Summary: There was no fault in the decision to place an embargo on Company X.

The complaint

1. A director of Company X, complains City of Bradford Metropolitan District Council (the Council) placed an embargo on new care packages causing Company X financial loss. He also complains there was a failure to respond to his complaint.

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The Ombudsman’s role and powers

2. The law says a complaint to us may only be made by a member of the public who claims to have suffered injustice. A member of the public means an individual or body of persons including an incorporated body (a company.) (Local Government Act 1974, section 26A (1(a)) and 27(1))
3. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word ‘fault’ to refer to these. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
4. We can decide whether to start or discontinue an investigation into a complaint within our jurisdiction. (Local Government Act 1974, sections 24A(6) and 34B(8), as amended)

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How I considered this complaint

5. I considered the complaint to us and documents described later in this statement. Both parties received a draft of this statement and I took comments into account.

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What I found

Relevant policies and procedures

6. The Council’s Serious Concerns Procedure applies to social care providers working with vulnerable adults in Bradford. It comes into action when there are concerns about standards of care for example when there has been a poor inspection by the Care Quality Commission (CQC). It also comes into play when there are issues related to contract management. The procedure sets out that where an embargo is under consideration, there should be a serious concerns meeting. There is a list of situations where an embargo might be appropriate, but it is not an exhaustive list and the policy gives some discretion. The Council writes to providers to explain why they have placed an embargo. Providers have to meet with council officers after the embargo to discuss the Council’s expectations and required actions (improvements) of them. Embargos are reviewed regularly and lifted if the provider has evidenced improvements.

Key facts

7. The Council commissions approved care providers to provide home care to adults with care and support needs who live in Bradford. Approved providers have a standard contract with the Council.
8. Supported living schemes are where care and housing are provided under two contracts. People have individual tenancy agreements with a landlord and care and support is provided by a separate company. In this case, the tenancy agreements were with a housing provider and care and support was provided by Company Z under a standard contract with the Council. The Council’s standard contract with Company Z said:

‘the contract is personal to the service provider, who shall not assign, transfer or otherwise dispose of the contract without prior approval of the Council.’

