House of Commons - The Forensic Science Service - Science and Technology Committee

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The Forensic Science Service - Science and Technology Committee Contents

2 The forensics market

Forensic science provision in the UK

ENGLAND AND WALES

13. Forensic science provision in England and Wales has evolved since the 1980s when one provider, the Forensic Science Service (FSS) had a virtual monopoly, to the current situation with several private forensic science providers (FSPs). The changes were driven by the concept and emergence of a market in forensic science provision.

14. The FSS is a 100% Government-owned, contractor-operated (GovCo or GoCo) organisation. It provides services to police forces across England and Wales, together with other agencies such as the Crown Prosecution Service, the Serious Organised Crime Agency (SOCA), Ministry of Defence Police and Guarding Agency, British Transport Police and HM Revenue & Customs.[11] The FSS works on more than 120,000 cases per year and employs around 1300 scientists.[12] In addition, the FSS assists more than 60 countries worldwide with services including consultancy, training services, systems and databasing technology and casework. It helps overseas governments to establish or enhance forensic resources, particularly in the field of DNA technology,[13] a field in which the FSS was an international pioneer.

15. There are several private forensic science providers (FSPs); the largest is LGC Forensics.

SCOTLAND AND NORTHERN IRELAND

16. Scotland and Northern Ireland have their own publicly-funded FSPs: the Scottish Police Services Authority (SPSA) Forensic Services and Forensic Science Northern Ireland (FSNI). We have not examined forensic science provision in Scotland and Northern Ireland as part of our inquiry.

Recent history of the FSS

17.  The table below summarises the recent history of the FSS.Table 1: Recent history of the Forensic Science Service[14]

1991 The Forensic Science Service (FSS) became an Executive Agency of the Home Office.

1999 The FSS gained Trading Fund status.[15]

2002 FSS stopped being the "preferred supplier" of forensic services for the Association of Chief Police Officers (ACPO).

2003 The Home Office's Review of the FSS recommended the FSS become a Public-Private Partnership (PPP), via the Government-owned, contractor-operated (GovCo) model.

2005   FSS changed from a Trading Fund to a GovCo company.

2008   With a £50 million Government grant, the FSS launched a transformation programme to reduce costs, aimed to deliver by mid 2011. This included the closure of three FSS sites: Chepstow in December 2010, Chorley and Priory House by March 2011.

2010 On 14 December, the Government announced closure of the FSS, stating "we have [...] decided to support the wind-down of FSS, transferring or selling off as much of its operations as possible. [...] our firm ambition is that there will be no continuing state interest in a forensics provider by March 2012."[16]

18. A key factor in the story of the FSS is the development of a market in forensic services. Prior to becoming an Executive Agency in 1991, the FSS did not charge customers for its services.[17] Executive agencies enable executive functions within government to be carried out by a business unit focused on delivering specified outputs, within a framework of accountability to Ministers.[18] The FSS gained Trading Fund status in 1999. As a trading fund, the FSS was still part of government and was set specific financial targets by HM Treasury. The change was intended to improve the FSS's financial flexibility.[19] In 2002 the FSS stopped being the "preferred supplier" of forensic services to police forces and multi-sourcing of forensic services was adopted by the FSS's biggest customer, the Metropolitan Police, in 2003.[20] These changes spurred the growth of private forensic science providers and the FSS gradually began to lose market share.

19. Against the background of the developing market in forensic science and the changing relationship between the police and the FSS, a review of the FSS was announced in July 2002 by the then Home Office Minister of State for Policing, John Denham MP.[21] In 2003 the Home Office published the Review of the Forensic Science Service, which had been led by Robert McFarland, a consultant. The McFarland Review recommended that the FSS become a Public-Private Partnership (PPP), via the Government-owned, contractor-operated (GovCo) model. The Review considered that this would increase the FSS's private sector flexibilities and relieve the Government of responsibility while allowing it to partly realise its investment.[22] The GovCo phase was intended to enable a contract between the FSS as an embryonic PPP and Government to ensure continuity of services, quality, standards and prices, as well as identifying an appropriate private partner.[23]

20. Reactions to the suggested move to a PPP model were mixed. In 2005 our predecessor Science and Technology Committee published Forensic Science on Trial, reporting on its inquiry into the McFarland Review's recommendations. The Committee noted the "vehement opposition" from the trade unions and FSS staff, contrasted with the view from Forensic Alliance (now LGC Forensics) that the move to PPP was a "logical progression" that, according to the Association of Chief Police Officers (ACPO), would enable the FSS to have "access to the same market freedoms that other competitors enjoy".[24] The FSS itself welcomed the decision to move to PPP via a GovCo company and stated that "more freedoms than Trading Fund could offer were needed".[25] However, the Government appeared to send mixed messages on the FSS's status change. Having announced its intention to develop the FSS as a PPP in July 2003, the Government then stated, in January 2005, that it would test the GovCo model in its own right, a move that the Committee considered to be inconsistent with the original acceptance of the McFarland Review in July 2003, which invoked GovCo only as a precursor to PPP.[26] The Committee characterised the Government's presentation of the decision as "misleading and confusing".[27] In fact our predecessor Committee was sceptical of the whole process and warned that "the Government's poor track record at managing PPP projects does not inspire confidence in its ability to make a success of developing the FSS as a PPP".[28] Ultimately, however, the Committee concluded that "it should not be assumed that a GovCo is merely a transition step leading to a PPP and, if the FSS is successful as a GovCo, it should remain as such".[29] In November 2005 the Committee held a follow-up evidence session with Andy Burnham MP, then Parliamentary Under-Secretary of State, Home Office, who stated:

no irrevocable decision has been taken with regard to any further development following PPP. It is my intention, and that of the Home Office, that the GovCo structure should be given an opportunity to succeed in its own right.[30]

21. The reasons for a lack of progress to PPP are explored further in paragraph 235, where we consider alternatives to the closure of the FSS. We assess, and express our criticisms of, the historical handling of the FSS, which includes the move to GovCo status, from paragraph 208.

