NHS shared services plans could breach EU legislation on outsourcing

Plans for a multi-million pound HR shared-services initiative in the NHS could be delayed because they may be in breach of European Union regulations, Personnel Today has learned.

NHS Shared Business Services, a joint venture between the Department of Health (DoH) and outsourcing provider Xansa, was set up in April last year to provide finance and accounting services to about 100 NHS organisations.

The venture, which estimates that 1bn per annum is spent on HR in the NHS, is now aiming to have “serious discussions” with several health service organisations about outsourcing their transactional HR services.

But there is uncertainty over whether the venture would be allowed to offer HR services without there being a formal tender process involving other outsourcing providers.

Under EU regulations, all public sector contracts above a certain threshold must be published in the Official Journal of the European Union. The legislation covers organisations and projects that receive public money, such as the NHS.

Jonathan Morgan, business development director at NHS Shared Business Services, said the company was taking legal advice to see if it would be able to extend its offering to HR. “Whether we can do that quickly or whether we have to go through a competitive process remains to be seen,” he told Personnel Today. “There could be challenges from competitors.”

The tender requirement would slow the whole process down by a year or more, Morgan said.

Shared services in the NHS

Extending the use of shared services is a key part of the Department of Health’s response to the Gershon review, which set a target of more than £20bn in public sector efficiency gains by 2008.

The NHS is likely to face pressure to open up the market, with shared services seen as the single biggest opportunity for suppliers to the UK public sector over the next five years.

Last week, research group Ovum predicted that the total market for shared services in the public sector will have grown by nearly a third between 2005 and 2010 to £1.6bn.

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