Facts

The Panel was asked by The Owl Centre Limited (“TOC”) to consider the use of Direct Award Process C by North East and North Cumbria Integrated Care Board ("NENC") for the award of a new contract to Psychiatry UK Limited ("PUK") for Online ADHD Assessment, Diagnostic and Management Services (the "Services").

The contract to be awarded using Direct Award Process C was intended to be an interim solution before NENC began an ICS wide commissioning process in 2025/26 (the "2025 process"). NENC intended to use Direct Award Process B for the 2025 process, but stated that it needed time to revise the specification for the Services before launching the 2025 process.

TOC made several representations to the Panel. These included that Direct Award Process B was a superior route, that the proposed award to PUK diminished the scope for patient choice, and that NENC had failed to gain a proper understanding of the provider landscape before making its commissioning decision.

Direct Award Processes B and C

In summary, Direct Award Process C allows a commissioner to award a new contract to an existing provider where that existing provider is satisfying its existing contract and is likely to deliver services to a sufficient standard under the proposed new contract.  NENC had considered the tests for using Direct Award Process C before deciding to award the contract to PUK and had concluded that those tests had been met. 

However, NENC confirmed that it also considered that Direct Award Process B could apply to the Services and its future commissioning intention was to use Direct Award Process B for the 2025 process.

Importantly, Direct Award Process B must be followed where patients have a legal right to choose their provider of the services in question. Where Direct Award Process B is used, the commissioner awards a contract to all providers that meet the commissioner's requirements.

The Panel's advice

The Panel concluded that where the PSR requires the use of Direct Award Process A (one capable provider) or Direct Award Process B, then the commissioner must follow that process and is not permitted to select another PSR award process instead. Here, NENC was required to follow Direct Award Process B because patients have a legal right to choose their provider of these services.

NENC was therefore in the Panel's opinion in breach of the PSR by using Direct Award Process C, even though this arrangement was an interim one before NENC used Direct Award Process B for the 2025 process.

The Panel stated that "In other words, commissioners must use Direct Award Process B to contract for all services where patients have a legal right to choose their provider, and Direct Award Process C is not available to commissioners in situations where Direct Award Process B must be used."

The Panel therefore recommended that NENC abandoned its Direct Award Process C procurement. The Panel stated that if NENC still wished to commission, it needs do so under Direct Award Process B. In the meantime, patients could continue to access the Services from providers who have contracts with other ICBs.

Impact

The Panel's advice and assessment highlights the decision making process that commissioners must go through when determining which PSR process applies.

A commissioner must consider Direct Award Processes A and B first, and, if either apply, it must follow them rather than any other PSR award processes. An understanding of the law on patient choice is also essential. Where Direct Award Process B applies, Direct Award Process C cannot be used instead as a "quick fix" to bridge a gap in service provision.

The Panel's advice also highlights the need for commissioners to plan properly to ensure that they have sufficient time to follow the required, PSR compliant process.