NHS procurement programme
Public-sector commercial programme
The context
Eighteen months into a five-year, £900m national-service upgrade programme, the prime contractor submitted a £120m compensation claim concerning changes and delayed decisions. Replacing the embedded contractor was expected to delay delivery by two years and cost more than the disputed amount. Informal change control and incomplete records weakened the position on both sides. Programme, finance and commercial colleagues favoured different responses, while a public delivery commitment and central reporting increased the pressure to find a workable resolution.
The work undertaken
- A joint legal-commercial review reconstructed the contractual history from instructions, notices, meeting records and baseline revisions, producing a shared assessment of evidence, causation and record weaknesses.
- A tiered negotiation process moved from commercial leads to senior executives, with mediation scheduled as a backstop and a common internal position guiding the discussions.
- The proposed resolution combined a revised delivery plan, rebalanced risk allocation, gain-share incentives and clearer decision timescales with settlement of the disputed claim.
- The settlement was accompanied by stronger client-side commercial capability, change-control training and a joint risk register reviewed monthly at senior level.
The outcome
- The £120m claim settled at £31m, with no proceedings issued.
- The programme's public delivery date was protected and the contractor relationship continued.
- Two major milestones were subsequently delivered early under the new gain-share arrangements.