18 August 2006 | Rebecca Ellinor

The Conservatives are challenging the government over plans to outsource the work of NHS Logistics and parts of the NHS Purchasing and Supply Agency (Pasa), according to The Times.

The article, published today, states that Stephen O'Brien, a shadow health minister, has written to health secretary Patricia Hewitt voicing concerns about the value of the deal rising from £700 million to £3.7 billion.

He said it would lead the German-American partnership of DHL/Novation - which is expected to win the contract - to dominate the market at the expense of small UK suppliers.

"Most of the UK medical equipment industry will be at the mercy of a foreign organisation. Experience in the US suggests that this is disastrous for smaller start-up companies that are frozen out of the market," he said.

O'Brien is calling for Hewitt to make a statement to the House of Commons so MPs can comment, but the Department of Health told supplymanagement.com it was not yet sure whether Hewitt would do so.

As reported by SM (News, 3 August), Pasa is set to lose a large part of its buying role as part of the deal. Outsourcing much of purchasing has helped boost the value of the deal and now covers 10 categories including medical supplies, food, linen and laboratory equipment.

SMaug2006