22. The transition to PPP was never completed and the FSS remains a GovCo organisation. Prospect, representing around 1,000 FSS staff, referred to GovCo in its written submission to this inquiry as a "failed experiment", and stated that the FSS's poor financial position was "entirely a consequence of previous decisions to contract out an essential public service".[31]

FORENSIC SCIENCE FOR PROFIT?

23. The concerns of FSS staff over the move to GovCo appeared to be based on an objection to the marketisation of forensic science services, a view that still prevails. Prospect stated that "it is simply not appropriate for the UK's forensic science capability to be run on the basis of pure commercial disciplines".[32] Steve Thomas, Officer for the FSS, Prospect Union, stated that:

Prospect's view was that embarking on this course was a dangerous one. In part [...] we were very concerned about commoditising forensic science and looking to secure a profit in a market that was not developed and in which there was only one main customer. [...] We were concerned that it would lead to our members working on profitable grounds, which would mean that work that was unprofitable would be marginalised. We believe that the concerns we expressed at the time have come to fruition, unfortunately.[33]

24. In the written submissions we received from FSS staff many considered that forensic science and the criminal justice system were unsuited to a market approach. For example, John Haley, FSS employee, considered that "there is no real [forensics] market in the UK" as "you cannot put a value on the criminal justice system".[34]

25. We also heard the opposite view from other submissions. For example, Professor Jim Fraser, Director of the Centre for Forensic Science at the University of Strathclyde, noting the importance of effective regulation, stated that:

I do not believe that one can legitimately object to privatisation in principle since private provision of services exists in many other areas of society, including the criminal justice system. Furthermore the main private forensic science providers appear to have served the needs of the CJS to date. There also appear to have been valuable benefits that have been forthcoming in England and Wales, such as very fast turnaround times for products and services. This contrasts with most public sector laboratories around the world that have very large backlogs.[35]

26. The Forensic Science Society feared that closure of the FSS would mean that "the less profitable areas of forensic science will be neglected"[36] and Shailes Jagatiya, scientific area manager, FSS, stated that:

In-order to undertake this volume of work, some of which is not financially lucrative, it will almost certainly require some level of investment on the part of another [forensic science provider]. It is likely that a business case which delivers a promise of a financial return would be readily approved, however for other services where profits cannot be guaranteed it is unlikely that the board of any commercial organisation would be committed to investing. The commercial providers are not obliged to undertake out all types of forensic analysis and many prefer to focus on the high value services.[37]

27. Andrea Grout, forensic scientist at the FSS, stated that:

The FSS has always proudly provided all types of forensic discipline, in order to best serve the CJS, whether profitable or not. Private sector providers have however carefully selected only profitable areas of forensic science, and left specialist, costly disciplines to the trusty supplier of last resort, the FSS. Inevitably, the FSS has therefore suffered financially where other private companies may seem to have succeeded. Clearly, overall forensic science is not a profitable or sustainable business arena. It is an essential service, requiring government support, in order to serve its sole function: to contribute toward a successful criminal justice system.[38]

28. The commoditisation of forensic science through the current procurement framework is explored further in paragraph 55.

29. At the time its closure was announced, the FSS held around 60% of market share in forensic science provision although its share of the market had been declining over many years. FSS market share varied across the country (for example in Wetherby, where the FSS worked with police forces primarily in the North-East, it was 90%)[39] and by scientific discipline (for example it had 75% of the forensic toxicology market).[40] The next largest forensic provider was LGC Forensics, a private company with around 20% of the market.[41]

Police expenditure

30. As well as providing services to police forces across England and Wales, the FSS provides services to other national law enforcement agencies too. However the police forces comprise the majority of the customer base for forensic science services and therefore the market for forensic testing is largely driven by police expenditure.[42]

31. In September 2010 the report Analysis of the Forensic Marketplace, conducted by PricewaterhouseCoopers (PwC) for the National Policing Improvement Agency (NPIA), was produced. The report gave an indication of the current and future stability of the market,[43] and subsequently the Government stated that a decline in the market from £170 million in 2009 to £110 million in 2015 was projected.[44] The report has not been published to date, although the NPIA provided copies to us. It was clear from the announcement made on 14 December 2010 that the Home Office had sought information on the market from the police and PwC, as it had stated:

The police have advised us that their spend on external forensic suppliers will continue to fall over the next few years, as forces seek to maximise efficiencies in this area. HMIC [Her Majesty's Inspectorate of Constabulary] concur with this assessment.[45]

Chief Constable Chris Sims, Association of Chief Police Officers (ACPO), clarified that:

The discussion with ACPO was to get a view of the degree to which we thought the position was manageable should the FSS be brought to a conclusion.[46]

We provided a report through PwC about the stability of the market. It was the Home Office then, quite rightly, that made the decision. We were asked about how we would manage the consequences.[47]

32. Given the importance that was attached to the future of the forensics market, we explored the issue further.

A SHRINKING MARKET

33. Police expenditure on forensic science falls, broadly, into two categories: external and internal. The external expenditure is spent on procuring forensic services from external providers such as the FSS and private companies, and drives the external forensics market. Internal expenditure refers to spend on forensic science carried out in-house, that is, by the police themselves. Analyses of finger marks (fingerprinting), for example, have long been carried out in-house.

