CQC breaches procurement rules to hire McKinsey

14 July 2015 Consultancy.uk

As a result of the Care Quality Commission’s (CQC) failure to provide sufficient regulatory oversight of care service providers within its remit, the agency looked to solve its internal issues through independent advice. However, the process by which it sought to tender this advice was flawed. As a result, the CQC has received a light slap on the wrists from the Department of Health’s audit body for its procedural error in the tender process that saw McKinsey win two contracts worth £1.5 million.

The Care Quality Commission (CQC) exists as the main public independent regulatory body to protect the standards of England’s care homes, hospitals, dental and general practices as well as other care services. The body, among others, makes sure that service institutions and businesses provide people with safe, effective and high-quality care. To achieve these goals, the agency works with a fundamental standard that service providers must exhibit in their service, with registration showing that a provider has met the standard. The body also monitors and inspects care providers to identify potential compliance violations. 


While the role of CQC is to make sure service providers are complying with their fundamental standard, a recent probe from the Department of Health’s audit body found that the unit itself was not complying with its own standards. The CQC had awarded two contracts worth nearly £1.5 million to McKinsey & Company, potentially in an unfair manner. This was reportedly due to ‘procedural errors’.

The problem became apparent in 2013 when, in response to the Francis report that found a failure of regulations that led to the problems at the Mid Staffordshire Foundation Trust, the CQC began overhauling its inspection process. For this process the CQC sought to bring in an independent party, and launched a tender process to find advice on potential changes to its organisational structures and develop a risk-based intelligence approach.

The tender process however was fraught with recriminations and claims of rule breaches, including claims that staff were ‘bullied and intimidated to select McKinsey’, as well as the claim that the consulting firm had been verbally awarded the contract in advance of the process being completed. The Department of Health’s audit however, found no evidence of foul play.

Preferential treatment

Nevertheless, there were procedural abnormalities to the tender process. The report found that in the first procurement process, McKinsey was valued the lowest of the three bidders. The bidding procedure, however, was changed to create a second stage, with bidders invited to present to a second panel, with McKinsey making it through this stage to be awarded the contract. A further abnormality was that McKinsey was met with in the pre-tender stage, which resulted in at least a perceived advantage over the other tenderers.

Commenting on the results, David Behan Chief Executive of CQC, says: “I welcome the independent review. I regret that procedural errors were made in these important procurement exercises carried out as we sought to make quick and fundamental changes to the way we operated as a regulator. I am determined to ensure that all our processes are robust. We will use this report to strengthen them further and to continue to improve.”