Over two years have passed since NHS England's first consultation on the proposed new rules for arranging healthcare services, but draft The Health Care Services (Provider Selection Regime) Regulations 2023 (the "Regulations") and draft statutory guidance are now here.
The Regulations are intended to come into force on 1 January 2024, giving "relevant authorities" (NHS commissioners, local authorities, combined authorities and NHS providers) just over 2 months to prepare.
There are no surprises in the Regulations but there is more detail and welcome clarity - we have summarised the main points below.
Which services are caught by the Regulations?
The Regulations apply to procurements for "relevant health care services" (as defined by reference to the CPV codes in Schedule 1 of the Regulations) and mixed contracts where the 'main subject matter' of the contract is relevant health care services.
The 'main subject matter' is determined by reference to Regulation 3(4) which sets out a test based on the estimated lifetime value of the relevant health care services versus other goods/services but also requires that the authority is of the view that the other goods/services could not reasonably be supplied under a separate contract - a concept similar to the "objectively separable" test in Regulation 4 of the Public Contracts Regulations 2015 ("PCRs").
Can an authority directly award / extend existing contracts?
For authorities hoping for a regime which permitted unlimited contract extensions or no requirement for competition, there will be some disappointment. The five routes to market are:
|
Process |
When? |
Requirements |
|
Direct Award Process A
One capable provider
|
Where the existing provider is the only provider capable of providing the services (e.g. A&E) |
Authority publishes a notice to award, within 30 days, including contract value and details of the award decision-maker |
|
Direct Award Process B
Patient choice |
Where the number of providers is not restricted by the relevant authority and the authority offers contracts to all capable providers
|
Authority publishes a notice to award, within 30 days, including contract value and details of the award decision-maker |
|
Direct Award Process C
Extend incumbent arrangements |
Where the term of an existing contract is due to expire, where the considerable change* threshold is not met and the authority considers that the existing provider is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard
*the threshold is met where the extended contract is materially different in character to the existing contract or where the change is attributable to the decision of the authority, the lifetime value exceeds £500k AND 25% of the original contract value
|
Authority applies key criteria* and basic selection criteria when making the decision to extend
Authority publishes an 'intention to award' notice triggering standstill
Authority publishes a notice to award if no representations are received during standstill *See Regulation 5 for key criteria:
|
|
Most Suitable Provider Process |
Where the authority can identify the most suitable provider, without a competitive process, by taking into account likely providers and all relevant information available to the authority at the time
|
Authority publishes intention to follow Most Suitable Provider Process
Authority identifies potential providers with reference to key criteria and basic selection criteria
Authority publishes an 'intention to award' notice triggering standstill
Authority publishes a notice to award if no representations are received during standstill |
|
Competitive Process |
Where none of the above apply, the authority must run a Competitive Process |
Authority determines award criteria (taking into account the key criteria and basic selection criteria)
Authority publishes contract notice
Authority assesses offers in accordance with the criteria
Authority publishes an 'intention to award' notice triggering standstill
Authority publishes a notice to award if no representations are received during standstill |
Interestingly, the only route that can be used to conclude a framework agreement is the Competitive Process.
What about modification of existing contracts or urgent contract award?
Modification of existing contracts was previously available in limited circumstances under Regulation 72 of the PCRs. Regulation 13 of the Regulations is similar in its approach and authorities will recognise many of the PCRs 'safe harbours' here.
Likewise, authorities will be familiar with the test for urgent contract award in Regulation 14 which is similar to the test in Regulation 32(2)(c) of the PCRs, i.e. urgent award is permitted where "the reason for the urgency was not foreseeable by and not attributable to the relevant authority and delaying the award of the contract or modification… would be likely to pose a risk to patient or public safety".
Do the Regulations apply to procurements already started or contracts already awarded?
If a procurement is underway, commenced under the PCRs, then it must continue under the PCRs.
However, if a contract was awarded under the PCRs, then it will be the Regulations that apply to any future modifications. Likewise, any call-off contract awarded after 1 January 2024 will be subject to the Regulations, even if the framework was established under the PCRs.
How does an aggrieved provider challenge?
There is no formal route to challenge through the Court, as there is in the PCRs. The route through the Court will be via judicial review as a last resort and it will be interesting as the first 'test cases' come through.
The only route to challenge, set out in the Regulations, is by way of representations to the relevant authority during standstill (see Regulation 12). The authority is required to review its decision-making process and then consider whether it enters into the contract anyway, goes back a step in the procurement or abandons the procurement.
NHS England has established the PSR (Provider Selection Regime) review panel to provide independent expert advice to relevant authorities with respect to the review of PSR decisions during the standstill period. If a provider remains unsatisfied about the response given by a relevant authority to their representations, then that provider may seek the involvement of the PSR review panel. The PSR review panel may consider whether the relevant authority complied with the Regulations and may provide advice to the relevant authority. The relevant authority should then make a further decision about how to proceed.
We look forward to working with NHS providers and commissioners, and independent sector providers to the NHS, over the coming year to get to grips with the new regime. Please contact any of our procurement specialists with any questions.
