Loosening the ties that bind: new NHS procurement regime proposed

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Loosening the ties that bind: new NHS procurement regime proposed

Published 22 febrero 2021

On 12th February we summarised for you the top 10 takeaways from the Government’s proposals for the new Health and Social Care Bill, “Integration and Innovation: working together to improve health and social care for all ” (the White Paper). Integral to the wider proposals, and to be consulted upon separately, is the new “NHS Provider Selection Regime”. The key objectives of which are to reduce the bureaucracy and cost in the process of procuring health services and to remove barriers to integrated care. The consultation is now live, and will be open until 7 April.

The main takeaway for those working in the sector is that, once again, health services will be carved out of the Public Contracts Regulations 2015 and the NHS (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 will be repealed. However NHS bodies responsible for procuring healthcare provision will not be given free rein; the proposed “NHS Provider Selection Regime” is intended to ensure continued transparency and accountability in the decision making process; particularly where a relevant body decides not to undertake a competitive process.

Key features:

New primary duty - Where the new regime applies, “services must be arranged in the best interests of patients, taxpayers and the population”. The government expects to enshrine the key principles of transparency and scrutiny into the process to ensure decision makers can be challenged in some way, either by providers or the government itself.

Who will it apply to? – All bodies responsible for arranging healthcare services for the purposes of the health service i.e. NHS England, the new ICS Boards, NHS Trusts and NHS Foundation Trusts and also local authorities where they are procuring qualifying healthcare services as part of their public health functions and as part of section 75 partnership arrangements (“decision makers”). The regime will also apply where an NHS Provider is arranging for the provision of a service by another NHS Provider.

What services will it apply to? – All forms of healthcare services provided for individuals, both physical and mental. It will not however apply to: social care services; public health services not arranged by NHS bodies or local authorities (e.g. the Secretary of State); non-clinical services (e.g. IT, catering, professional etc.); procurement of goods (e.g. medical equipment) or medicines; community pharmaceutical services.

Will there be a financial threshold? – No, the regime will apply to all qualifying procurements but a key factor in the decision making process may be to ensure that the administrative cost of procuring the service is proportionate the value of the service.

So how will it work? – In summary when seeking to arrange any health service provision the decision-makers must identify the circumstances of the procurement and categorise it into one of three possible scenarios: 

Scenario 1 

Is the decision maker looking to continue existing arrangements without a new tender process? If so, continuation will be permitted if:

• there is no reasonable alternative provision; or
• the alternative provision is already available to patients through patient choice mechanisms; or
• the incumbent is “doing a good job" and delivering against the Key Criteria defined in the regime and the service is not changing; so there is considered no value in seeking another provider.

Scenario 2

Are arrangements substantially changing or is a new service needed? Can the incumbent no longer continue? Does the decision maker wish to make a direct award? If so it can now do so without a full tender process if it “reasonably believes” that one or more providers are the most suitable to deliver the service provided that all of the following apply:

• it is transparent about this choice of process;
• it is satisfied that the “key Criteria” will be met. In this regard there will be criteria specified in the legislation but it is not limited and can be applied in any order of priority or weightings;
• it has carefully considered other potential options providers within the geographical footprint;
• it publishes its intention to make an award with a 4-6 week notice period; and
• there are no credible representations/challenges during the notice period.

Scenario 3

The decision maker wishes to run a competitive process and/or there is a failure to satisfy the Key Criteria and it would not be possible to identify a suitable provider without a competitive process. In this circumstance, a lightly regulated procurement process must be undertaken which can be structured in accordance with the decision maker’s own preferences provided the opportunity is formally advertised and the principles of transparency, openness and fairness are adhered to; as well as any relevant best practice and guidance. If this route is chosen there will also be a need to advertise the award and allow a notice period for representations as for a direct award.

How will it be enforced? – As for the changes to the procurement regulations more generally, the government’s approach is to ensure transparency throughout the process and limit remedies as much as possible after the contract has been awarded:

Intentions as to approach must be published in advance; a record must be kept of all decisions and reasoning and notices of the successful provider published again prior to contract award. There will also be requirements to publish a list of awarded contracts and annual audit processes.

• There will be no remedies available akin to those under the current PCRs but there will be an informal process for making representations to the decision making body. NHS England may also use powers of intervention under the NHS Act 2006 but for a claimant, the last resort will be judicial review.

Will there be an impact on independent sector providers and patient choice?

Whilst the right to patient choice will remain in place the proposals set out above mean that opportunities for independent sector providers to bid for healthcare services that would previously be subject to a competitive process (for example, at the end of the incumbent provider’s contract) may no longer arise, or may arise less frequently.

In terms of patient choice, patients will continue to be able to choose from lists of accredited suppliers or AQPs (or ”any qualified Provider”) arrangements, however going forward decision makers will not run a procurement process to pre-select which providers will be placed on a list. Instead, provided they can meet the stated conditions they will be placed on the list. They are expected to be:

• they are registered with the CQC and licensed by Monitor where required;
• they accept the T&Cs of the NHS Standard Contract and NHS Prices;
• they can provide assurances they can meet the service requirements; and
• can reach agreement with local commissioners on supporting schedules to the standard contract.

What next?

Clearly there will be a number of issues to bottom out in the legislative detail and subsequent guidance e.g. how will a substantial change be defined when determining the difference between Scenarios 1 and 2? Will unlimited extensions be allowed under scenario 1 both in years and number? How and when does the decision-maker fix its “Key Criteria” for the purposes of scenario 2 (as clearly the risk is the chosen provider is made and the Key Criteria retrofitted accordingly); how much data/evidence will be necessary to produce robust reasoning for a decision to direct award i.e. can informal proposals be market tested with potential providers? What level of detail will be needed in the published notices (both before and after award?)

DAC Beachcroft looks forward to submitting a more detailed response to the Consultation by the deadline of 7 April 2021 and would welcome client views.

Authors

Katherine Calder

Katherine Calder

Newcastle

+44 (0)191 404 4060

Hamza Drabu

Hamza Drabu

London - Walbrook

+44 (0)20 7894 6411

Charlotte Burnett

Charlotte Burnett

Leeds

+44 (0)113 251 4785

Stephen Hocking

Stephen Hocking

London - Walbrook

+44 (0)20 7894 6572

Alistair Robertson

Alistair Robertson

London - Walbrook

+44 (0)20 7894 6020

Victoria Fletcher

Victoria Fletcher

London - Walbrook

+44 (0)20 7894 6658

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