34. The NPIA, a non-departmental public body that supports policing, provided us with figures for police expenditure on forensics in England and Wales between 2005-06 and 2009-10, showing that while spend on in-house forensics had been increasing up to 2008-09, external spend decreased; a decrease in both had occurred in 2009-10.[48]

35. James Brokenshire MP, Parliamentary Under-Secretary of State for Crime Prevention, estimated that external spend was £138 million in 2010-11.[49]Table 2: Police forensic expenditure in England and Wales[50]

Internal forensic spend[51]
£ Million (%)
External forensic spend
£ Million (%)
Total
£ million

2005-6 165 (46.5%) 190 (53.5%) 355

2006-7 170 (47.2%) 190 (52.8%) 360

2007-8 180 (49.3%) 185 (50.7%) 365

2008-9 190 (52.1%) 175 (47.9%) 365

2009-10 185 (52.9%) 165 (47.1%) 350

2010-11 181 (56.4%)[52] 138 (43.6%)[53] 319

Figure 1: Police forensic expenditure in England and Wales

36. The NPIA stated that "the reduction in the internal forensic spend will accelerate in 2010-11 and beyond"[54] and stated that:

The internal expenditure is primarily on pay for crime scene and fingerprint analysis (work not carried out in the private sector). The external expenditure is split between commodity testing (DNA, Drugs and Toxicology) and casework [...] the casework is likely to include some DNA analysis depending on the type of case to be examined.[55]

37. The state of the external forensics market has a strong influence on the willingness and potential for private FSPs to fill the gap left by the planned withdrawal of the FSS from the market. David Richardson, LGC Forensics, stated that:

It is important that [the] market has stability for the future if the private sector provision is going to continue to invest at the levels it is doing at the moment. [Police in sourcing of forensics work] is an important factor in the sustainability of that market.[56]

38. The Minister's view was that "when the commercial market is allowed to flourish properly and effectively, as we intend with the wind-down of the FSS, it will drive further efficiencies and underline the quality and assurance which can be obtained through the private market".[57] However, witnesses from FSS, LGC Forensics and Cellmark were not even confident about the current size of the market, with Bill Griffiths, Chairman of the FSS, estimating it at around £110 million.[58] David Hartshorne, Cellmark, stated that:

We have seen a decline in the market. As we see it at the moment, the most important thing is having some level of certainty as to what the market size is likely to be. Clearly, there is an issue at the moment about the capacity that the FSS currently has and how that is going to be accommodated. We, and, I am sure, other private service providers, are poised in a position to be able to make investment, to be able to provide the sorts of additional capacity that is required. To make those investment decisions, we really need to have some understanding of where the market is likely to end up.[59]

39. LGC Forensics and Cellmark were unaware of the figures we had received from the NPIA on police internal and external forensic expenditure, summarised in Table 2.[60]

40. LGC Forensics stated in its written submission that it would be difficult "to attract further private sector investment in the market while there remains a perceived risk that one state subsidised market participant (the FSS) is being replaced by another (in the shape of in-sourced provision from police forces)".[61] Despite the concerns we heard from private companies, when we asked the Minister whether he had heard concerns from the private sector about the police's internal forensic expenditure, he responded "not as far as I am aware".[62] Witnesses from LGC Forensics and Cellmark confirmed, while giving oral evidence on 30 March, that they had not been consulted prior to the closure decision.[63]

41. There was a widespread view that the forensics market was fragile[64] and Mike Silverman, Reporting Officer, Metropolitan Police Forensic Science Laboratory, stated that:

This is only partly as a result of the FSS wind-down. Of more impact are the shrinking market, financial constraints on the only realistic customer for forensic science (the Police services) and the pressures to find cuts in forensic science police budgets (perhaps through in sourcing or unwarranted reduction in submissions to the laboratory). [...]

Although I am sure that any competent forensic service provider would be able to complete process upscaling in time to manage the volume of work currently being carried out by the FSS, I am at a loss as to why they would want to take such a risk. What is the commercial sense in the risk of an investment in additional staff and equipment and accommodation without any assurances from the Police customer that there will be a continued demand for the service?[65]

42. Given that the Government expected private forensic science providers (FSPs) to pick up the FSS's 60% share of the external forensics market, it is disappointing that the Government does not appear to have gathered any market intelligence on the capacity and commercial willingness of private forensic science providers to take on the FSS's work.

43. The apparent lack of transparency over the size of the forensics market is unacceptable and we see no reason why the FSS and other forensic science providers should have been unaware of police forensic expenditure figures. The levels of police expenditure on internal and external forensics should have been published, and we recommend that they are published in detail in future. If the Government expects the private sector to pick up the FSS's market share, it must be clear with private forensic science providers about the size of the market and anticipated future trends.

44. The Minister's lack of awareness that private FSPs have concerns about police expenditure on forensic science is worrying. The Government must now ensure that the views of private FSPs are sufficiently taken into account during the transition period; it runs the risk otherwise of having unrealistic expectations about what private FSPs can deliver in a shrinking market.

FULL COSTS OF POLICE INTERNAL FORENSICS

45. We have made clear our views on transparency of police expenditure. Therefore we were concerned when the hidden costs of police labs were questioned, for example by David Sawney, Principal Scientist, FSS, who stated in his written submission that "the bill for work done by external [providers] may well be reduced, but the cost of the inhouse work [the police] do is often hidden".[66] We took this issue up with Chief Constable Chris Sims, ACPO, and Dr Simon Bramble, Head of Police Science and Forensics, NPIA, but were unable to get to the bottom of the matter. It was eventually acknowledged that the figures provided to us by the NPIA (see Table 2) included training but did not include capital expenditure.[67] Chief Constable Sims stated that capital spend would be "tiny",[68] although he could not give us any figures. We requested the information in writing and were told that:

Unfortunately it has not been possible to obtain capital expenditure specifically for forensics for the period requested [2005-2011] but we have been able to review such expenditure in West Midlands Police as a case example. Over the last three years there has been no capital expenditure in that force in the area of forensic science, following an earlier re-fit of the facility.[69]

Chief Constable Sims explained that "under government policy to reduce central demands for data on forces, we are constrained to use existing data sources rather than carry out new data gathering exercises".[70]

46. When the issue was raised again on 17 May 2011 during a debate, Rt Hon Damian Green MP, Minister of State for Immigration, stated that:

The operational expenditure of individual police forces is a matter for chief constables. [...] it would be wrong for Home Office Ministers to try to detail every piece of expenditure by every police force in the country. By going down that route, we have over-managed police forces and other public services, to their detriment. [...] the police operational independence is an important way to improve the service.[71]

47. The Home Office sent us an additional written submission on 17 May, stating that:

The Home Office does not compile details of police expenditure as it is up to individual Police Authorities and Chief Constables to decide how best to spend their money.

