Forensic Marketplace Short Term Stabilisation

This paper sets out the need for urgent additional investment in contracted Traditional Forensic Services, for short-term stabilisation of the Forensic Marketplace. This is to address acute Forensic Marketplace fragility and imminent risk of major disruption to services, loss of forensic capacity, and minimise risks to Criminal Justice outcomes for the MPS.

A national approach to stabilising the Forensic Marketplace has been developed by the Forensic Capability Network (FCN) Commercial team working with the National Police Chiefs Council (NPCC), all Regional Forces, and in consultation with Forensic Service Providers (FSPs) with police contracts. This has resulted in a proposed two-phase approach; the first commencing immediately with price uplifts to all contracts (calculated on a fair and consistent basis) for a period of one year, followed by a longer-term sustainable solution (developed during the first phase).

Approval is now requested for the MPS to agree to the national approach and implement the recommended price uplifts to the MPS contract for Traditional Forensic Services, commencing from the 1st April 2019.

The Deputy Mayor for Policing and Crime is recommended to:

1. Approve a short-term one year uplift to contracted prices under Agreement SS31502; Traditional Forensic Services supplied by Eurofins Forensic Services Limited (EFS). This would result in an increased spend of circa £1.84M for the financial year 2019/2020. This will be funded from the additional £84M funding received as part of the 19/20 police grant settlement; £3M was allocated initially for Forensics Marketplace stabilisation via the bidding process to support the allocation of the additional £84m. As £1.84M is now required, £1.16M will be released to be reallocated to fund other bids.

2. Note that a further review of contracted prices and the forensic marketplace will be carried out during 2019/2020. This is to ensure that services are sustainable for the longer-term and also represent value for money to the Authority. The outcome of this review may result in a further request for Decision by the Deputy Mayor.

1. Introduction and background

1.1. The National Forensic Marketplace is in a state of acute financial pressure. This has largely been driven by successive cuts in police budgets and extremely competitive tendering at below cost prices by Forensic Service Providers (FSPs) desperate to retain market share. Unless urgent action is taken to support stabilisation of the Forensic Marketplace, there is a high risk of massive disruption to services resulting from long-term loss of capacity, significantly extended turnaround times, and risk to criminal justice outcomes for the MPS.

2. Issues for consideration

2.1. Since the closure of the Forensic Science Service in 2012, all services in the “Traditional” or “Physical” forensic sector (as distinct from Digital Forensics) have been the subject of significant organised regional tender activity. As such, they have a high compliance to accreditation standards and the specified service requirements of the police customer.

2.2. Whilst this approach has enabled cost reductions, policing’s approach to tendering in more recent years has led to a significant and unsustainable downward pressure on pricing.

2.3. The fragility of the Forensic Marketplace was most keenly felt when Key Forensic Services (KFS) entered into administration, in January 2018. At the time, it was agreed by the NPCC, Association of Police and Crime Commissioners (APCC) and the Home Office (HO) that the threat posed to the integrity of the two thousand live cases and their archive of all former cases within the company meant that intervention was required.

2.4. Since September 2018, it has come to light that the financial issues facing the Forensic Market Place have again become so critical that there is a real risk that if action is not taken, one or more FSPs may choose to exit the Forensic Marketplace imminently.

2.5. To address this risk, a national approach to stabilizing the Forensic Marketplace has been developed by the FCN Commercial team working with the NPCC, all Regional Forces, and in consultation with Forensic Service Providers (FSPs) with police contracts. This has resulted in a proposed two-phase approach; the first commencing immediately with price uplifts to all contracts (calculated on a fair and consistent basis) for a period of one year, followed by a longer-term sustainable solution (developed during the first phase).

3. Financial Comments

3.1. The forecasted financial impact of the recommended uplifts is £1.84M for the period 2019/2020, commencing on 1st April 2019. This represents less than 1.4% of the total contract value. This will be funded from the additional £84M funding received as part of the 19/20 police grant settlement; £3M was allocated initially for Forensics Marketplace stabilisation via the bidding process to support the allocation of additional £84m. As £1.84M is now required, £1.16M will be released to be reallocated to fund other bids.

4. Legal Comments

4.1. The Competitions and Markets Authority has been consulted on the approach to the national stabilisation plan, and no concerns were raised.

4.2. The implications of the Public Contract Regulations have been considered. Legal Counsel's opinion (provided to the Chief Constable of Dorset Police and shared with the MPS) is that the short-term contract price uplifts will be justified on the basis of the pressing public interest in maintaining and securing supply and the independent financial assessments verifying the severity of the financial pressures faced by FSPs.

4.3. Counsel referred to regulation 72(1)(c) of the Public Contracts Regulations 2015, meaning that the contract variation to increase prices may be justifiable due to unforeseen circumstances. Therefore, care should be taken to ensure that the total value of the increased payments does not exceed 50% the total expected value of the original contract, in accordance with regulation 72.

4.4. It should be noted that Counsel's opinion is that a longer term contract variation (for the remainder of the term of the contract and any roll over period) would be of greater concern as a longer term variation would be more difficult to justify.

4.5. Counsel also advised that the period of contract variation (12-24 months) should be used to allow the Authority to advertise and negotiate new contracts in compliance with the Public Contracts Regulations 2015.

4.6. Further information is contained in the restricted section of this report.

5. GDPR and Data Privacy

5.1. Implementing the recommended uplifts will not require the use or processing of personally identifiable data of members of the public, so there are no GDPR issues to be considered.

6. Equality Comments

6.1. As this paper relates to ensuring the continuity of an existing service, this work does not change any aspects relating to equality or diversity.

7. Background/supporting papers

7.1. Report.