Procurement and commissioning of services fraud

Those with direct influence on decision-making within the procurement process, such as during the pre-tender phase, may be susceptible to bribery and corruption. This can be carried out multiple ways including using single tender waivers, failing to declare a conflict of interest, contract splitting or falsifying quotes or tenders. These methods will all be enabled by the decision-making process taking place within a closed environment, and as such, very few opportunities for suspicious behaviour to be witnessed and reported on.

The threat of payment diversion fraud, or mandate fraud, remains prominent and often cyber enabled, such as phishing email communications, the hacking of supplier email accounts or the spoofing of genuine email addresses.

A recent NHSCFA mandate fraud priority project has seen recorded savings of £32.8 million this reporting period and indicates the levels likely to have been inadvertently paid out to criminals in previous reporting periods.

Exceeding procurement threshold limits is assessed to remain a vulnerability that may enable fraudulent practice. Previous work carried out by the NHSCFA measured vulnerable spend to fraud and error for procurement contracts that should have gone through the tender process or existing frameworks. Despite this intervention reducing financial vulnerability by £156.8 million in the most vulnerable aspects of non-purchase order spending between 2018 – 2020, a lack of oversight and governance of procurement spending and contracts, still enables existing processes and frameworks to be bypassed.

The threat of commissioning of services fraud remains prominent, especially the necessity for NHS organisations to provide sufficient staffing levels through the procurement of agency staff. For example, NHS expenditure on agency workers increased by £600 million between 2020 – 2021 and 2021 – 2022. Partly due to resourcing implications during the COVID-19 pandemic,and the basic requirement of the NHS prioritising patient care over cost, it is realistic some offframework agencies charged inflated rates without scrutiny.

The 2023 – 2024 financial year will be the first to see the impact of Integrated Care Systems (ICSs) through the Health and Social Care Bill. Under the auspices of encouraging collaboration and moving from competition and silo working, ICSs may increase the potential for abuse of positions and collusion. Additionally, there is the possibility for commissioners and providers to work collaboratively whilst sharing finances and thus creating the potential for collusion and conflicts of interest.

Information reports received for procurement and commissioning of services fraud

This reporting period has seen a significant reduction from 1,227 reports to 652, and largely those relating to COVID-19 scams. This type of allegation accounts for 63% (775) of all reports in this thematic area in 2021 – 2022, compared with 24% (158) this reporting period.

It is assessed that a full year without pandemic restrictions and associated requirements such as testing, has meant there is no longer the same opportunity for criminals to utilise the pandemic to attempt fraud, and the public may be increasingly less susceptible to such attempts.

Once COVID related reports are excluded, procurement and commissioning registered 494 reports this reporting period and comparable to last year’s total of 452.

The change in the number of fraud reports received in relation to procurement and commissioning from 2018 – 2019 to 2022 – 2023 is illustrated in the below chart: