The Health and Care Bill sets out that we can expect new regulations for procuring healthcare services for the NHS along with guidance from NHS England and Improvement (NHSE/I) on the new “NHS Provider Selection Regime”. The regime aims to:

• Remove barriers to integration,
• Allow greater transparency in terms of publishing opportunities and awards and
• Enable the arrangement of services to be joined up in the interest of patients, tax payers and the population. 

Following a consultation on the Regime, read more below on how healthcare services might be procured in future and how Integrated Care Boards (ICBs) can start preparing for this new regime.

Which rules do commissioners have to navigate at the moment?

Currently, when awarding contracts for healthcare services, NHS England and Clinical Commissioning Groups are required to comply with both the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (“NHS Procurement Regulations”) and, where the contract is valued at £663,540 or above, the Public Contracts Regulations 2015 (“PCR”) (the “Current NHS Procurement Regime”).  Until the NHS Provider Selection Regime is put onto statutory footing, the Current NHS Procurement Regime applies.

If the commissioner is satisfied that the services in the contract can be provided by a single provider only, the NHS Procurement Regulations do not require a procurement process.  However, that can be a difficult test to meet for some clinical services.  The two sets of regulations contradict each other in parts, which has been difficult for commissioners to navigate.  Commissioners face both the risk of a judicial review on their decision-making as well as High Court challenges by providers over their procurement process breaching the PCR.  Under the NHS Procurement Regulations, providers can also raise complaints through Monitor (now part of NHS Improvement).  Under both sets of regulations, a contract could be declared ineffective (cancelled) and commissioners can face fines as well as having to pay substantial damages. 

Key differences in the proposed NHS Provider Selection Regime

• Who it applies to (collectively known as “decision-makers” in the consultation paper):
  1. ICS Boards (once given legal footing)
  2. NHS providers of healthcare services (when they are procuring healthcare services/awarding sub-contracts)
  3. local authorities when arranging healthcare services as part of their public health functions and section 75 partnership arrangements with the NHS.

• A new duty that services are arranged in the best interests of patients, taxpayers and the population (although it may not always be clear that these interests are aligned);

• A focus on record keeping and publicising planned awards.  Decision-makers will also be required to audit their own compliance with the regime and publish the results of the audit including how any complaints were dealt with;

• New award criteria (described as “key criteria”), which can be prioritised differently but must be applied in full:

1. Quality (safety, effectiveness and experience) and innovation;
2. Value;
3. Integration and collaboration
4. Access, inequalities and choice;
5. Service sustainability and social value. 

• While decision-makers will not be required to run a competitive procurement process, they will still need to ensure they can satisfy the key criteria before deciding to not compete the service;

• A Judicial Review will be the only way a decision can be formally challenged, although decision-makers will be required to publish their plans upfront if they are not choosing to compete and organisations will have a right to object.

The three “circumstances” for awarding contracts and what decision-makers need to do

The consultation paper sets out that decision-makers will find themselves in one of three circumstances: 

Seeking the continuation of existing arrangements with their provider – this will apply where:

• there is no alternative provision (e.g. 999 emergency ambulance services);
• the alternative provision is already available to patients through other means such as the exercise of patient choice (e.g. elective services subject to AQP arrangements) and
• the incumbent provider(s) is judged to be doing a sufficiently good job (i.e delivering against the key criteria in this regime) and the service is not changing, so there is no overall value in seeking another provider;

Actions to take: Decisions makers will need to ensure the arrangement works in the best interests of patients, taxpayers and the population, and take appropriate steps when awarding and managing contracts to ensure that the service will continue to deliver well and be transparent about their intention to continue with the current arrangements by publishing their intent in advance, including their justification.

When continuing an arrangement with an incumbent, decision-makers will be required to publish their intention to award the contract, with a suitable notice period (e.g 4–6 week was initially suggested for non-urgent awards but NHS England and Improvement are considering this notice period).  If, during the notice period, credible representations are received from other providers, the decision-making body will be required to:

• discuss the issue with the providers or their representatives;
• publish a response to the objections before the award, setting out its decision to either: (a) not proceed with the contract award as intended and reconsider its process and/or decision; or (b) award the contract as intended and publish reasons for so proceeding as part of the contract award procedure.

Selecting the most suitable provider when a service is new/changing substantially but a competitive process is not appropriate  

In this situation, decision-makers will have to apply the key criteria and then, if the decision-makers have reasonable grounds for believing that one provider(s) is the most suitable provider (which may or may not be the incumbent), they may award the contract to that provider without conducting a competitive process. This must be done in a way that is fully transparent in accordance with the regime;

Selecting a provider by running a competitive procurement process

What is the impact?

Although the NHS Provider Selection Regime will offer a more flexible way to arrange healthcare services going forward, decision-makers may need to adapt their processes and build in additional timescales in the event that they need to allow the market time to respond to plans.  NHS England and Improvement will provide guidance on where decisions makers are required to publish and what notices must be published and when.   

Whilst it may be the case that going forward, there are fewer competitive processes for certain contract opportunities, the proposed regime does not put an end to competitive tendering as has been suggested by some commentators. 

ICBs will need to be mindful of how conflicts of interest are effectively managed under the new regime – for some decisions, NHS providers may have to recuse themselves.

How Capsticks can help

The Capsticks procurement team has significant experience supporting clients when commissioning healthcare services.  We can provide training sessions to ICBs and procurement teams on what the new regime means for them in practice and develop procurement processes for each award route, procurement policies, template documents and conflict of interest policies.

For more information, please contact Mary Mundy, or any of your contacts at Capsticks.