Concerns over cancer centre procurement process

Chris Haines ICNN Senedd reporter

A consortium was selected to build a cancer centre amid concerns about the involvement of construction companies caught colluding on bids for other projects, a committee heard.

The public accounts committee scrutinised representatives of Velindre University NHS Trust over the procurement of the new hospital on the Northern Meadows in Whitchurch, Cardiff.

The Tories’ Natasha Asghar pressed the trust about court cases involving two members of the Acorn consortium, Sacyr and Kajima, which won the construction contract.

Lauren Fear, interim executive director, said the trust became aware of a case found against Sacyr after final bids were submitted in July 2022.

The company was one of six construction firms fined a total of €204m by Spain’s antitrust regulator for colluding in submitting bids for public projects over 25 years.

‘Distorting competition’

Ms Fear, who is responsible for strategic transformation, planning and digital, confirmed the trust learned of the case before a successful participant letter was sent.

She said Velindre took advice on Sacyr’s responses to a pre-qualification questionnaire in 2021, particularly grounds of exclusion such as criminality and distorting competition.

She told the meeting on November 21 that law firm DLA Piper advised the responses were still valid because the case was ‘live’ and Sacyr intended to appeal.

On Kajima, a Japanese firm which was similarly convicted for bid-rigging, Ms Fear said the trust was made aware in February 2023 via the press.

She sought to draw a distinction between Kajima group and Sacyr, saying the former is not directly involved in the consortium but two subsidiaries are.

‘Criminal corruption’

Plaid Cymru’s Adam Price asked: “Is it your evidence… that a parent company could have … been found guilty of very serious criminal corruption and as long as it’s created a protective shell for itself … there would be no problem procuring from that company?”

Ms Fear replied: “Our understanding based on the legal advice is … it’s neither an entity in the consortium directly or a financial guarantor of one of those entities.”

Labour’s Rhianon Passmore called for assurances the procurement process was rigorous.

Carl James, interim chief executive, said the trust endeavoured to follow the letter of the law, adding: “Our reputation is sacrosanct and we would never knowingly put that at risk.

“We have really rigorous risk management processes.”

Mark Isherwood, who chairs the committee, questioned how reports of Kajima being found guilty of bid-rigging in March 2021 could not have come up on the trust’s radar

‘Subterfuge’

Ms Fear said Kajima answered ‘no’ to questions about criminality and distorting competition on a pre-qualification questionnaire, “which is still correct”.

Mr Price suggested it is standard practice for companies to drag out the appeals procedure, asking: “At some point, surely as a public authority you should see through that subterfuge and say ‘sorry, this is not a company that we should be dealing with’?”

Mr Isherwood added: “And surely you should at least know that this has happened even if an appeals process is going on?”

Ms Fear replied: “The advice that we’ve had is there’s not an obligation on us to have done that proactive research through this part of the procurement process.”

She argued the whole process was in line with 2015 procurement regulations.

‘Fire safety’

Pressed by Labour’s Mike Hedges, she said: “It was appropriate because first the case was still ‘live’ and secondly the entity was not involved in the consortia nor a guarantee.

“And in Sacyr’s case, it was appropriate because it was still ‘live’.”

Ms Asghar asked how Velindre became aware of legal action against Kajima related to alleged fire safety defects in English hospitals.

Ms Fear told the committee changes needed to be made at Royal Alexandra Children’s Hospital and Sheffield Teaching Hospital following the Grenfell Tower disaster in 2017.

She said: “This is clearly a commercial matter for Kajima with the authorities … and those situations have now been resolved and the full works have been carried out.”

‘Mutual investment model’

Matt Bunce, executive director for finance, said the NHS shared services team was not involved in the procurement, with the trust using external support from DLA Piper.

He said the law firm was involved in designing the Welsh Government’s mutual investment model, which is a respin of the Blair UK Government’s private finance initiative.

Mr Bruce said Acorn’s rival Future Health was paid £1.3m for costs of its unsuccessful bid.

Ms Passmore questioned why this was appropriate when one of its members, FCC Concesiones, was among the construction firms fined for collusion in Spain.

Ms Fear said FCC is involved in the same legal case as Sacyr, adding the contract could be terminated following the final judgement but the appeal is not expected “for some time”.