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NHS: Procurement

Volume 497: debated on Wednesday 14 October 2009

To ask the Secretary of State for Health (1) what medicines and patient services have been procured through a reverse e-auction in each of the last 48 months; (290388)

(2) what criteria the Purchasing and Supply Agency uses in deciding whether to use a reverse e-auction to procure medicines or services for patients;

(3) what guidance his Department has issued to the Purchasing and Supply Agency on the use of e-auctions.

The NHS Purchasing and Supply Agency (NHS PASA) has undertaken one reverse e-auction in the last 12 months for water coolers. Information on what medicines and patient services are procured through reverse e-auctions in the national health service is not collected centrally.

The NHS PASA consider the following criteria before deciding on whether to undertake an e-auction:

an accurate and unambiguous specification of the buyer's requirement to ensure that suppliers are clear on what is required, and are bidding against the same criteria. The regulations state that the specification must be established with precision. Where your requirements cannot be established with precision, or where some elements of your requirements are negotiable, it will not be appropriate to use an e Auction;

a sufficient (proposed) spend to encourage competition and supplier participation;

a large enough pool of suppliers to ensure competition during the e Auction (and a willingness and aptitude of such suppliers to participate in electronic bidding—this can be driven by spend or the strategic importance of the contract);

availability of the goods/services - there should be no known market distortions such as shortages or surpluses as these may have an impact on e Auctions which is not beneficial to the buyer; and

there must be a credible “switching threat” —i.e. a willingness by stakeholders to switch to an alternative supplier if this is the result of the e Auction because any contract offer must be made to the winning tenderer.

No guidance has been provided to NHS PASA regarding the use of e-auctions. NHS PASA led the way in the NHS on e Tendering, e Auctions and e Sourcing. As early as 2003-04 NHS PASA instigated a pilot project on the use of e auctions in the NHS. The e Auctions managed by the Agency delivered substantial savings and the NHS continues to benefits by the appropriate use of e auctions.