CONTENTS

Appendix 1 TRANSPORT

Appendix 2 INFORMATION TECHNOLOGY AND THE NHS

Appendix 3 TECHNICAL GROUP REPORT ON ALTERNATIVE PROPOSALS FOR A NEW BUILD GLASGOW SOUTH HOSPITAL

Appendix 4 SUPPORTING EVIDENCE

Appendix 5 CAN A SINGLE BID FOR THE ACADs ASSURE VALUE FOR MONEY?

Appendix 1 TRANSPORT

The primary objective of medicine in general, and hospitals in particular, is the care of patients with the aim, where possible, of curing them so that they pick up and continue with their normal lives. Human beings are not automata. Their state of mind profoundly affects not only their immediate condition but also their will to survive and rate of recovery. When in hospital, support from family and friends, is important, as is freedom from worries about the family particularly when the principal next of kin may also be in poor health, elderly and without means of personal private transport.

Many aspects of improving technology in medicine and information technology now point to care for patients by a decentralised system in which all components of the service co-operate and share information and many more aspects are handled locally rather than via a massive centralised complex.

In contrast to Information Technology, the trends in transport are moving inexorably towards greater costs.

There are several reasons for this:

· The underlying cost of oil is predominantly upwards, approximately doubling every ten years; despite great advances in oil exploration and recovery technologies, the amount of drilling which has to be done for every gallon of fuel produced is steadily increasing.

· The costs of travel congestion are increasing.

· The impact of global warming is likely to cause governments to make increased fuel taxes a way of enforcing a reduction in the environmental impact of transport.

Transport costs are likely to escalate over the lifetime of the plan, from 2 times the year 2000 costs in 2010, to 8 times the year 2000 costs in 2030. A prudent and cost/effective plan for hospital services must take account of this.

Comparison of a Single Hospital Strategy (Southern General site) and the New Strategy that provides inpatient services on two sites in South Glasgow.

Increased journey times (in minutes) for a single large hospital

No of hospitals	1	2	% Increase for single hospital
Av. Time by public transport	53.3	36.4	46%
Av. Time by car/taxi	16.9	10.6	59%

The times shown in the table are average times for the non peak period calculated for the year 2006. Times during peak travel periods are substantially longer.

Reference: Average journey times computed from data for catchment areas extracted from Table 1 South Side Hospitals Time and Traffic Impact Study (Allan W. Drewette BSc MICE Chartered Civil Engineer, Consulting Traffic and Transportation Engineer). Simulation by CSTM3 traffic model owned by Scottish Executive

The traffic and environmental impact of centralising hospital inpatient services for South Glasgow on a single site at the Southern General Hospital

Local authorities are obliged to set targets for reduction in traffic growth in their areas under the Traffic Reduction Act 1997. If NHSGG proposals to centralise inpatient services on a single site at the Southern General were carried out, this would have an immediate and substantial effect on increasing road traffic in south Glasgow. The Drewette report (above) has investigated the traffic impact of the proposed change.

Traffic impact is represented by the number of vehicles on the road multiplied by the time they are on the road. Increasing the time of travel to hospital by 59% has the same effect as increasing the number of vehicles on the road by 59%. The traffic impact of centralising hospital services on a single Southern General site is made greater because of the higher proportion of journeys, which have to be made by car or taxi, to reach the southern general site compared to the Victoria Infirmary site. This is because the Southern General site is not well served by train, while patients from Croftfoot, Cambuslang and Rutherglen can readily reach the Victoria Infirmary site by rail. Drewette estimates that for every 10 of these rail passengers 9 will travel by car and taxi and 1 by bus. Taxi travel often implies two journeys for the vehicle where a car may make one. The overall traffic impact of hospital travel resulting from NHSGG’s proposed centralisation is estimated by Drewette to be an increase of 70 to 80%.

The increased traffic impact of the proposed change would have to be paid for in terms of increased pollution and fuel costs as well as inconvenience and effects on patients.

Appendix 2 INFORMATION TECHNOLOGY AND THE NHS

Over the next 20-30 years we can expect the underlying costs of moving and storing information electronically to decrease and the relative costs of moving people and things to increase. Information Technology (IT) makes possible the policy of ‘keeping the NHS local, ensuring national standards and national accessibility of healthcare patient records’.

