Procurement in a Nutshell: Provider Selection Regime (‘PSR’) – Framework Agreements
8th December, 2023
The Department of Health and Social Care recently published the draft Provider Selection Regime (PSR), set out in the Health Care Services (Provider Selection Regime) Regulations 2023, which is intended to come into force on the 1st January 2024.
The PSR intends to remove the procurement of health care services, when procured by relevant authorities under the PSR, from the scope of the Public Contracts Regulations 2015 (the PCR). In doing so, the PSR seeks to give the relevant authorities, to which it applies, more flexibility in selecting providers for health care services, with an aim to promote greater collaboration, reduce the bureaucracy associated with the current rules, and enable the development of stable partnerships. As such, it is hoped the PSR will ensure all decisions are made with a view to securing the needs of patients, improving the quality of the services, and improving the efficiency in the provision of the services.
This new regime will apply to NHS England, Integrated Care Boards, NHS Trusts, NHS Foundation Trusts, local authorities and combined authorities when they are procuring healthcare services.
The procurement processes under the draft PSR include:
- Direct Award Process A
- Direct Award Process B
- Direct Award Process C
- Most Suitable Provider Process
- Competitive Process
What this Nutshell covers
This Nutshell will review Framework Agreements, under the PSR, explaining their scope and procedural requirements.
Applicability (Regulation 16)
Framework agreements, under the PSR, are agreements relating to ‘in-scope’ health care services between one or more relevant authorities and one or more providers. These agreements set out the terms and conditions based on which the provider(s) will enter into one or more contracts with relevant authorities during the term of the framework agreement.
A framework agreement must, when concluded, identify the relevant authorities which may award contracts based on the framework agreement.
The term of a framework agreement must not exceed 4 years, other than in exceptional cases where the relevant authority is satisfied that the subject-matter of the framework agreement justifies a longer term.
A relevant authority must follow the Competitive Process to conclude a framework agreement.
Process to conclude a Framework Agreement (Regulation 11)
The relevant authority must first determine the framework award criteria, taking into account the key criteria and applying the basic selection criteria.
The relevant authority must then submit for publication, on the UK e-notification service, a notice inviting offers, including the information set out in Schedule 8.
The relevant authority should then assess any offers received, in accordance with the framework award criteria, and decide to whom to conclude the framework agreement. Relevant authorities may engage in dialogue or negotiate with all bidders prior to determining who to conclude a framework agreement with, provided they do so in a fair and proportionate manner.
Once the successful provider(s) has been chosen, the relevant authority must promptly inform, in writing:
- the successful provider(s) that their offer has been successful and the relevant authority intends to make an award
- each unsuccessful provider that their offer has been unsuccessful, including the information in Schedule 9.
The relevant authority must then submit for publication, on the UK e-notification service, a notice of intention to conclude a framework agreement to the chosen provider(s), including the information in Schedule 10.
The standstill period (Regulation 12) will begin the day after the publication of the notice of intention to conclude a framework agreement. If no written representations are made during the standstill period, then the relevant authority may conclude framework agreement (after the standstill period has ended). The relevant authority must submit for publication, on the UK e-notification service, a notice of concluding the framework agreement, including the information in Schedule 11.
The requirements expected of relevant authorities when representations are made during the standstill period, under Regulation 12, will be examined in a separate Nutshell.
Process to award a contract based on a Framework Agreement (Regulation 18)
During the term of a framework agreement, providers may be added to the agreement. It is advised that relevant authorities set out how and when this might be done in the terms and conditions of that framework agreement.
Contracts based on a framework agreement must not create substantial modifications to the terms laid down in that framework agreement. The term, and value, of the contract must also not exceed the framework agreement.
Relevant authorities may award a contract based on a framework agreement in the following ways:
- If the framework agreement only includes one provider, relevant authorities may use a ‘Direct Award’ (without competition)
- If the framework agreement includes more than one provider, relevant authorities may choose whether to award the contract:
- without a further competition (via ‘direct award’), or
- by following the Competitive Process (via a ‘mini-competition’)
Where a relevant authority awards a contract based on a framework agreement without a competition, the relevant authority must submit for publication, on the UK e-notification service, a notice of the award, including the information in Schedule 2. This must be submitted within 30 days of the contract being awarded.
Where a relevant authority follows the Competitive Process in order to award a contract based on a framework agreement, the relevant authority must invite all providers who are party to the framework agreement to submit an offer, including the information set out in Schedule 15.
The standstill period for the Competitive Process must be observed (see above).
Each relevant authority is required to keep certain records (Regulation 24), including the reason for any decision made under the PSR.
When the Competitive Process is utilised, relevant authorities must record the way in which the key criteria was taken into account, how the basic selection criteria was assessed and how the framework award criteria was evaluated when reaching a decision.
In addition, each authority must publish online an annual summary (Regulation 25) which must include the number of framework agreements concluded in the year to which the summary relates, and the number of contracts awarded based on a framework agreement.
What this means
Under the PSR, the process for competitive tendering is more flexible than current regulations. Relevant authorities are now able to negotiate with bidders more freely, which is hoped to improve the quality of healthcare services and strengthen the partnership between providers and authorities.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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