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NHS: Procurement

Volume 458: debated on Monday 12 March 2007

To ask the Secretary of State for Health (1) what mechanisms her Department has available to hold DHL, as holder of the contract to manage supply chain and procurement services for the NHS, to account should the national procurement savings target not be met; (125415)

(2) what financial incentives DHL receives as part of its contract to manage supply chain and procurement services for the NHS.

DHL receives financial remuneration for operating NHS Supply Chain in the form of a transaction fee for every item ordered.

DHL has a significant incentive to maximise sales volume by lowering selling prices, investing in increasing capacity, and improving product quality and service performance. There are significant contractual constraints on the maximum remuneration payable including a profit cap. Therefore savings flow through to national health service trusts, which in turn ensures benefit to NHS patients by reducing the overall cost of patient care.

The NHS Business Services Authority manages the outsourced DHL contract to run the business now known as NHS Supply Chain, ensuring compliance with all contractual obligations.