In general the Forum supports the programme to make the NHS more IT-aware and to modernise its operations. We are acutely aware of the importance of the NHS acquiring an effective IT infrastructure, linking one hospital with another, GP practice with hospital and making research information available widely without loss of individual patient’s confidentiality.

The Present Position In Scotland

The overwhelming majority of GP practices in Scotland (some 890) use the GPASS system. This means that at GP practice level there is already a single system, which has to be interfaced to local hospitals, and this task is to some extent undertaken. It would be a big mistake to abandon this software and the existing training of NHS staff. This is one of the ‘islands of technology’ already successfully integrated and adopted by the NHS in Scotland. Other ‘islands of technology’ exist in the subsystems which already support radiography and laboratory services.

Difficulties exist in the integration of a patient’s data and in preserving the patient’s confidentiality, while allowing hospital (or other) specialists access to appropriate portions of the patient’s personalised healthcare information. Systems must also permit access to de-personalised healthcare records for research and epidemiological studies.

There have been a number of medical records projects over the years (Oxford, Exeter and Aberdeen), all of which were ‘heavyweight systems’. Each started anew but none progressed beyond the pilot project stage. By the time such systems were evaluated they were out-dated by progress in the real-world NHS. There was also an unresolved training problem in the NHS staff that would be required to use the chosen system.

The Forum supports an approach, which is in essence ‘lightweight’, using software tools of greater generality and longevity. Tools which could be used include e-mail and web-enabled IT services. Public key encryption with a suitably long key has already been developed. This enables the public-key of the recipient to be well known e.g. it could be made available via a document like a telephone directory, but only de-encrypted by the user’s private key known only to specific users. It can also be used in reverse to effect a digital signature of the authorised persons i.e. the public-key can be used to de-encrypt anything encrypted with the user’s private key.

Cost

Costs are enormous. There are around 60 million men, women and children in the UK. Contracts worth £2.3 billion have already been awarded out of a total budget of £5 billion. This huge investment represents approximately £170 per person.

Conclusion

There is a long history of problems in large scale public sector IT programmes in the UK. Not only is the NHS IT Strategy for Scotland very large in scale, it is also at the leading edge of technology. The sharing of confidential personal medical data across a wide area electronic network is one of the most sensitive, challenging and high profile developments ever undertaken.

The NHS is not one generation of technology behind, but at least two. We are expecting organisations such as NHSGG to implement successfully a large scale, high technology strategy when they are still using taxis to transfer paper records from one hospital to another. Key factors in implementation will include:

• the availability of sufficient numbers of staff with key IT skills
• the provision of adequate levels of training for staff at all levels in the NHS
• the availability of adequate support services to ensure that hardware, software, and the IT infrastructure function at all times
• the involvement of staff at all levels in the detailed design stages

All of these factors are the subject of criticism from staff within the NHS.

The present Scottish strategy seems sufficient, but it is successful implementation that is required.

References:

Extract from NHS National Programme for Information Technology Web site www.npfit.nhs.uk/news/news_131004/

Extracts from Computing Company UK Web site

www.computing.co.uk/specials/1157250

Appendix 3 TECHNICAL GROUP REPORT ON ALTERNATIVE PROPOSALS FOR A NEW BUILD GLASGOW SOUTH HOSPITAL

NHSGG proposals for the Southern General site

The NHSGG proposals for this site involve seven stages in sequences of demolition and extensive construction including temporary re-siting of some existing units. In effect the entire central existing area would be more or less totally demolished and a complex of three densely designed, compact four to five storey blocks would be constructed.

The existing SGH of approaching 600 beds would be almost trebled to a size of some 1800 beds including the possible transfer of Yorkhill and the Queen Mother’s to the SGH site and provision for a self-contained psychiatric unit.

This would appear to be a logistical nightmare to co-ordinate on the existing built-up hospital campus, whilst maintaining its operational capacity and integrity. Complex demolition work would have to be continuously undertaken involving biologically, chemically and radiological contaminated areas whilst ensuring power and services to existing and continuing hospital services.

Add to this the major construction works required for the new buildings right across the main avenue and concourse of the hospital site, which must involve upwards of ten years to complete and the full enormity of the proposals becomes all too clear.

Victoria Infirmary and Queen’s Park Recreation ground sites

NHSGG summarily dismissed the QPR ground plus the adjacent former Queen’s Park School site as being too small for an acute hospital. In fact, the overall area is greater than the existing restricted and heavily impacted site upon which Glasgow Royal Infirmary presently stands, yet the Board is planning to expand the Royal Infirmary to approximately 1200 beds.

The recreation ground site comprises some 30 acres inclusive of the existing hospital complex. As the accompanying sketch shows, this can comfortably hold a 750 bed hospital complex of gross area 75,000 square metres comprising 4 to 5 storey stepped central accommodation of 50,000 square metres and two storey ward blocks of 25,000 square metres as a discreet and independently functioning unit.

This complex can be built exclusively on the QPR site, independently of the existing Victoria Infirmary and totally without interference to its present functioning. Demolition of the existing Infirmary buildings can then likewise proceed without affecting the new hospital and frees up this area of the site for the self-contained psychiatric unit, or any other hospital requirements such as additional parking etc.

A shortage of medical staff is being used as an argument to close down hospitals and thus concentrate scarce resources into bigger and fewer units.

In January 2005 the Health Committee of the Scottish Parliament published a report entitled “Reshaping the NHS?: Workforce Planning in the National Health Service in Scotland”.

In the report it is stated (para 117)

“The evidence that the committee has received suggests that under almost any eventuality there will be a requirement for a large number of additional doctors within the NHS in Scotland in future.”

And para 110:

“To date this does not appear to have been quantified by the Executive of NHS Scotland and health boards are still grappling with some of the issues.”

The staff shortages that are driving the centralisation plans will result in fewer hospitals across the city. If the Victoria Infirmary site is disposed of then another valuable piece of development land will be lost to the NHS. NHSGG is planning its flagship hospitals on the most impacted sites in the city and will be left with no room for manœuvre. When the plans to recruit and train more staff come to fruition there will be no possibility of building local hospitals as suitable sites will no longer be available.

Concluding observations

The needs of the community must form the basis of the hospital design and service brief. An urban hospital must be accessible to the population it serves. It must be an integral part of that community. Both the Southern General Hospital and especially the Victoria Infirmary are such hospitals.

The option of retaining the Southern General Hospital with its established brain and spinal injuries specialties intact, together with the other units which have been invested on this site, and building a new hospital at the Victoria QPR ground is worthy of serious considered appraisal. This would seem to be the preferred option of the communities themselves. As it is the people in these communities who, through taxation, finance the health service and its managers’ salaries, surely the people have some democratic right to a determining voice, as they are also the ultimate users of the service.

ARCHITECTS’ SKETCH PLAN

Feasible hospital on Victoria QPR site

ESTIMATED SCHEDULE FOR BUILD ON THE TWO SITES

NEW HOSPITAL COMPARISON OF STRATEGIES

	TWO HOSPITAL STRATEGY			SINGLE HOSPITAL (SGH) STRATEGY with ACAD at Queens Park Recreation site
	New Hospital	SGH		SGH Option
Too large ?	700	900	3rd and 5th largest in Scotland	1600	50%Larger than largest in UK (Ref:Binleys Directory)
Too small ?	700	900	> UK average =500	1600	Notes 1
Decant site for build ?	Yes	Not required		No
Design takes advantage of IT Clinical networks integration	Yes	Yes		No
ACAD site meets VA 12345 safety regulation for day surgery	Yes	Yes		No	Day surgery repertoire limited (or additional risk to patients) Notes 2
Ambulance requirements				interhospital
Patient/home increase	0%	0%		100%
Meets NHS Emergency pick-up targets for heart attack, stroke etc.	Yes	Yes		No
ACAD-hospital	No	No		Yes
Inter hospital transfers	Yes	Yes		No
Patient transport % By Car/Taxi	70%			>90%
Car/Taxi distances increase	nil			60%
CAR/TAXI traffic impact(time x distance x number)increase				78%
Access by Public Transport Time increase				50%	As Per CSTM3 Transport Model
On-site rail station	Yes			No
Attractive Open Design	Yes			No	5 storey ward blocks arranged around internal well
Parking Places Available	1100 off street
Concentration of speciality staff	Yes	Yes		Yes
Re-Build Disruption	None	None		Yes Massive	Throughout construction period (up to 10 years)
Rebuild Supplement cost	0%			40-100%
Site Area	37 Acres	60 Acres		60 Acres
Total Staff on site	3000	5000		8000
In-Patient	700	900		1600
In-Patient visitors / day (3 per patient)	2100	2700		4800
Makes maximum use of existing facilities	New Build	Yes	Limited new /additional at SGH	No	Demolition/Reconstruction required
Complete Maintenance of existing services during construction	Yes	Yes		No	(at best with difficulty)
Stand Alone ACAD at QPR SITE	No	No		Yes	Cost est £103 million
Public Transport use estimated	30%	20%		<5%
Additional Loading at GRI A&E	0%	0%		20%
Additional Parking needed to GRI				10%

