A guide to procurement and competition in healthcare - DAC Beachcroft

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A guide to procurement and competition in healthcare

Published 3 November 2016

Procurement and competition: at a glance

  • Adopt a systematic approach to avoid legal challenge
  • Do not go with the status quo; carry out a market analysis to identify potential providers
  • Open dialogue with all potential providers to reduce the potential for legal challenges
  • Take time to decide on the model of care you wish to adopt
  • Procurement processes can be simple and streamlined. Don’t make providers jump through unnecessary hoops

Why this area is important

Providers and commissioners are faced with putting in place whole new models of care within very short time-scales. They must also be aware that a whole range of providers, including other NHS organisations, third sector and private companies may be as well placed as incumbent providers to deliver new models. It is essential to go through the process systematically to avoid potentially time consuming and costly legal challenges.

Key issues

Commissioners must comply with the NHS (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 (the “NHS Regulations”), where objectives include patient experience, outcomes and improved efficiency.

From April 2016, the Public Contracts Regulations 2015, which implement the EU Public Directive, required healthcare services to the value of £589,148 or above to be advertised Europe-wide via OJEU (the Official Journal of the European Union).

The reality is that this might not be practical for certain services especially as commissioners face pressure to support local NHS providers even when there are a range of other providers who could offer the services they are looking at re-modelling.

Awarding contracts without going through a competition process is potentially risky. Going with the status quo means commissioners could face challenges from other providers, both public and private, who could deliver the relevant services. A challenge could end with a court declaring the contract ineffective leading to its cancellation and fines and damages to the challenger, and to the organisation which had its contract cancelled.

Where an incumbent provider, which has serviced a contract for many years and sees it as ‘their work’, has lost out in such a manner it would be in their interest to mount a challenge as the loss of a contract could have an impact on other areas of its service, or indeed its viability.

Potential solutions

CCGs should carry out market assessments to determine who is out there and not just assume that the current providers on the patch and the incumbent are the only ones to talk to.
Where there is comprehensive market engagement, providers are less likely to raise a challenge as they will have at least had an opportunity to be involved in the process.
The NHS Regulations state that a competitive process need not be done if the services are capable of being delivered by only one provider. Under the new models of care scenario there may be many potential providers in an area, in which case it could be difficult to say there is only one capable provider.

There are ways to work within the procurement regime, such as shared services and using the so-called ‘Teckal’ exemption.

The procurement process should be streamlined so that bidders are not put through unnecessary steps, and contain clear specifications to ensure the right provider is appointed. Do not rely on outdated procurement documentation that could be unsuitable for the new model in mind.

More information

For advice on procurement and competition issues, contact Mary Mundy on +44 (0)113 251 4727 or mmundy@dacbeachcroft.com.


Mary Mundy

Mary Mundy


+44 (0)113 251 4727

Key Contacts

Mary Mundy

Mary Mundy


+44 (0)113 251 4727

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