For expenditure information we rely on CIPFA (the Chartered Institute of Public Finance and Accountancy) which compiles expenditure figures in its annual 'Police Statistics' publication. Although the 'Police Statistics' publication is quite detailed, it does not go down to the level of detail the Committee were looking for on police capital expenditure on forensics laboratories. We have asked CIPFA why this is not included in their data. They explained that spending on forensics laboratories was a very niche area which meant there was little or no demand for the information to be collected. However, CIPFA did say that if the Committee did want the information to be collected in future, a request could be submitted to the CIPFA-led Working Group that agrees the data-collection questionnaire that goes out to forces.[72]

48. Given our desire to report on this inquiry as soon as possible, we did not have time to approach the CIPFA for the figures.

49. In our view, collecting data on police expenditure is not at odds with enabling the police to have operational independence. We are concerned that neither ACPO nor the Home Office could provide us with the full cost of internal forensic science activities. We recommend that ACPO and the Home Office gather and publish data on the full police expenditure on internal forensic activities, including capital, training and skills, forensic testing and administration over the last five years, and continue to publish this information in future. If the Government's policy of a market in forensic science services is to operate effectively, it is important that the full costs of internal forensic expenditure are fully and accurately reported. In addition, we consider that the statement given to Parliament on 14 December 2010 was inadequate as the information on police expenditure, on which it was based, was incomplete.

Spending review 2010

50. The precise impacts on police forensic expenditure following the Spending Review 2010 are yet to be seen. The 2010 Spending Review, published on 20 October, announced a reduction in Home Office spending by 23 per cent in real terms by 2014/15 and a 20 per cent real terms cut to core police funding over the next four financial years.[73] David Sawney, Principal Scientist, FSS, considered that "in the current economic climate where police budgets are being dramatically cut, the police as primary customer are seeking to reduce their spending on forensic science as much as possible".[74]

51. When we asked the Minister whether, given the decrease in the external market of £27 million between 2009-10 and 2010-11 and reductions in police budgets, the market may reduce to £110 million significantly sooner than the projected date of 2015,[75] he responded that:

It would be wrong to speculate around that. We can only work to the information that we have received from PwC and HMIC who looked at this at that point in time. Clearly, efficiency savings have been made by the police. The way in which they are procuring services is quite clear. I don't necessarily see it in the way that you have characterised it.[76]

52. The figures provided in the PwC report, Analysis of the Forensic Marketplace, were produced in September 2010, before the 2010 Spending Review and the announcement of the decision to close the FSS. Given the marked decrease in the external forensics market in 2010-11, it is reasonable to expect that the market may shrink to £110 million or less before 2015, particularly given that spending cuts have yet to bite on police budgets. While we agree with the Minister that it would be wrong to speculate, we recommend that the Government re-evaluates the future of the forensics market in light of the cuts to police budgets and planned withdrawal of the FSS from the market.

National Forensic Framework Agreement

53. The means by which the police procure forensic science services also affect the forensics market. The National Forensic Procurement Project was established in 2007 to formulate a strategy for procurement of forensic analysis, leading to the development of the National Forensic Framework Agreement (NFFA). The NFFA is managed and supported by the NPIA. The NFFA is used by most of the police forces in England, although other qualifying agencies can use it too.[77] Procurement under the NFFA is not compulsory, for example the North West and South West regions are not currently covered by the NFFA: they purchase forensic services collaboratively under the "North West South West consortium".[78]

54. Under the NFFA, 14 categories of "product" are identified and suitable forensic providers are identified for each product.[79] Table 3: NFFA products and providers[80]

Work Package Forensic Service Provider

1. DNA PACE Eurofins Genetic Services Ltd, Forensic Science Service Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd

2. DNA Crime Scene Stains Eurofins Forensic Services, Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd

3. Drugs Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Mass Spec Analytical Ltd, Scientifics Ltd

4. Fire Investigation First Forensic Ltd, Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd

5. Footwear Marks First Forensic Ltd, Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Napier Associates, Orchid Cellmark Ltd, Manlove Forensics Ltd

6. Casework - Gun Crime A Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd, Manlove Forensics Ltd

7. Casework - Homicide & Violent Crime A Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd, Manlove Forensics Ltd, Forensic Access Ltd

8. Casework - Sexual Offences Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd, Forensic Access Ltd

9. Casework - Volume Crime Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd, Forensic Access Ltd

10. Questioned Documents Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd

11. Road Traffic Incident/ Collision Investigation Forensic Science Service Ltd, LGC Forensics Ltd

12. Toxicology Eurofins Genetic Services Ltd, Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Mass Spec Analytical Ltd, Randox Laboratories Ltd, (ROAR) Forensics Ltd

13. Casework - Gun Crime B Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd

14. Casework - Homicide & Violent Crime B Forensic Science Service Ltd, Key Forensic Services Ltd, LGC Forensics Ltd, Orchid Cellmark Ltd, Forensic Access Ltd

COMMODITISATION

55. Axiom International Limited, a company that assists overseas governments by providing forensic science and police training, explained the history of the current procurement strategy and its subsequent effect on the FSS:

[The growth of] police forensic budgets [...] prompted greater focus on value for money. This highlighted the difficulty of comparing one forensic supplier with another because they all described their services and calculated prices in different ways.

