Procurement and Competition
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Procurement and Competition

Commissioners and providers may see procurement rules as creating barriers to integration, however they can be used as a tool for encouraging integration and improving services.

Indeed, the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (the "NHS Regulations") specifically require commissioners to consider improving services through integration and Monitor's guidance (now part of NHS Improvement) on the NHS Regulations sets out that commissioners have flexibility as to how to procure and secure services in the best interests of the service user. The NHS Regulations run in parallel to the Public Contracts Regulation 2015 ("PCR 2015") and commissioners need to comply with both sets of regulations when procuring healthcare services. 

Commissioners and providers looking at implementing new models of care are likely to be involved in some complex procurement processes. Following the collapse of the Uniting Care Partnership contract and various reviews into that procurement process, the Integrated Support and Assurance Process (ISAP) for novel and complex contracts has been introduced. The ISAP will apply to commissioners procuring “complex contracts”, as well as the preferred bidders of those procurements. NHS England and NHS Improvement will provide a "system view" of proposals for "complex contracts", where CCGs or NHS England (acting as a commissioner) are letting the contract. The main test is to understand whether or not the provider is able to take on the risks associated with the proposed contract.

Commissioners should look at the ISAP guidance and build in steps to deal with ISAP within their procurement processes. Even for simpler contracts, there are certainly lessons to be learned from the collapse of the Uniting Care Partnership, particularly around ensuring the financial viability of a bidder and contract model.

From the perspective of providers, when looking at service redesign and/or working with other organisations to deliver services, consideration needs to be given to whether the new model has procurement law implications. Put simply, if organisations are just working together but are not delivering services to each other, then that should not attract procurement law issues. However, if one organisation is delivering services to another within a new model in a sub-contractor arrangement, for example, then this is likely to have procurement law implications. The PCR 2015 allow for integration across the public sector without the need for a procurement process, where there is cooperation between public sector bodies or a separate organisation is set up and such arrangements adhere to the parameters set out within those regulations.

Commissioners and providers also need to be mindful of competition law. Commissioners cannot engage in anti-competitive behaviour unless to do so is in the interests of the service users. When integrating services, providers also need to understand that partnering can still amount to a merger if consolidation of control over departments of functions is ceded to another organisation. The first consideration should always be whether the integrated model would ultimately benefit the service users.

Taking account of procurement and competition law when considering integrated models, commissioners and providers should:

  • engage with the market and service users early to inform service design and any procurement process;
  • be transparent;
  • manage any potential conflicts effectively; and
  • maintain records to evidence compliance with the relevant rules and reasons for decisions.