07 September 2006 | Rebecca Ellinor

The Office of Government Commerce (OGC) will have to respond to any challenges brought against the Department of Health's (DH) proposed outsourcing deal involving NHS Logistics and the NHS Purchasing and Supply Agency.

One possibility could see the OGC advise DH to retender the deal. The European Commission could also ask the UK government to investigate, which will be the OGC's responsibility.

An OGC spokesman told SM: "The OGC has the responsibility to lead for the UK government on all procurement infraction cases raised by the European Commission.

"The OGC would undertake this role for the Department of Health just as it would for any other public body if challenged."

As reported in SM, (News, 24 August) DH is already facing questions over the legality of its Official Journal of the European Union (OJEU) notice since the value of the deal climbed from £715 million to £3.7 billion without it placing an updated notice.

If the deal is awarded to preferred bidder DHL/Novation without a new notice being placed, it is thought that suppliers or the European Commission itself may challenge the award.

This would be done on the basis that significant changes to the size and scope of the deal means it should be readvertised according to EU law.

The DH has refused to issue a second OJEU notice, a move some lawyers perceive as a violation of EU procurement rules. Nor is it in keeping with the spirit of transparency and fairness promoted by the EU Treaty.

The OGC spokesman added: "In general terms the requirement to advertise procurements ensures transparency, which enables the EU market to be opened up to competition and the impartiality of procurement procedures to be reviewed.

The scope of a requirement, set out in the OJEU and in the contract documents, sets the boundaries for the resulting procurement."

The Treasury is currently looking at the deal. It has not yet given it the go-ahead. The OGC is working closely with Treasury colleagues on it. But as SM went to press the OGC had not been asked to formerly review it.

It is not known when the Treasury will make its judgment, but the DH will not be able to go ahead without approval.

A Treasury spokesman said if the deal is given a "red light", DH will not be asked to scrap the deal but could be asked to make amendments to it in areas such as design, financing or its business case.

As reported on supplymanagement.com (Web news, 18 August) the Conservatives are challenging the government over the outsourcing deal.

Stephen O'Brien, a shadow health minister, told SM he has written to health secretary Patricia Hewitt to voice his concerns about the huge rise in the value of the deal.

He is calling for Hewitt to make a statement to the House of Commons so that MPs can comment.

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