To overcome this and provide a greater degree of control, the police introduced a new procurement system for forensic science. This specified, through a series of 'products', the precise nature and level of service required, timescales for delivery, and quality and reporting standards to be met, with price the only real differentiator. Prices fell substantially which suited the police. But scientists were dismayed because they were left with little or no opportunity to use their skill and ingenuity to develop more effective investigative strategies than allowed by simple lists of 'products' chosen by their customers. There was also less money to be channelled into research and development—the life blood of any scientific enterprise.

Compounding the difficulties was an all or nothing approach to contracts, resulting in huge swings of work between unsuccessful and successful providers which started to have a seriously destabilising effect on the market. The first to bear the brunt of these swings was the FSS because they had the largest share of the market, reflecting their historic monopoly.[81]

56. The NFFA's drive towards commoditisation of forensic services into priced products was widely criticised by forensic scientists from the FSS, private companies and academics. The Northumbria University Centre for Forensic Science considered that the NFFA:

appears to have maximised commodification and disaggregation of supply (i.e. a number of different providers might handle different tests in a single investigation). Thus the lowest possible prices might be obtained at the expense of optimising value through the effective use of scientific expertise.[82]

57. Dr S P Day, FSS employee, considered the NFFA to be incompatible with the complexities of forensic interpretation:

Forensic Interpretation products are characterised by their reliance on expertise (not process), by their unpredictability, and their focus on solving a problem. Like CSI on television, every case is different. They are expensive because they require investment in an individual's knowledge, scientific research, and innovation. [...]

In the submissions where investigative skills are required the [NFFA] drives the wrong behaviour in [police] Scientific Support units. Cases where inadequate or insufficient samples have been submitted or where the strategy for the forensic investigation has been set based on cost or policy rather than effectiveness are common.

Because of the way the [NFFA] is constructed the forensic interpretation products often find themselves competing against forensic testing products. Getting a DNA profile does not necessarily solve a crime but is a lot cheaper than interpretation of how the DNA got there, which is the more important aspect of successfully solving a crime.[83]

Dr Day concluded that "forensic interpretation is a holistic service not a series of discrete products and the market should be re-constructed to trade services, not products" and that "there is a risk that some Forensic Interpretation disciplines will not be available to solve major crime in the future".[84]

58. Axiom International too considered that the procurement system needed adjustment to reflect the complexities of forensic activities.[85] Forensic Science Northern Ireland (FSNI) stated that "the ACPO-led procurement approach to date has been poorly conceived and is driving commoditisation and price reduction and reducing the value added services, thus suppressing providers' profit margins".[86]

59. Others took a positive view of the procurement strategy. For example, David Hartshorne, Commercial Director, Cellmark, considered that:

The procurement exercise dictates some very good quality standards by which police forces and we need to be able to work. In that regard, you might argue that the procurement exercise is raising some of the quality standards in forensic science provision.[87]

Mr Coe-Salazar, Crown Prosecution Service (CPS), considered that standardisation had improved quality and efficiency, and that "operationally from a prosecutor's perspective, we have not noticed a difference in the sense of cases being taken to court and so forth".[88] Dr Bramble, NPIA, stated that:

One of the other objectives with the framework was to spread the work across a number of private sector suppliers. We now have four organisations that are able to offer the majority of what the Police Service wants to procure, which adds additional competition. That is not to say that we are not continually looking for improvement. We recognise there are some frustrations [...] We are feeding those lessons in.[89]

60. The NPIA emphasised that the NFFA, rather than police in-sourcing, was a more significant reason for the decline in external police spend on forensic science:

Although increased in-sourcing of forensic services is offered as a reason for the drop in external forensic spend, it is important to note the significance of the application of commercial tendering arrangements to forensic services making the service more effective [to] buyers.

The NPIA has developed a National Forensic Framework Agreement which allows forces to tender their forensic services in a relatively simple way [...] This is being adopted nationally.

The East Midlands region were the latest region to put their entire forensic services out to tender under the NFFA agreement. This has resulted in an 18% reduction in their total cost of external forensics and the cost of drug analysis dropped by 40%.

When savings of this magnitude are compared to the fall in the value of the forensic marketplace, it can be seen that the introduction of competition into the forensic process is the single biggest factor in the reduction in forces external forensic spend.[90]

61. David Hartshorne, Commercial Director, Cellmark, considered that both the procurement strategy and police in-sourcing had influenced the market. He stated that:

[The market] has been influenced by a number of factors. One is that the procurement exercise that has been ongoing for a number of years has been driving down prices. So the amount of expenditure is affected as a result of that. We also see that there is a restriction on expenditure as a result of public procurement and public expenditure restrictions at the moment. Overall, there has been a reduction. We are also seeing some in-house work provided by police forces, which, again, is restricting the amount of external expenditure.[91]

62. It is our understanding that some areas of forensic science provision, particularly complex, interpretive analyses, are not profitable under the current procurement strategy, although this does not make them less important to criminal justice. In considering the proposed closure of the FSS and development of a future procurement strategy, the Government must recognise and address this issue.

