supply chain, no new private contracts to be granted during the coronavirus crisis, and the reinstatement of the NHS as a fully public service. [16]

It also follows a group of scientists - known as Independent SAGE - called for major reforms of the NHS procurement process. The group recommended that “there must be reform of the process of procurement of goods and services to ensure responsive and timely supply for primary and secondary care, and community infection control, in anticipation of a second wave of infection.” [17]

Ends

For a copy of the report, further information and additional comment, please contact Chris Jarvis - christopher@weownit.org.uk, 07506792751 or Neil McKeown - N.M.McKeown@greenwich.ac.uk, 020 8331 8937

Professor David Hall and Cat Hobbs are available for interview. 

Notes for editors

[1] The full report - Privatised and Unprepared: The NHS Supply Chain - is available at: weownit.org.uk/privatised-and-unprepared-nhs-supply-chain 

Please contact christopher@weownit.org.uk for an embargoed copied of the report

[2] DHL owned by Deutsche Post - the German multinational package delivery and supply chain management company. The company has boasted about how it helped the government privatise “the government purchasing and supply agency and logistics agency. DHL has previously confessed to being part of freight cartels. Details on DHL can be found on page 33 of the report. 

[3] A detailed explanation of the current procurement process can be found in pages 10-21 of the report.

[4] The report has been co-published by the University of Greenwich and We Own It. It is written by David Hall (visiting professor PSIRU, University of Greenwich), John Lister (senior lecturer Coventry University and Director, London Health Emergency), Cat Hobbs (We Own It), Pascale Robinson (We Own It) and Chris Jarvis (We Own It)" with additional material by Dr. Helen Mercer (retired senior lecturer at the University of Greenwich). 

[5] Page 3 of the report

[6] Page 4 of the report

[7] Unipart was granted a five-year contract to provide logistics for the NHS in September 2018, in a deal worth £730 million. including inventory management, warehousing and delivery of non-drug medical consumables and devices to NHS hospitals. Unipart is now majority owned by its employees and pension fund. Details on Unipart can be found on page 35 of the report.

[8] Details on the just in time model and its effect on PPE stocks can be found on page 23 of the report.

[9] Details on stockpiling failures can be found on page 19-21 of the report.

[10] Details can be found on page 8 of the report

[11] Foodbuy is the wholesale supply division of Compass Group which holds contracts for school meals, hospital catering and university catering. Details on Foodbuy can be found on page 34 of the report.

[12] Clipper Logistics has been contracted to run a supply channel for PPE - which failed to deliver its promised Amazon-style system to dispatch PPE across the country, and left care homes without the PPE they need. Clipper Logistics’ CEO is a leading Conservative Party donor and supporter, having donated £725,000 to the party. Details on Clipper Logistics can be found on page 38-40 of the report.

[13]  Movianto is a subsidiary of USA healthcare giant Owens and Minor. It was announced in January 2020 that Movianto is to be sold to a French healthcare logistics company EHDH. Details on Movianto can be found on page 38 of the report.

[14] Deloitte is one the world’s big 4 multinational accountancy/consultancy groups. Deloitte has obtained a series of major contracts from the NHs in relation to procurement measures. This includes a £400k contract to design the new centralisation of the whole procurement system, as well as a contract to coordinating testing centres. Additional details on Deloitte can be found on pages 40-41 of the report

[15] Serco is one of the “world’s leading outsourcing companies”, employing over 50,000 people. Details of the company and its record of running public services can be found on page 42 of the report.

[16] We Own It’s campaign - Protect NHS staff not private profits - can be found here: weownit.org.uk/act-now/protect-nhs-staff-not-private-profits

[17] Independent SAGE’s recommendations can be found here: independentsage.org/read-the-key-recommendations/
 

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