Appendix 4 SUPPORTING EVIDENCE

Why the Forum says NO to a mega hospital.

Private Sector 'Small is good’: Public Sector 'Small is bad'. Are surgeons operating on double standards?

Very small hospitals are the norm in the independent private healthcare sector. The private sector in England is taking an increasing proportion of NHS elective surgical procedures as part of the government's concordat to reduce waiting lists. In Greater London, of 29 independent private hospitals, which provide acute medical and surgical services, 41% (twelve hospitals) have fewer than 50 beds, 31% (nine hospitals) have fewer than 100 beds, 24% (seven hospitals) have fewer than 200 beds and one hospital has 247 beds.

Private acute hospitals in Scotland are listed in Laing's Healthcare Market Review 2000-2001. [Laing and Buisson London] as;

Glasgow; Nuffield: 33 beds, Ross Hall: 101 beds. Edinburgh; Murrayfield: 50 beds. Aberdeen, Ayr, Dundee and Stirling also have small private acute facilities.

Most of these hospitals carry out a wide range of surgical procedures. Several perform complex cardiac surgery, including paediatric surgery, and neurosurgery. Neither the Royal College of Surgeons nor the government has publicly expressed any reservations about the expansion of elective surgery in very small private hospitals, most of which have only a single medical officer on call for 24 hours. NHS hospitals with less than 400 beds are stated to be non-viable in the long-term while an increasing proportion of elective surgery is being hived off to small private hospitals, most with less than 100 beds.

Why the Forum says NO to a stand-alone ACAD

In November 2000 members of the Greater Glasgow Health Board visited San Diego, California to see at first hand a working ACAD and five ambulatory surgery centres. As a result the Board decided to proceed with their plan to establish two stand-alone ACADs in Glasgow.

Department of Veterans Affairs; Performance of ambulatory surgery

ACADs were a new concept to the Forum and we had to make enquiries to establish their functions and procedures. Our medical committee made contact with Dr Abbas Sedaghat, Professor of Medicine and Chief of the Veterans Hospital in San Diego, USA. Part of Dr Sedaghat’s training took place in Glasgow and he is familiar with the poor record of health in the city. He accepted the Forum’s invitation to address a meeting held in Glasgow City Chambers which was attended by members of the Greater Glasgow Health Board, medical doctors and members of the public.

The Veterans Hospital is a teaching hospital providing for the medical needs of those army veterans who cannot afford health insurance. It is our belief that this system of care is close to that provided in Glasgow under the NHS. Dr. Sedaghat explained that the stand-alone ACADs in San Diego, the only medical facilities visited by the Health Board, dealt specifically with those citizens who could afford medical insurance. Basically the patients were reasonably healthy individuals under the age of sixty with only minor health problems.

The purpose of the Veterans Health Administration (VHA) Directive 96-046 is to provide policy for the performance of ambulatory (same day) surgery. It rescinds VHA Directive 10-93-019 and its supplement.

It is the policy of the department of Veterans Affairs (VA) to provide patient care in the most economical manner possible without compromising the quality of care. Most diagnostic and the majority of surgical procedures can be performed on an outpatient basis, and ambulatory surgery is the norm for many of these procedures.

If these procedures are to be performed in a dedicated ambulatory surgery suite (ambulatory surgical centre), the operating rooms should be of appropriate size and equipped to the same standards as the main operating room suite. Use of general or regional anaesthesia in ambulatory care centres, not located in the operating room complex, must meet the requirements for communication, quick response, supplies and equipment as specified by the Joint Commission on Accreditation of Healthcare Organisations.