FRAGMENTATION

63. Another criticism of the NFFA was that it encouraged fragmentation of forensic science provision, whereby exhibits from the same crime scene might be sent to different FSPs. Dr Gill Tully, Research and Development Manager, FSS, stated:

We have seen in recent years that the forensic procurement approach has been towards driving the work down to commodities and simple analytical tests, and potentially losing the wider, interpretive value. [...] forensic science is a puzzle and if you split up this process then you won't see the whole picture. It is very much an issue of concern to all our caseworking scientists that, more and more, they are being directed very clearly just to examine small fragments of evidence in a case in an analytical way and they are not able to see the whole picture and put that together. We have already seen instances where that has led to problems with quality and problems in court.[92]

64. Forensic Service Northern Ireland (FSNI) stated that:

A [...] negative effect of commoditisation has been the "fragmentation" of casework as different exhibits from the same crime are dispersed to multiple providers based on the apparent cost of a particular piece of work or product. This greatly impedes the overall forensic interpretation and planning, introduces additional points of failure in continuity and contamination control and compromises the ability to optimise the recovery of multiple evidence types from the same exhibit (known as forensic integration). An example of this is a mobile phone first sent to a small provider whose expertise is in data recovery from the phone memory will have any potential for DNA, fingerprint and fibre evidence destroyed because the phone specialist provider does not have the facilities or expertise to examine and recover multiple evidence types in a contamination controlled environment.

Only a few forensic providers (FSS and FSNI amongst them) have the ability to integrate forensic examinations across a wide range of specialisms. Breaking up FSS will likely damage or destroy this rare capability.[93]

65. We put FSNI's views to Dr Gary Pugh, Metropolitan Police Service, who responded that:

I have no experience of the fragmentation to which I think that refers in which individual cases are being fragmented so that different materials are sent to different providers. That is certainly not the case in the Metropolitan Police and I don't know of any other force that operates forensic science in that way.[94]

66. When we put FSNI's statement to Chief Constable Sims, he responded that "I disagree with virtually everything in that statement", yet he also stated that "you could always have a highly specialised piece in a case that required it to go to a niche provider who was, in effect, the only provider. That has always been the case".[95]

67. Continuity, also referred to as the chain of custody, refers to the movement and treatment of physical evidence from the crime scene, including removal, storage and processing. Fragmentation poses risks to continuity, which is vital to the acceptance of evidence in court. Roger Coe Salazar, CPS, highlighted the importance of continuity in criminal cases:

One of the very first questions that comes up in a criminal case around any form of exhibit is continuity. Has continuity been established? Can it be maintained? Is there integrity? It is called the golden thread—an umbilical cord that is running through the case.[96]

On the issue of fragmentation, he stated:

Does it naturally follow that fragmentation is a bad thing? It is how it is managed. The proof is in the pudding here. We prosecute over 1 million cases a year. There is a distinction [...] between specialisms as opposed to moving one particular article from one place to another, to another and to another. If, indeed, fragmentation is taking place, a risk is inherent in that and the risk is to do with continuity. But, if it is managed properly, then it is not a problem. It is like most things. On the face of it, operationally, from our perspective, if it is taking place, it is not creating an operational delivery problem.[97]

68. We consider that fragmentation, whether caused by exhibits from the same crime being sent to different FSPs or the transfer of articles from one to another, poses risks to continuity. While the CPS considered that such risks could be managed, there were mixed views on whether fragmentation actually occurs. The risks of fragmentation cannot be managed if the extent of fragmentation and the reasons for it are unknown. It is the responsibility of the police to monitor whether fragmentation, whereby crime exhibits from the same crime are sent to different FSPs, has been occurring. ACPO and the NPIA (or its successor) should conduct a survey of police forces to determine the extent to which fragmentation has occurred under the National Forensic Framework Agreement, and reasons for any fragmentation. This should be fed into future forensic procurement frameworks and continually monitored.

THE NEXT PROCUREMENT FRAMEWORK

69. The NPIA will close by March 2012 and the NPIA is working with Home Office and ACPO to identify which services should be discontinued, and which services should transfer to successor agencies after 2012.[98] When asked what would happen to the NPIA's functions, Dr Bramble told us that:

It is my understanding that the Home Office has requested that non-IT procurement returns to the Home Office as soon as is feasible. I believe that work is under way. That would suggest that the procurement element of the national framework, in terms of the skills and capabilities, will sit in the Home Office.

[...] at the moment my understanding is that the NPIA will be phased out. At the general level, there are a number of reviews that we are waiting upon [...] These will help decision-making processes, which ultimately will decide where the functions that remain in the NPIA may end up. That is a process, according to my understanding, that is going to take most of this financial year, I suggest.[99]

Chief Constable Sims added that:

It is still very much up for discussion. Our understanding from ACPO's point of view is that different parts of the NPIA will migrate to different homes. Some of it will, perhaps, go back to the Home Office, some of it, potentially, will be within the National Crime Agency that is being established, and some, potentially, within lead force arrangements within policing. As yet, the route map is not clear.[100]

70. Dr Bramble stated that:

part of the PWC report was to help us work out the next framework, because this framework comes to an end in 2012. We need to replace it. We want to take those lessons on board and try and find even better ways of procuring for both sides.[101]

71. Chief Constable Sims told us that the procurement strategy had "driven down costs" and that "it has hugely and massively driven up quality, in terms of timeliness, standards and so on".[102] However he acknowledged that it had "probably" contributed to market instability.[103]

72. The expiration of the current procurement strategy provides an ideal opportunity for the NPIA, ACPO and the Home Office to review the successes and failures of the National Forensic Framework Agreement. We recommend that the following questions are answered and resolved: (i) whether all forensic services, particularly complex interpretations, are adequately valued; and (ii) whether the procurement strategy has encouraged fragmentation of casework.

Financial position of the FSS

73. Although the reasons put to us varied, there was no dispute over the fact that the FSS had been in a poor financial position. The FSS had been subject to Government-led interventions designed to improve its operation within the market, most recently a transformation/restructuring programme funded by a £50 million Government grant.

