Anglo-Canadian bid deselected by DoH

A second independent sector diagnostic and treatment centre (ISDTC) contract has fallen at the final hurdle, with preferred bidder Anglo-Canadian Clinics kicked out of the race for being too expensive.
The Department of Health's (DoH) decision to deselect Anglo-Canadian as preferred bidder for the London ISDTC chain sent shock waves through the PFI health sector this week.
This is the second ISDTC to run in to difficulties at preferred bidder stage. In February it emerged that Tribal Group, a consortium led by Mercury Health, pulled out as preferred bidder on the £300m Spine chain of ISDTCs, after the DoH made radical changes to the contract (CJ 25 February). The DoH has since paid £2m towards the consortium's bid costs.
The London chain was due to start operating next April, providing 30,000 orthopaedic operations and general surgery at two London hospitals in Ilford and Enfield and specialist surgery at the Royal National Ear, Nose and Throat Hospital at King's Cross.
The DoH took this second setback in its stride. A well placed DoH source said the government is totally committed to the ISDTC programme and is planning to extend the capacity of the first wave, as well as the second wave of ISDTCs, which has yet to be announced.
The source told CJ that Anglo-Canadian's rates were "significantly" higher than the NHS Tariff, adding: "These things happen. The other Wave One contracts are progressing well. We are no longer operating an on-the-spot purchase market, when we bought operations piecemeal. Now we can exercise economies of scale and so we expect very competitive prices."
Delays to the contract are now inevitable, since there is no reserve bidder. The source said: "We may have to go back to the prequalified list of bidders as the reserve bidder is no longer with us." He declined to name the reserve bidder.
Industry observers were dismayed. One consultant said: "The NHS Tariff is totally unrealistic. It is like comparing apples and pears. Their problem is they pick up the marginal costs, ignore the capital expenditure on maintenance and use low-fee management costs. It is not a true reflection of costs."
One leading DTC contractor said: "I am surprised it has taken this long for them to realise Anglo-Canadian's bid was too expensive."
Another contractor added: "We understand the NHS kept squeezing costs until Anglo-Canadian gave up and refused to go on."
Bowmer & Kirkland and Yorkon were part of the Anglo-Canadian consortium. Neither was available to comment as CJ went to press.