Patient safety requirements described must be met. For purposes of patient safety all satellite ambulatory surgery centres must have:

(1) Adequate emergency back-up services (in VA or non-VA hospital) available within 15 minutes rush hour driving time from the satellite facility.

(2) Ambulance services must be readily available.

We do not believe that the planned stand-alone ACADs in Glasgow can meet theses two essential requirements. The ACAD at the Veterans, San Diego, is situated on the fifth floor of the hospital next to the operating theatres, surgical units and intensive care wards.

Alternatives are being trialled elsewhere

In December 2004 the Scottish Health Minister announced that sections of the Golden Jubilee Hospital in Clydebank would be leased out to private healthcare providers who could then be contracted to carry out specialised elective health treatments for the NHS. This raises serious questions. First and foremost where are the medical staff to come from?

Three pilot sites in England with innovative plans are currently being evaluated in England at Central Middlesex Hospital, Bishop Auckland General, and Penzance. The first of these, the Brent Emergency Care and Diagnostic Centre (BECaD) is particularly relevant to South Glasgow as it aims to develop a local hospital able to deal with emergency and routine cases on a 24-hour basis. The redesign of accident and emergency services will combine a nurse and general practitioner led service for minor illnesses and injuries while those with more serious illnesses and injury will be seen and treated by a small consultant led team. The services provided at the BECaD for a population of 220,000 will include acute medicine, surgery, gynaecology, trauma and orthopaedics. Elective in-patient Urology will be provided. Short-stay and day surgery will be provided from the ACAD.

If such an arrangement is possible at the Central Middlesex why not in Glasgow?

The proposals in the Department of Health’s consultation document “Keeping the NHS Local: A New Direction of Travel. 2003” point in the same direction as the Forum’s hospital strategy. “Configuring Hospitals Evidence File” of July 2004 provides a clear endorsement of the Forum’s views.

Reference: The Configuring Hospitals Evidence File: Part Two. DoH, England July 2004.

Appendix 5 CAN A SINGLE BID FOR THE ACADs ASSURE VALUE FOR MONEY?

Summary

· NHS Greater Glasgow (NHSGG) received only one bid to construct two Ambulatory Care and Diagnostic Units (ACADs) on the Stobhill Hospital and Victoria Infirmary sites at a present provisional capital cost of £180million.

· The decision to proceed with a single bidder, resulting from a poor contract specification and diminished interest by the private sector in large PFI contracts, removes competition from the project. It greatly increases the risk of poor Value for Money (VFM), despite the alleged safeguard provided by a “shadow bid” prepared by NHSGG’s project team and its advisers.

· A single bid may be judged illegal under current and forthcoming E.U. Procurement law if challenged in the European Court of Justice.

Introduction

NHSGG is compelled by government policy to use the Private Finance Initiative for the construction of its new hospitals. In this process, a Public Sector Comparator (PSC), which assumes the use of public funding to construct the hospital, is compared with the costs of a number of private bidders who finance the project via a consortium of banks and construction companies over a 25/30-year leaseback period. The consortium owns the hospital over this period, maintains its infrastructure and provides non-clinical services for an annual availability fee. This comprises the cost of maintaining these services together with capital and interest repayments over the loan period. Since privately available finance is more expensive than publicly available finance, the higher cost of PFI is adjusted by applying a Treasury discount rate (initially 6%, now 3.5%) to the cost of the 30-year loan from the private sector. This still leaves the PFI cost significantly more expensive than the PSC; a further reduction (risk transfer) in the relative cost of PFI is then factored in by estimating the cost of the risks transferred from the public to the private sector and adding this to the PSC. Both financial mechanisms have been heavily criticised since their adoption. The concept of risk transfer is at odds with the reality that the cost of failure of PFI/PPP schemes such as the Passport Agency, IT projects and Railtrack, and of reductions in service delivery from PFI hospitals is borne by their users and the public purse.

