Quality or Competition? OV procurement part 4

Changes in policy should have a clear objective, but when it comes to reforming TB testing what is it? And what are the chances of those policy objectives being met? Already I have described the potential negative impacts of AHVLAs TB testing reforms and the organisational difficulties that could compromise the delivery of TB testing. But perhaps these impacts could be offset by some improvements in TB testing quality or in cost savings? Maybe, maybe not.

There seem to be a lot of objectives to the tendering process. The first objective is procedural: an open system of procurement is required by EU law. However, as with most EU laws, there's flexibility within them: the system of procurement is not actually proscribed - it could take many forms, not just the solution AHVLA have put up for consultation. Perhaps AHVLAs consultation would have been better if they had pointed this out and highlighted potential other options?

When I attended a couple of open meetings about tendering for TB testing last year, this procedural or compliance reason was held up as the key objective for OV procurement: "we've been breaking the law and we've got to stop" went the message. The timing to this was curious though: the BVA and Animal Health had been negotiating over a pay rise for TB testers. Maybe the brinkmanship in negotiations had gone too far, but all of a sudden Animal Health announced that the memorandum of understanding between themselves and the BVA was illegal and negotiations were off. It put the cat amongst the pigeons.

A cat amongst the pigeons (source here)

Those presentations and the ones that AHVLA have recently released suggest two further objectives beyond the "we have to do it" rationale. The first is to do with quality. The AHVLA appear to be using the procurement process as a way of quality assuring TB testing. This is different to improving the quality - Ill come on to that. But reading the proposals, they suggest that all tenders must show how they will have quality assurance plans in place. In other words, each tender must say how it is going to audit itself, and what standards it is going to set itself. This seems a little odd: what is the point of 33 contractors all coming up with different standards to audit themselves by? Why would you want different standards in different parts of the country? Why not have just one set nationally? Its also, of course, a further example of cost-sharing, or in this case, passing the costs of quality control to the private sector so the state can avoid paying them. Maybe this would work?

Returning to New Zealand for the minute, the performance indicators and standards are pretty much laid down by the Animal Health Board in advance of any contract negotiations. The training that all TB testers have to go through is also laid down by their national qualifications board, and is a module that fits into their national diploma in agriculture - run by the New Zealand’s Agriculture Industry Training Organisation (AgITO), our equivalent of Lantra. For a country obsessed by neoliberalism, that is a surprisingly centralised, coordinated and structured approach, so different from what AHVLA seem to be proposing. There, vets have to take and pass an exam in order to be able to test - all they currently do in the UK is a half day classroom training session, and if they're lucky, a supervised (not a surprise) test by a veterinary officer from AHVLA. What we may end up with across England is a smorgasboard of different approaches to training and auditing for the sake of saving money. I'm not sure how that helps the quality of training. What happens when vets move to different jobs in different areas?

The other issue in relation to quality is how the proposals would address existing concerns about the quality of testing. Without getting into to much detail about this (you can see some of my research about this here [pdf] and here - £, email me for a copy), at last year's meetings, Animal Health were keen to ensure that vets no longer conducted TB tests for their own clients. This was to avoid a conflict of interest which underlies concerns about the quality of TB tests (ie not following the testing protocol to the letter). Officially, the Comer report - you can read it here - first highlighted these concerns, but they were concerns that everyone knew about but did nothing about. Its kind of ironic therefore that Animal Health are asking the private sector to do something about quality control when their own approach has been pretty lax over the last 10 years.

However, the requirement to avoid a conflict of interest does not seem to appear in their TB testing proposals. Perhaps AHVLA are expecting the "network of practices" to deal with this issue by agreeing to test each others clients herds. If that is the case, then not only would it be extremely complex to audit, but it would also add to the costs incurred by those veterinary practices competing for the work. If they are not going to insist on "independent" testing, then perhaps AHVLA aren't really that keen on addressing the structural causes of poor quality testing either? You could also argue that having a monopoly supplier in one area also discourages improvements in quality in other ways: it could lessen the coercive power that the farming industry could have (if they wanted it) over the quality of TB testing that they receive. At least, it could make for some interesting dynamics within these "networks of practices" when a complaint about testing arises.

The final aspect to the procurement process is competition. There's no point introducing competitive procurement if you're not going to save money, is there? At last years meeting this was rammed home: that Animal Health needed to save a stack of money and OV procurement was going to deliver it. As vets were told at the meeting: "financially, in government, we are not a priority". So, one year on, its kind of strange that in Nina Purcell's podcast, economic considerations are not more prominent. Its like, "oh and by the way, we'd like to try and save some money too, if possible please". Maybe this is because AHVLA recognise the tension between doing something well and doing something quickly - the picture I posted previously.

But then again, if AHVLA are loading more and more costs onto private vets sector, then why should they care? They'll save money anyway wont they? Maybe, but it will depend on how competitive the tenders actually are. How much competition is there really going to be? Well, it seems odds on that there'll be a fair amount of enthusiasm amongst vets in Devon, Gloucestershire and other high incidence areas for retaining what is already seen as "theirs". But if the AHVLAs preferred model is one of a network, how many networks are there going to be competing with each other? Given the dominance of a small number of providers in some areas, potentially, you could end up with only one bidder, or one realistic bidder. In other words, the network model reduces the level of competition. It could result in large variations in the cost of a test (this is the case in New Zealand, where there is considerable variation in test costs per region). Or it could result in overall higher test costs than what is paid out now (to be sure, this didn't happen in New Zealand: the price per test came down on the introduction of competition and has stayed at that level pretty much ever since). On top of that will be all the additional contract management costs which Animal Health will have to pay for. In studies of contracting out, these costs often make the difference, turning what appears like the reduction of costs into an increase - what some people have referred to at the outcome of "Parkinsons law" (see here).

As an official from Animal Health said at those meetings last year: "yes, its quite possible that this will not save us money, but cost us more".

In the final part of this analysis, Ill sum up the key points to TB testing reforms and look at whether there are any marginal gains within the current system.