THE TRANSFORMATION PROGRAMME

74. The objectives of the FSS's transformation programme were to:

Align core operational business to the future customer requirement;
Make the FSS a profitable and sustainable business within a "right sized operating platform";
Develop the FSS position as employer of choice; and
Provide the best positioning and value for the shareholder and the UK criminal justice system within the marketplace.[104]

By December 2010, three FSS sites were planned for closure and the FSS was "on course to have reduced its headcount by 608 from 1874 to 1266 by the end of the 10/11 financial year".[105]

75. Despite the £50 million grant for restructuring, of which £37.9 million was spent in 2009-10, the FSS's sales revenue continued to decrease while losses increased. Table 4: Summary of FSS's accounts for 2008-09 and 2009-10[106]

Year/ £million Sales revenue Operating costs Exceptional costs: restructuring (excluded from operating costs) Profit/(loss) on ordinary activities

2007-08 138.0 134.4 4.6 3.5

2008-09 125.8 131.0 12.3 (4.9)

2009-10 113.0 126.0 37.9 (12.7)

76. Bill Griffiths, FSS Chairman, explained that "the exceptional costs were the costs that were funding the reduction in staff and the efficiencies", which "was not just headcount reduction [...] the purpose was to leave a business that was smaller and could still operate across the whole range of services that we had to provide".[107] Mr Griffiths stated that:

the benefit of [the restructuring] funds comes through later because the transformation is done, the cost base falls and the number of people falls. The idea was to bring the business back to a stable and more profitable basis. We should say that there was a headcount and a level of costs. We had to resize the business. We could not do it in a rash way. We did it carefully, and the transformation, which was necessary—I would, again, pay tribute to all involved, including the trade unions and the employees—was praised as being a success because it did get the business to a new basis.[108]

77. In their written submission, the FSS explained that the transformation programme, funded with a £50m government grant, "was on track to deliver the anticipated benefits by mid 2011" and that:

The losses of £2m per month quoted in the December 14th announcement do not reflect the prospective savings from the transformation programme. The first FSS site closed at the end of December 2010, as planned, with two further sites on track for closure in March 2011 in anticipation that FSS would lose market share as the commercial market developed.[109]

78. Mr Griffiths, FSS Chairman, told us that the loss for 2010-11 was expected to be £19 million. When asked whether this figure was the source for the Government's quoted £2 million monthly losses, he replied:

I am prepared to agree that that is where they got it from, yes. There were months where we lost £2 million, literally. We think it is £19 million but that is not counting the benefits of transformation because we have only just closed some of the laboratories—in December and March—and so we are looking forward.[110]

79. The Government confirmed in a written answer on 31 January that:

The Forensic Science Service (FSS) operating losses of £2 million a month, which we referred to in our announcement on 14 December 2010, are current losses and therefore do not take into account any savings delivered through planned FSS site closures, nor do they take into account further likely declines in FSS' business.[111]

80. The Government announcement that the FSS was losing £2 million a month was not the full story. It should have been made clear that (i) the figure did not take into account the savings expected to be delivered by the transformation programme; (ii) it did not account for potential further declines in business; and (iii) while some monthly losses may have been £2 million, the average monthly loss over the past year was lower. As a result, evaluation of the proposal to close the FSS from the taxpayer's perspective was difficult.

81. A significant number of FSS employees who wrote to us expressed surprise that the transformation programme had not been allowed to finish before the Government took a decision on the FSS's future. Dr Fiona Perry, Forensic Toxicologist, FSS, pointed out that "the amount of money required [to support the FSS until the end of the transformation programme] is tiny compared to the billions used to bail out the banks and subsidise transport".[112] Amanda Meaby, Forensic Biologist, FSS, stated:

The FSS was given the opportunity to re-shape in order to meet the increasing demands of the police customer yet maintain its high standards and this transformation programme had gone exceptionally well. Unfortunately, the Home Office announcement on 14th December halted the transformation programme and now we will never know the true benefits of this investment in staff and intelligent property.[113]

82. A minority of FSS staff appeared to have less faith in the transformation programme, stating, for example, that "the transformation process which the FSS has been undergoing for the past two years [...] has not and will not result in a cost effective service".[114]

83. Ultimately, however, we heard that the transformation could not have been successful because of the shrinking forensics market. Mr Griffiths explained that since the change to GovCo in 2005, the market had not reformed as expected and that the FSS:

raised these concerns and asked for a formal market review to be undertaken. We asked for that a number of times. We wanted to know what kind of a market it was and how big it was so that our plans could be formulated to address that. [...] the plan could only be as good as the assumptions we had made and we said that we would like those assumptions to be validated. We did not get any formal validation for the market. We wanted an external, broad, independent review. [...] We were unsighted, other than the trend of submissions that we got into the business.[115]

Mr Griffiths explained that better information on the state of the market:

would have shown following the transformation of our business [...] whether that would have been a stable platform to deal with the market changes or whether we would have to do other things, be it further restructuring or whatever. [...] the level of decline in this current year, from about the time we submitted the plan in April, has been very severe. It is of the order of 20% plus, and it was more severe in the second six months than the first six months. We had a very unstable situation throughout the period up to the decision.

I don't know what detailed information was available to the officials when they were preparing the case for the eventual announcement. We know some work was done by Pricewaterhouse. We did not see that until February, but, in itself, it may not have been the only piece of information that was available. I am not sighted on the whole lot.[116]

84. Mr Griffiths stated that the transformation programme would "absolutely" have delivered the FSS back into the black had it not been for the market situation.[117] He considered that the Government may not have been fully convinced because:

If you take the full evidence that they would have had at their disposal, and some of it is alluded to in their announcement, there is a worry about the size and the contraction of the market. That overwhelms, potentially, the benefits. We were trying to get a business that was smaller, stable and still able to operate across the full range of services, preserving all the skills and all the integrity. If the marketplace, the environment and, indeed, the appetite for police forces to in-source were going to carry on at a pace, then I can imagine that that would overwhelm even the success of transformation.

