Decision details

A proposal for the Lancashire County Council Telecare, Community Alarm and Lone Worker services was developed by One Connect Limited (OCL) on behalf of the County Council during 2012 and the early part of 2013.  This proposal was approved by the former Leader of the County Council and the Cabinet Member for Adult and Community Services on 29th April 2013.  The contract to provide Telecare equipment supply and maintenance services was awarded to Tunstall Healthcare UK Ltd (Tunstall). Tunstall intended to subcontract with a company, Mears Care Limited, to provide a home response service.OCL would take on responsibility for the control centre monitoring for Telecare.

Following the decision by the former Leader and the Cabinet Member for Adult and Community Services, it was expected that OCL would work with Tunstall to finalise the details so that an implementation date of August 2013 could be achieved. 

Negotiations between OCL and Tunstall were not concluded and no contract was signed.  As a consequence of this, and the fact that OCL advised the County Council that they were not willing to deliver the proposed monitoring service element 

of the overall Telecare proposal, the 29 April 2013 decisions were revoked by the Deputy Leader of the County Council and the Cabinet Member for Adult and Community Services on 4^th and 9^th September 2013 respectively..

Tunstall have written to the County Council expressing their concerns about the contract discussions with OCL and in light of these concerns, a review has been carried out to establish whether the proposal from OCL represented value for money for the County Council and represented the best deal available.

This report focuses on the aspects of the Telecare service procured from Tunstall by OCL. Further work on the creation of the monitoring service can be carried out should this be required.  The main findings of the review are:

1. Whilst it is anticipated that the rollout of Telecare Services will deliver savings to the County Council, it is estimated that the proposal from OCL would have cost the County Council £1.4m more than the tender prices submitted by Tunstall. The majority of the amount of £1.4m represents OCL increasing the prices tendered by Tunstall by adding mark ups to those tendered prices. The higher  costs  to the County Council are  due to:

• Tender prices for annual visits by Tunstall to service users for monitoring and repairs being increased by OCL by more than 20%. 
• Tender prices for one –off visits by Tunstall to existing service users for monitoring and repairs being increased by OCL by approximately 20%.
• Tender prices for equipment to be provided by Tunstall being increased by OCL by on average 20%.
• The County Council being charged by OCL for marketing costs that were already included by Tunstall as part of their tender price.
• Monitoring equipment was purchased to establish a monitoring service that had not been fully assessed in terms of cost and benefits.  The service is no longer being developed with OCL and therefore this equipment is now surplus to requirement.  In addition to this, OCL increased the Tunstall tendered costs of the ICT equipment  by 12% and the tendered annual maintenance costs by 20%.
• Packages of equipment were proposed by OCL as part of the tender documentation.  These packages could commit the County Council to purchasing equipment that may not have been needed by all service users.  The potential financial impact of this cannot be quantified.
• Inflation costs would be charged by OCL to the County Council  even though this was not included in the tender documentation Tunstall were asked to price.

2. A one-off Investment of £2.8m was required from the County Council to establish a Telecare monitoring service without there being any evidence that savings for the County Council could be achieved.  Other delivery models proposed by Tunstall were not provided to the County Council by OCL. There is no evidence that the investment would have offered value for money to the County Council or would have delivered significantly more savings to justify the investment.
3. No business case setting out the costs and savings to establish a Telecare, Community Alarm and Lone Worker Service compared to other delivery models, including utilisation of current service providers, was produced by OCL.  Requests from existing providers of Telecare and community alarm services for the County Council to provide evidence on where savings could be achieved were never responded to in detail by OCL.  Concerns raised by the Adult, Health and Wellbeing Directorate about the proposal and requests to consider other delivery models, including the use of current providers, were not taken forward by OCL.
4. OCL informed Tunstall that immediately upon signature of the contract document the parties (LCC and Tunstall) would be required to enter into a legal agreement to novate (transfer) the contract from the County Council to BT.  The requirement to novate the contract was not agreed with Tunstall (in fact this proposition was not discussed with Tunstall during the procurement process).  BT is a direct competitor of Tunstall in the Tele care services market. Tunstall believed that a novation of the contract from the County Council to BT would have a significant adverse impact on the integrity of their commercial and intellectual property.  As a result of this requirement from OCL, Tunstall were unable to sign the contract and following this OCL informed the County Council that they were not willing to deliver the proposed monitoring service element of the Telecare proposal. 
5. The whole tender process and evaluation was led by the OCL Lancashire Procurement Centre of Excellence (LPCoE).  The Adult, Health and Wellbeing Directorate were not involved in the full evaluation process and were only given access to non-financial/commercial data. The commercial discussions were carried out by OCL. The lack of transparency meant that the County Council was unable to establish whether the final proposal from OCL reflected the prices tendered by Tunstall.
6. Different funding options were proposed by Tunstall as part of the tender process which may have reduced some of the financial risks to the County Council.  Tunstall were however informed by OCL that the County Council was not interested in other models.  They were also instructed by OCL not to speak to any County Council officers.  The different funding options were not disclosed by OCL to the County Council.

Conclusion

Based on this review, there is little evidence that the Telecare proposal developed by OCL would have offered the best value for money option for the County Council. On the contrary, the findings demonstrate :

• a comprehensive approach by OCL to increasing  the costs to the County Council  by on average 20% more than the prices tendered by Tunstall;
• a fundamental lack of transparency in OCL's procurement processes ;and
• a failure  on the part of OCL  to work in partnership with the County Council to secure the best deal financially, whilst at the same time delivering the best option for service users.

OCL led on developing the telecare proposal for Lancashire including carrying out the commercial negotiations and the procurement processes. It is of concern that, on the face of it, OCL have used this position to secure financial benefits for itself and BT at the expense of the County Council. This is evident from the mark-ups on the prices tendered by Tunstall and OCL's inflexibility to address material concerns raised by Tunstall regarding  the proposednovation of the contract.

The approach by and actions of OCL including LPCoE do not therefore appear to be in the best interests of the County Council.clearly should similar practices have been applied by OCL to other contracts which OCL has dealt with on behalf of the County Council, the potential financial implications for the County Council could be significantly more than the £1.4m increase in costs identified in this report.

County Councillor Jennifer Mein, the Leader of the County Council agreed to:

(i)  note the findings of the review of OCL's approach and actions  in shaping the Telecare Services proposal for Lancashire County Council ;and

(ii)  request officers to raise the findings  of the review  with BT and OCL as a matter of urgency and report  back to the Leader on any further recommendations considered necessary.