Issue details

Proposed decision:

Extend the current Older Persons Residential and Nursing contract for up to a maximum of two years (1 April 2024 to 31 March 2026) and delegate authority to the Corporate Director Adult Social Care and Health to take other relevant actions, including but not limited to finalising the terms of and entering into required contracts or other legal agreements, as necessary to implement the decision.

Reason for the decision:

The Care Act 2014 gave local authorities in England, the NHS and the Care Quality Commission clear legal responsibilities for managing different elements of the adult social care market that include considering need, provider sustainability, value for money and integration.

Framing Kent’s Future and Securing Kent’s Future and the Adult Social Care Making a Difference Everyday Strategy Kent identify New Models of Care and Support as a key priority by recognising the importance of health and social care integration, building effective strategic partnerships with our providers through coproduction whilst being innovative in the way we look to redesign services to improve quality and importantly respond to budget constraints.

To help achieve this, the council has procured external expertise to undertake three distinct pieces of work that will help with the redesign of a new service. This will help inform the commissioning intentions for adult social care services and provide commissioners with the required information to design new specifications and a robust commissioning and procurement process.

The commissioning exercise will include extensive engagement with people who use care and support services to develop a new specification which ensures high quality and cost-effective services in the future.

The council will develop alternative care and support offers which support people to remain in their own home for longer. These include an enhanced technology offer, integrated reablement service, homecare offer, increasing direct payments and support that can be purchased such as personal assistants and niche services delivered by the voluntary sector and micro providers.

Following on from the cost of care review a new pricing model and contract fee mechanism will be developed to ensure best value for future placements. The extension will allow this activity to be completed.

The council will work closely with the market to ensure better value for the council and achieve savings where appropriate. This will include consider how to best utilise the Lots as part of the present contract model to make cost efficiencies for example, the utilisation of block contracts.

We will work to increase membership of the current framework and will review all off-framework placements regarding price, volume and value for money and seek to negotiate on this basis.

An extension to the current contract is required to allow the external consultants to complete the assessment and for the new service to be procured. However, it is anticipated that the exercise carried out by external experts will not be finalised until March 2024. This will enable a full procurement process to commence April 2024 once the extension to the contract has been implemented.

The proposed extension period will be put in place for a maximum of up to two years. However, a robust re-procurement exercise is to be completed as quickly as possible and break clauses will be written into the contract extension to allow the council to terminate the contract when appropriate and to fit in with the mobilisation of a new contract.

Subject to the outcome of the work currently being undertaken by consultants, we expect to commence the procurement process in April 2024 with a view to implement from early in 2025.

The proposed decision supports objective 2 of Securing Kent’s Future to deliver savings from identified opportunity areas to set a sustainable 2024/25 budget and MTFP and priority 4 of Framing Kent’s Future – New Models of Care and Support.

Options considered and discarded:

The council can choose not to extend the current contract and let it end on 31 March 2024. However, there are significant risks to choosing this option and no benefits have been identified. The risks are set out below:

Legal and Policy: The council commissions residential and nursing care services for older persons from the independent sector to meet the needs of individuals deemed to be eligible in accordance with and following a Care Act assessment. If the contract ends the council will be pressured to fully meet its statutory obligation under the Care Act with regards to providing a high quality, safe service that is at an affordable price.

Financial: A lack of robust fee setting mechanisms and contractual leverage may result in a significant increase in placement costs which will be challenging to control. Savings targets set out by the council and to be met through greater partnership working and negotiation will be difficult to achieve through spot purchasing agreements and providers will be within their right to give notice on individual placements that may be hard to source at an affordable price.

Reputational: A shift to partnership working with providers will be challenged as the expectation from providers is that the contractual arrangements with the authority will be maintained due to the mutual benefits to both parties. People using this service expect a robust oversight of the service and the perception will be that this is not the case if the service is not part of a KCC Contract.

Resource Implications: If the contract ends there will be a requirement for the review, renegotiation and repurchasing of all individual placements with new contract and terms and conditions established. This will also require significant system and process updates.

Financial Implications:

The total cost of the current Older Persons Residential and Nursing contract was set at approximately £800m (£100m per annum). However, due to the factors set out above, the annual cost has increased to £160m per annum. The approximate total cost of the proposed two-year extension period therefore is £304m.

Dedicated commissioning and finance resources will be required to ensure a collaborative approach to determine a robust fee model and pricing guide and the identification of any financial risk.

This is a demand driven service and due to increases in complexity, increased demand and fee rates in excess of inflation, spend has increased year on year. Mitigations will be put in place to help limit the increased spend through the development of a robust savings action plan during the contract extension period. This will require a collaborative approach across KCC and NHS Kent and Medway ICB colleagues and proactively engaging with providers to determine fair costs for both legacy and new placements.

Legal Implications:

The Older People Residential Care, Nursing Care and Respite Care Services was procured as a Dynamic Purchasing Framework. The original Contract Notice which was advertised in the Official Journal of the EU, allowed for a contract term of four years, from 1 April 2016 to 31 March 2020. It also allowed for two 24-month extensions, from 1 April 2020 to 31 March 2022 and 1 April 2022 to 31 March 2024. 

Both contract extensions have been exercised and the current extension period is due to expire on 31 March 2024. 

Under Regulation 34 (Dynamic Purchasing Systems), Contracting Authorities, are permitted to extend the period of validity of Dynamic Purchasing Systems (DPS). Regulation 72 (Modification of Contracts during their term) permits Contracting Authorities to modify contracts and framework agreements, without a new procurement procedure. This decision is in accordance with the regulatory requirements.

An extension to the DPS is necessary to enable the council to undertake a detailed Cost of Care review of residential, nursing and respite care provision, which is likely to be completed by 28 February 2024. As such, the council will not be in a position to undertake a reprocurement, based on the outcome of the review, in time for a new service to be in place by 1 April 2024. Therefore, a change is not proposed at this time for economic or technical reasons.  Any procurement of the service, prior to the completion of the Cost of Care review, will cause significant inconvenience and substantial duplication of cost, as the procurement will need to be undertaken again on completion of the Cost of Care review. It is also unlikely that a procurement will attract market interest, as providers may be reluctant to bid, prior to the completion of the Cost of Care review.

Equalities implications:

To ensure KCC’s statutory obligations under the Equalities Act 2010 are met, a full Equality Impact Assessment (EqIA) has been undertaken for recommissioning purposes. This has also been considered for the purposes of the contract extension and no major issues were identified. This will be refreshed to encompass any new negative or positive impacts identified due to the new service model.

New providers joining the DPS during the contract extension will need to continue to demonstrate that they have policies and procedures in place that ensure their compliance with Equality Act 2010.

Data Protection Implications:

A Data Protection Impact Assessment (DPIA) has been completed and no anticipated new data protection implications have been identified. Providers tendering for the contract extension will be expected to undertake a DPIA as part of their tender submission.