A key concept enshrined in all PFI/PPP schemes is the introduction of market forces via competitive bidding to secure the contract and ensure value for money (VFM). This concept is embodied in European Community (EC) Public Procurement Directives. For example, Article 27, Point 3, of Council Directive 92/50/EEC (18^th June 1992) relating to the co-ordination of procedures for the award of public service contracts states “where the contracting authorities award a contract by negotiated procedure as referred to in Article 11 (2) (i.e., referring to the competitive negotiated procedure used in UK PFI projects), the number of candidates admitted to negotiate may not be less than three, provided that there is a suitable number of candidates.” The National Audit Office (NAO) Report “Procurement of Vaccines by the DoH” (HC625 Session 2002/3: 9^th April 2003) also states that the negotiated procedure with a call for competition “requires an OJEC advert and the purchaser is required to negotiate with at least three bidders.” These rulings are in keeping with everyday commercial practice, which seeks to ensure that contracts for projects are based on the widest possible range of competitive tenders.

Response to NHSGG’s Invitation to tender for two ACADS

NHSGG’s invitation to tender for two ACADs in Spring 2003 received twenty expressions of interest but only a single formal bid from Balfour Beattie Construction, effectively eliminating competition and choice from the project. This presented the Board with the choice of re-advertising the project or going ahead with a single bid. The Scottish Executive decided that a single bid was acceptable, if supported by a satisfactory “shadow bid”, to ensure competition. This shadow bid is currently being prepared by NHSGG’s Commissioning Team, as detailed in guidance provided by Ernst & Young’s “Strategy for Proceeding with Single Bid Documents”. On 18^th June 2003, the Board’s legal advisers, Price Waterhouse Cooper, confirmed, “there were no public procurement issues from a legal perspective in proceeding with a single bidder”. The process of preparing a shadow bid commenced in October 2003. The Scottish Executive Health Department, NHSGG and the Board’s legal advisers (Price Waterhouse Cooper and Ernst & Young) believe that the use of this further financial instrument will ensure Value for Money (VFM).

Value for Money (VFM) issues in relation to single bids for PFI/PPP projects

The Public Accounts Commission (PAC) disapproves of the single bid procedure. For example, in commenting on the PFI contract for Dartford and Gravesham Hospital (HOC Session No. HC131), the PAC comments “we find it disturbing that the Trust ended up with one final bidder on this major pathfinder project for the use of PFI in the NHS. Active competition is essential if VFM is to be achieved. We therefore recommend that NHS Trusts assess carefully the risks to achieving an effective competition and manage these risks carefully.” The Treasury Minute on this project stated “the NHS Executive agrees that the withdrawal of one of the two short-listed bidders made the final negotiations more difficult for the Trust and prevented competitive tension in the later stages of procurement. The NHS Executive agrees that maximising competitive pressures amongst bidders at an earlier stage is the best means of optimising VFM under PFI contracts.”

In HOC Session No. HC764 (Delivering Better Value for Money from the PFI), PAC Recommendation 13 states, “Competition is essential if VFM is to be achieved. But on a number of deals we have examined, the Department received only one bid. The receipt of just one bid may indicate, for example, that the proposed project has been poorly designed. Where only one bid has been received, Departments should consider redesigning the project or starting the procurement again.”

NHSGG’s Outline Business Case (OBC)

Scrutiny of NHSGG’s Outline Business Case (OBC) for its two ACADs, in comparison with two comparable Outline Business Cases for University Hospitals of Leicester and an ACAD on the Birmingham City Hospital site confirms the inferior specification of the Glasgow OBC. For a project with an estimated capital cost of £140million, the 52-page specification in the public domain describes the project in general terms with three tables describing the areas of the component parts of the ACADs and two tables providing incomplete projections of clinical activity. Financial data is excluded on grounds of commercial confidentiality and workforce requirements and architectural specifications are absent. The comparable Leicester and Birmingham OBC’s are over four times as long and provide detailed specifications of the scope of each project. NHSGG’s Chairman and Chief Executive insisted at interviews with the Health Service Forum South East and with Dr Jean Turner, MSP and Dr Robert Cumming that the specification issued to prospective bidders contained no more detail than available in the publicly available document. If so, it is in keeping with the National Audit Office’s comment that a single bid may indicate a poor design specification.