[...] If the appetite for in-sourcing is fulfilled—probably, more than half the police forces have some appetite for it—then you could imagine a market very much smaller than now. The transformation was not intended to resize the business for a very small market of £50 million, £60 million or £70 million.[118]

85. The Minister explained why restructuring was ruled out as an option for resolving the FSS's financial situation:

It is worth talking about some of the evidence and issues that we looked at in the context of forming our decision. One important part of that was an assessment of the size of the market and what was expected to happen in the future. The estimate that we received, in terms of the size of the existing external forensic market, was around the £170 million to £160 million range and that was projected to reduce to around £110 million by the end of 2015. We looked at that and at the fact that every time the FSS had gone out to the market as part of the procurement framework, it had lost business—every time that it had sought to go out to the competitive market and when police forces tendered for the work.

Seeking to examine the issue of a reducing market with the FSS having a declining share of that market, we could not satisfy ourselves that, by investing what would be a significant sum of money, that sum of money would, potentially, be smaller than the revenue that the FSS would be receiving in that reduced situation.[119]

86. We are dismayed that the FSS was not privy to information on the forensics market. There has clearly been a persistent failure to communicate information to the FSS about the market environment in which it was expected to find a way to thrive. The PwC report on the state of the forensics marketplace and figures on police expenditure should have been available.

Conclusions

87. We have expressed our concerns at the decline in the external forensics market, which, although partly attributable to the savings brought about by procurement strategies, has also been influenced by the increased police in-sourcing of forensic science. The Minister attributed the FSS's current situation to its inability to compete under the NFFA rather than in-sourcing:

The FSS's challenges were that it was set up as a GovCo with the intent of establishing some sort of private-public partnership or moving to a fully commercialised basis. But it got stuck. It had an inherently high cost base attached to it which fettered its ability to compete when new contracts became available through the National Forensic Framework model and, consequently, continued to lose business every time a police force or a region came through seeking to procure its services. I would characterise that as being the weakness rather than issues on in-sourcing or the challenges around that. It was largely that the FSS was not, perhaps, in the right state and condition to be able to compete in an increasingly competitive market.[120]

The Minister's view did not quite agree with the Home Office's written submission, which stated that the Government was "advised that neither ongoing nor further restructuring would solve the key underlying problem: reducing levels of customer demand".[121]

88. When asked whether the decline in the external market could be attributed to police in-sourcing, the Minister responded that:

The interrelationship between police-provided internal services as against police triage and assessment of their forensic need, whether that be external or internal, as well as the provision of services in the external market, is a complex position. There is a fair degree of complexity around this and I would not necessarily point to one issue being more significant than any other. There is a range of factors that all interrelate here. I would not necessarily place the greatest amount of weight on any one of those specific factors.[122]

89. When we asked the Minister what influence the Home Office had over police expenditure, he replied that:

Clearly, we set the overall budgets for individual policing, but it is for individual police forces to make the determinations as to their need. Certainly from the Home Office, we don't see it as our role to micro-manage police spending in relation to the activities of the police.[123]

90. The Minister also explained that the Government was "looking carefully at the issue of mandation" with respect to police in-sourcing and that:

We made the decision not to use mandation at this point in time, given the nature of the forensics transition work around the FSS, mandating, for example, that all police forces should go out to the National Forensic Framework Agreement. It is something that we will continue to keep under review, moving forward, in terms of the utilisation of mandation to see that police forces are harnessing moneys effectively in that context. It is in that mandation framework, which has been allowed and permitted on the way in which the police service procures certain contracts and services and facilities to itself, that that may arise [...].[124]

On mandation, the Government will decide whether to proceed with the services regulations that we have. The effective mandation could be, for example, that nothing bought in the market in the future by the police could be undertaken outside of the National Forensic Framework Agreement that is being delivered. That would prevent in-sourcing of anything bought in the market that is available through the National Framework. Regulations could be amended in the future, for example, to address successor frameworks when the current National Framework expires. It could be used in that way. It is something that we will continue to keep under examination. At this point in time, with the transition of the arrangements with the FSS—the transition that is taking place—now is, perhaps, not the time to be using that.[125]

91. If the Government wants a competitive market in forensic services it must ensure that the market is not distorted by the police customer increasingly becoming the competitor. Otherwise the ambition for a truly competitive market is fundamentally undermined. We consider that the Government's ambitions for fully privatised forensic science provision are jeopardised by its complacent attitude towards police forensic expenditure.

92. We are concerned that there are no measures in place to curb further in-sourcing. We recommend that the Government introduce measures to ensure that the police do not further in-source forensic science services that are already available from external providers through the National Forensic Framework Agreement. Regulations should apply to any successor frameworks. We disagree with the Minister that the FSS transition period may not be the right time to put these measures in place - given the fragility and uncertain future of the market it is the ideal time to do this.

11 "What we do: General FAQs", The Forensic Science Service website, www.forensic.gov.uk Back

12 Ev w165, para 1 [Royal Society of Chemistry] Back

13 "What we do: General FAQs", The Forensic Science Service website, www.forensic.gov.uk Back

14 HC (2004-05) 96-I Back

15 HC (2004-05) 96-I, para 17 Back

16 HC Deb, 14 December 2010, col 95WS Back

17 HC (2004-05) 96-I, para 17 Back

18 Cabinet Office, Executive Agencies: A guide for Departments, Cabinet Office, October 2006, para 1 Back

19 Ev 61, para 22 [Home Office] Back

20 Ev w152, para 12 Back

21 HC (2004-05) 96-I para 19 Back

22 Home Office, Review of the Forensic Science Service: a report, 17 July 2003; HC (2004-05) 96-I, paras 22-24 Back