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Outsourced DWP assessment costs soar under poor management

Outsourcing Department for Work and Pensions health and disability assessments has caused costs to soar by 65% in just a few months, the National Audit Office (NAO) has found.

These assessments, used to decide if people are eligible for benefits or to help those on long-term sick leave back into work, are an essential part of the department’s work, with seven million of them expected to be carried out between April 2015 and March 2018.

But the auditor decided that the DWP has not yet achieved value for money with the service. Under the new contract with the Centre for Health and Disability Assessments (CHDA) for employment and support allowance (ESA) assessments, signed in March 2015, the DWP is paying £190 per assessment – compared to £115 in its former deal with Atos.

While costs have increased partly due to a larger amount of face-to-face assessments and rising salaries, the company’s ESA backlog had already ballooned to a whopping 280,000 in August of last year. It is also not on track to complete the expected number of assessment for 2015 and has missed assessment report quality targets since the start of the contract.

Both Atos and Capita, previous contractors, have also failed to meet the Personal Independence Payment assessment report quality target since October 2013.

But these mistakes are largely linked back to the department’s own failings, the NAO has found. In light of the rising costs of assessments and providers struggling to meet standards, the NAO identified a series of struggles within the department.

It is failing to set targets and requirements with clear evidence and is failing to adequately test bidders’ assumptions – such as about staff training – during the contract tender process.

The DWP also lacks transparency and a clear strategy for contracting-out assessments and risks damaging market interest through tight procurement timetables.

Amyas Morse, head of the NAO, said: “The department has addressed some of its immediate operational issues in managing contracted-out health and disability assessments but now needs to take action to break a perpetuating cycle of optimistic targets, contractual underperformance and costly recovery.

“The department is paying more for assessments, but providers are still not meeting expected performance levels.  The department needs providers to complete the planned number of assessments so that it can achieve the significant benefit savings it expects to make over the next few years.”

Meg Hillier MP, chair of the Commons Public Accounts Committee, argued that the DWP’s “inability” to manage assessments has failed disabled people and taxpayers.

“The department’s approach has been unclear, its targets untested and consistently missed and future delivery is under threat. With the annual cost of assessments now expected to rise to a staggering £579m in 2016-17, taxpayers have been left to foot the bill,” she said.

“Contracting out the delivery of public services does not absolve the department from its responsibilities to ensure that taxpayers’ money is well-spent. The department needs to do more to ensure private providers deliver a better deal for sick and disabled people as assessments have a huge impact on their ability to access vital cash to live with dignity.”

But a DWP spokesman said: “To ensure that support is targeted correctly and that we achieve value for money, we operate a strict competitive contract tendering process and factor all costs into departmental spending plans. This also ensures that the quality of the assessments for claimants improves at the same time.”

Amongst the recommendations made to the DWP is the need to develop an overall commercial strategy for these assessments, including setting realistic targets that providers can meet and engaging with contractors to learn from previous failures.

(Top image c. Kirsty Wigglesworth, PA Wire)