To provide an authoritative view on the VFM and legal aspects of a single bid from a European perspective, the Health Service Forum South East obtained the views of Professor Christopher Bovis, Jean Monet Professor of European Law in the University of Lancaster. A summary of his opinion follows: -

“Legally, any procurement procedure which results in a single bidder lacks competitiveness, as a demonstrable principle of dispensing public services. The European Directives stipulate the need to have at least three candidates in negotiated procedures (the standard UK model) and at least five candidates in restricted procedures. The fact that there is a single candidate after the selection and qualification process may indicate a number of points: first that the contracting authority has not done the preparatory work properly (market testing, sounding of suppliers and services providers). It might also show a manipulation of the selection and pre-qualification process, so a single candidate (consortium) could emerge. If you have only one bidder in a PFI project, there is something wrong with the procurement process, or something more cynical. Logically, the contracting authority ought to abort and reconsider the options. If only one candidate has emerged from the procurement process, I would question the relevance of the business case (I have seen a few which are very poor). If the contracting authority proceeds with only one candidate (single negotiation), the risk (likelihood) of achieving Value for Money decreases dramatically. Two reasons support this assumption: (I) with a single candidate, the contracting authority does not have any price/quality benchmarking and (II) the specifications for the delivery of the project are subject to negotiations which violate directly and overtly the principles of competitive tendering (the single candidate will be able to write their own specifications and price them accordingly with no comparison!) My biggest concern is that the single candidate scenario will inevitably result in the lack of any risk transfer between the public and private sectors, which is the fundamental requirement for the project to go ahead. How can the contracting authority demonstrate risk transfer to the Audit Commission and the relation between risk transfer and pricing for the services? The “Should Cost Model” (Shadow Bid) is nothing more than the Public Sector Comparator case, submitted by the contracting authority to the Treasury for notional credit approval.”

The claim that a shadow bid can compensate for the absence of normal competition fails because, like the discount rate and relevant risk transfer adjustments made to ensure that the PFI bid is comparable with the PSC, it is a purely financial comparison. In normal commercial practice, and as every consumer purchasing a car or making a contract to have his/her house decorated knows, price is only one of several criteria governing final choice. Reliability, prompt delivery, aftercare, and a reputation for design and build quality are equally or more important in a context of wide consumer choice. None of these criteria operate in a shadow bid limited to artificially generated in house cost comparisons. The single bid situation is the reductio ad absurdum of the open competition which PFI is supposed to bring about. NHSGG currently faces a situation in which the first phase of its ASR is neither competitive nor can assure value for money.

European Procurement Law does not favour the selection of a preferred bidder from three to five bids in the standard competitive negotiated procedure employed in U.K. PFI/PPP contracts since this is deemed to reduce the level of competition. A forthcoming E.U. Directive may veto the system of naming preferred bidders. The legality of the single bid procedure currently being followed by NHSGG for its two ACADs could then almost certainly be challenged at the European Court of Justice (See Private Eye, No. 1120, 26^th November, p6, “HP Sauce,” for a recent update on this situation). The Scottish Health Executive and NHSGG should think carefully before committing themselves to such a costly project in the absence of effective competition.

The present situation

At present (December 2004), NHSGG has not yet received the Shadow Bid, which is being prepared jointly by Ernst & Young and the Board’s Commissioning Team. No explanation has been offered in the Board’s minutes for this prolonged delay of over a year in presenting what the Scottish Health Executive and the Board’s Auditors consider an essential part of the assessment of VFM in this complex procedure. Once the Shadow Bid is received, it must then be considered and approved by the NHSGG Board, the Scottish Executive Health Department, and Audit Scotland. NHSGG believes that preparation and approval of the Full Business Case (FBC) for the ACADs (assuming approval of the Shadow Bid) may be completed by Summer 2005. Only then can construction of the two ACADs proceed. If Audit Scotland or the Scottish Executive Health Department were to consider VFM for the single tender unsatisfactory, NHSGG would have no option but to re-tender for this project.

The present ACADs project, the first phase of NHSGG’s ASR, offers poor value for money on grounds of poor specification, the absence of competition and the presence of commercial confidentiality, which conceals the true costs of the project. Based on past experience of PFI contracts from the award of preferred bidder status to final cost, the costs of this project will escalate; the presence of a single bidder makes cost control difficult. The single bid procedure negates the concept of a competitive market in which VFM is ensured by genuine competition. In the present procedure the sham of ill-understood financial instruments of doubtful efficacy provide only an illusion of a level competitive playing field.