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NHS: Procurement

Volume 458: debated on Tuesday 13 March 2007

To ask the Secretary of State for Health what information her Department has received from NHS Supply Chain on the consideration that it gives to National Institute for Health and Clinical Excellence guidelines for medical devices when procuring those items. (125358)

NHS Supply Chain has informed the NHS Business Service Authority that they place considerable emphasis on National Institute For Health And Clinical Excellence (NICE) guidelines when evaluating the non-financial aspect of quality in a tender evaluation to ensure that the products they offer are in line with NICE guidance.

To ask the Secretary of State for Health what assessment she has made of the likely effect on patient access to new medical technologies of NHS supply chain's decision to designate preferred suppliers for product areas for fixed periods. (125359)

NHS supply chain does not operate a preferred suppliers list but will manage the procurement and delivery of in scope products through a formal contracting process in-line with the European Union directives. Procurements undertaken prior to the establishment of NHS supply chain were also governed by the EU directives and contracted in the same way.

Transparency is brought to this process by publication of a procurement calendar identifying all opportunities that are available and open to supplier bids. New opportunities will be added on a regular basis. This calendar is available on the NHS supply chain website at

NHS supply chain actively monitors the progress of new and innovative products and will work with small suppliers to ensure innovative products can be delivered at the best possible price.

To ask the Secretary of State for Health what information her Department has received from NHS supply chain about (a) how it chooses the products included on its preferred supplier lists and (b) how standard prices are set for these products. (125417)

The tender process which national health service supply chain use to select which suppliers should be awarded contracts is shown in the table.

Contracting process – steps

Key activities

1. Identify customer needs

A. Product assessment

Customer input/clinical preference determination

Third-party information

Manufacturer input

Knowledge of product management

New products/innovative technology

B. Market assessment

Validate business opportunity

Competitive analysis

Supplier assessment meetings

Capabilities, technology, breadth of line, value beyond price, strategic direction

C. Customer market research

Quantitative survey (valid sample)

Key decision-makers


Consider procurement rivers and timescales


Supplier comparison

Input on tender specifications

D. Choose the most appropriate procurement procedure

Consider procurement rivers and timescales

2. Tender development

Finalise decision criteria award matrix

Follow formal procedures of the tendering process

Define product line

Determine final product and performance specifications

Send to all eligible tenderers

3. Tender analysis

Determine total delivered cost and quality available

Compare among tender respondents

4. Issue resolution/clarification

Clarify terms and conditions to tender responses

Discuss enhancements

Focus on value for money

Develop implementation plan

Finalise supplier agreement

5. Decision making

Determine low best tender based on decision criteria award matrix

Consider needs, market assessment and market research

Involve councils, task forces and customers as necessary

Make award recommendation pending issue resolution

Notify all tenderers of decision

6. Finalising the award

Finalise supplier agreement

Prepare executive summary package

Draft contract summary

Begin contract approval process

7. Launching the agreement

Notify all tenderers of decision

Inform customers of decision

Develop customer-focused marketing and communications plan in collaboration with supplier

Complete and distribute contract summary to customers and logistics

Perform sales training and targeting

8. Records retention

Provide legal department with original signed copy of agreement

Standard prices for products are set based on the product cost and a margin applied to these products to cover the operating costs of NHS supply chain. There are restrictions as to how margin can be applied and also restrictions to increases in sell price changes.