9. In June 2017, there were changes to Company Z including a change of name and Company X took over control of Company Z. There were also changes to the name and ownership of the company providing housing at the supported living scheme.
10. In July 2017, the Council found out about the changes described in the previous paragraph. Officers noted Company X was not a council approved care provider. Senior officers placed an embargo on new care packages as part of the Serious Concerns Procedure. The Council wrote to Company X about the embargo explaining it was because of the lack of registration of the new company with CQC, the legal status of the new company and the lack of contract with the Council. The letter explained there would be a meeting to address concerns. The effect of the embargo was to suspend new business with Company X (so the Council would not allow any new care packages) and to stop any increases in hours to existing care packages.
11. Council officers met with a senior member of staff at Company X in August 2017. Officers explained their concerns:
• The service was not registered with CQC
• Officers were going to review the legal position in relation to Company X ‘taking over’ the contract.
12. Company X changed its name in October 2017. For ease of reference, I shall continue to refer to it as Company X.
13. The Care Quality Commission inspected the care provision at the supported living scheme in November 2017. The inspection report noted Company X had recently taken over.
14. In January 2018, officers met to review the embargo under the serious concerns procedure. There was to be a meeting with Company X the following week and the Council was going to ask Company X to explain the changes in control and name. Officers met again to review the embargo two weeks later following the meeting with Company X. The minutes noted concerns about the suitability of the flats at the supported living scheme.
15. Council officers met again in February and twice in March to discuss the embargo. In February, there were concerns about Company X’s bank details being incorrect and in a different name. This was clarified in email correspondence with Company X after the meeting. In March, the minutes of the review noted Company X as the support provider ‘needed to be vetted i.e. accredited as no procurement exercise or previous service/quality checks had been undertaken’
16. In March 2018, a director of Company X emailed the Council to ask when the embargo would be lifted.
17. In April, the Council reviewed the embargo. The minutes noted officers were satisfied the Council was paying the correct provider.
18. In May 2018, the Council reviewed the embargo. It recommended a partial lift to the embargo so Company X could operate in Bradford, outside the supported living scheme. The minutes noted senior officers were concerned Company X had plans to refurbish the building and restructure the support at the scheme. Officers were of the view Company X’s proposed business model did not represent good value for council funding.
19. In July 2018 Company X ended the contract for care and support at the care home with effect from September. The Council acknowledged Company X’s termination, invited it to apply to become an approved provider and if not, said it would make other arrangements for the care of tenants at the supported living scheme once the contract ended.
20. Council officers and staff from Company X met in July. Officers told Company X the Council was willing to commission new care packages outside the supported living scheme.
21. A director of Company X emailed the Council with questions and queries. The Council clarified in an email that:
• Company X’s position was of concern because it was not an approved provider and it had not got a contract with the Council. The Council’s procurement process had not been followed
• The tenancy services provided at the supporting living scheme were not part of the social care budget; they were paid for by housing benefit which was a separate system.
22. The Council reviewed the embargo again in July 2018. The minutes set out officers’ findings in relation to the various companies involved with Company X. They noted the ongoing risk with respect to Company X not having competed for the contract or having applied to be an approved provider.
23. A director set out Company X’s position and made a formal complaint to the Council about the embargo. He said:
• Company X received a good CQC rating in all areas and he assumed the embargo would have been lifted
• Company X bought shares in Company Z and continued to deliver services as outlined in the contract.
24. The Council responded to the complaint but due to an oversight, failed to send the response until we informed the Council we had received a complaint about it. The Council’s complaint response said:
• It imposed the embargo on new placements because of the uncertainty about which company was providing care at the supported living scheme. None of the new companies had informed the Council of the changes and so the Council did not have the opportunity to form a view about their suitability to be an approved provider
• There had been an assignment of the contract from Company Z to Company X and this was a breach of contract. Company X could not just claim to be the new provider because it was a significant shareholder or controller
• The Council took the view that the care provided to existing customers should continue in order to avoid distress but that the status of the new provider should be clarified before it made any new placements
• The Council’s contracts manager was responsible for making judgments about the suitability of providers. He was concerned that no-one from the company had discussed the matter with him before the changes and the situation was not clear with lots of new companies with different names.
• It was unfortunate that the Council and the company could not reach a resolution before the company decided to withdraw from delivering care.
25. The Council told us:
• We may not have power to investigate the complaint as it is about a company
• The dispute stemmed from the legal uncertainty about the status of Company X which had no contract with the Council. Social care contracts could not be freely transferred and had to be approved by the Council before it had investigated the suitability and taken account of procurement rules. The Council had no notice of the transfer and so was not given the opportunity to do this
• Company Z was an approved provider with the Council, but Company X was not. The Council’s policy was to use approved providers for new care and support placements/packages
• There were a large number of empty flats at the supported living scheme but this was not relevant for the Council and there was no commitment from the Council to fill the vacancies
• The embargo allowed the Council to establish the correct contracting arrangements and ensure Company X was registered with CQC
• Once the Council had established the legal entity of Company X, the existing care packages transferred from Company Z to Company X, but there was still confusion about the companies and so the embargo on new placements remained in place
• Council officers and staff at Company X met several times. Officers highlighted that they did not feel the building was suitable for a supported living scheme as the flats were very small and led to a residential care style of support
• At a meeting in February 2018, a director of Company X set out the proposed business plan. All new tenants would have to have Company X provide their care and support which was a refurbished supported living scheme for adults with learning disabilities. The Company intended all placements to be made by the Council. The Council had never agreed to this and Company X’s proposal did not fit its commissioning policy. The Council considered it could offer better properties for adults with learning disabilities so they could have freedom over who supported them. The embargo continued until all aspects of the proposed scheme could be agreed.
• Council officers met with Company X in July 2018 and said Company X could provide new home care packages to people receiving direct payments (outside the supported living scheme). But Company X decided to end the contract to provide care at the supported living scheme.

Findings

Our jurisdiction

26. The Council considers we may not be entitled to investigate a complaint from Company X. We have the power to investigate complaints from members of the public, and, as our enabling law, the Local Government Act 1974, says this includes incorporated bodies or companies, we are satisfied we can investigate this complaint.

Was there fault?

27. There was no fault in the decision to place an embargo on new care packages. The Council followed its serious concerns procedure and gave reasons for the decision: lack of prior notification, lack of registration with CQC, lack of approved care provider status and concerns about Company X’s legal structure.
28. Officers reviewed the embargo regularly and partially lifted it to enable Company X to provide new care packages outside the supported living scheme. This was appropriate and in line with the serious concerns procedure as some of the initial concerns, including about CQC registration had been resolved.
29. It is clear that Company X intended to develop a new supported living service and its business plan involved the Council being the sole purchaser of placements at the new scheme. The Council explained the company’s plans did not fit its commissioning priorities. It is not for the Ombudsman to intervene in a dispute about how the Council should commission social care. This is a budget matter for the Council.
30. I note Company X ended the contract before the parties resolved the outstanding issues. It appears this was a business decision based on the Council’s unwillingness to commission the proposed new scheme. There was no fault in the Council’s response to Company X’s decision. It invited Company X to apply to become an approved provider. Company X did not do this.
31. The Council did not send the complaint response. In some cases this would be fault, but not here. I am satisfied the response was drafted and accidentally not sent. Company X has now received the response.

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Final decision

32. There was no fault in the decision to place an embargo on Company X. I have completed my investigation.

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Parts of the complaint that I did not investigate

33. I discontinued my investigation of a complaint from a former director of Company X about a council officer having a personal grievance about him because the former director is no longer pursuing a complaint with this office and any injustice caused was personal to him.

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Investigator's decision on behalf of the Ombudsman