Scottish Hospitals Inquiry – Latest hearing looks at difficult procurement of Edinburgh’s Children’s hospital

United Kingdom

The Scottish Hospitals Inquiry recently resumed with a two week hearing last month taking evidence from those involved in the procurement of the Royal Hospital for Children and Young People and the Department of Clinical Neurosciences (RHCYP/DCN), Edinburgh from the start of the procurement exercise up until financial close in 2015.

Evidence was gathered from witnesses involved in all stages of the procurement notably NHS Lothian, Scottish Futures Trust, the private sector partners and key consultants including the technical advisers and engineers. 

The latest hearing considered the procurement process, the reference design, the environmental matrix and the contract (particularly the hierarchy of the technical documents).  The project was originally intended to be capitally funded with planning commencing way back in 2006 but following the 2011 cuts in the Scottish budget, it switched to become a revenue financed project delivered using the non-profit distributing (NPD) model and procured through a competitive dialogue process.

The hospital eventually opened in March 2021 after a delay in opening of over 18 months due to safety concerns with the ventilation system with additional costs of such delay amounting to at least £91.6 million.

The Inquiry was launched in August 2020 to investigate the building issues at the RHCYP/ DCN and the Queen Elizabeth University Hospital Campus, Glasgow (QEUH).  Costs to the public purse of running the Inquiry so far total a fairly hefty £10 million as at December 2022.

There are still a number of further hearings to come this year and next plus the final report and recommendations to follow after that.  With such substantial costs and time invested already, it begs the question what difference can the Inquiry outcome and recommendations make to improve future procurements and the building environment of Scottish hospitals?

What did the latest hearing cover?

Witness evidence considered the reference design, the environmental matrix, the procurement exercise and the contract. 

A Closing Submission was issued by the Counsel to the Inquiry this week which sums up the issues explored in the latest hearing and makes recommendations to the Chair, Lord Brodie on the findings.

Closing Submission by Counsel to the Inquiry - Edinburgh Hospital | Hospitals Inquiry

Counsel’s view is that the central issue was around the level of clarity in the procurement documents and that the procurement documentation was not drafted with sufficient clarity to allow for one universal interpretation by tenderers and there was a lack of procedures to prevent that.  The lack of clarity was demonstrated by the fact that different tenderers proposed different solutions in their tender bids to meet the stated requirements.

Reference Design

A Reference Design was developed for the project which is a specific solution to the bidders and is the recognised route for NPD procurement when taking to the market for tenders.  It gives bidders less latitude to develop their own proposals with an output specification provided with certain fixed requirements. The hearing considered the level of specification and detail in the Reference Design, and how technical requirements for the ventilation system were communicated to prospective tenderers by NHS Lothian.  Bidders were expected to provide their own Room Data Sheets.  Counsel concludes that the evidence does not indicate that a reference design was inappropriate for this specific project but queried whether NHSL’s requirements were clearly conveyed in the procurement exercise and whether sufficient consultation with clinicians was undertaken.

NHS Lothian intended for the design risk to sit with the private sector partner with the exception of “operational functionality”.  However what seems to be unclear, is whether the bidders were given sufficient clarity on this particularly in the context of the Environmental Matrix.

Environmental Matrix

The Inquiry looked at the purpose and status of the Environmental Matrix and whether compliance of tenderers with the Environmental Matrix was required.  A draft Environmental Matrix was provided by NHS Lothian as part of the disclosed data in the ITPD. 

Several witnesses spoke to a wide variety of complications with the Environmental Matrix. The document was designed to be an “easier reference tool” to reduce the complexity of using Room Data Sheets, however the Environmental Matrix contained limited information on environmental parameters.

The main problem with the Environmental Matrix ultimately boiled down to human error in transposing figures between documents and a lack of effective proofing system to ensure accuracy of information. This resulted in the wrong room function being included, which then resulted in incorrect environmental parameters being included.

There were references to the Environmental Matrix as a draft guide document, as a defined document, and as a document of reference for design.

Compliance with guidance documents was also required by the Project Agreement and guidance documents were circulated, in particular the SHTM 03-01, with NHS Lothian intending that the ventilation system would fully comply with the guidance set out in SHTM 03-01. There is a dispute between the parties as to whether the specification at financial close, fully complied with SHTM 03.01.

Counsel concludes that the procurement documents generated for the Project were ambiguous and inconsistent in relation to the status of the Environmental Matrix which gave rise to a real risk of confusion on the requirements for the ventilation system.  The Counsel submission also states that “The errors in relation to critical care rooms were not detected by NHS Lothian or its technical advisors before the contract was signed with the successful tenderer. This was a mistake. The Inquiry has seen no evidence indicating any deliberate concealment or failure to disclose wrongdoing”.

Time pressures

The development of the preferred bidder’s solution to the ventilation system and the decision to relax the requirement for the preferred bidder to produce all room data sheets by financial close was considered at the hearing. There were ongoing delays in the sharing of information and production of required documents such as Room Data Sheets. The concerns about the ongoing delays and that the project would potentially miss its third attempt at financial close, which resulted in certain aspects of the project, including the Room Data Sheets, not being finalised before financial close. There were concerns over looking “foolish” if financial close was missed and reputational damage to all parties involved in the project. All parties have mentioned a growing tension due to required documentation not being produced and stresses due to the timeline for completion.

Although this was one of the requirements published throughout the tender process, it was agreed as part of negotiations at a Special Project Steering Board that to keep the project moving forward towards financial close that the provision of Room Data Sheets before financial close was an area for compromise, and it was ultimately agreed that these would be reviewed at a later post financial close stage of the project.  Counsel’s view is that the complexity of these arrangements left scope for argument about exactly how they were intended to work after financial close, and where contractual responsibility lay for the ventilation parameters in the matrix and the room data sheets.

Next steps

A further hearing for the Edinburgh sites will be set and will cover the decisions of the then Cabinet Secretary for Health and Sport to delay the opening of the hospital in July 2019 and to open it in March 2021.

The next hearing will commence next week on 12 June 2023 and will examine further detail of the Queen Elizabeth University Hospital, Glasgow including the nature, function and location of the hospital, concerns about the water, drainage and ventilation systems and the incidence of infection and the possibility of links to the built environment.