Procurement in a Nutshell Provider Selection Regime (‘PSR’)- Modifications
4th January, 2024
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 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 relevant 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 explain the requirements expected of relevant authorities if they wish to modify a contract or framework agreement without following a new procurement process (Regulation 13).
Modifications to contracts originally awarded under Direct Award Process A or B
Where the original contract was awarded under Direct Award Process A or B, and the modification does not materially alter the character of the contract, then the modification is permitted.
If that modification is attributable to a decision of the relevant authority, and the cumulative change in the lifetime value of the contract is £500,000 or more, the modification is still permitted, but the relevant authority must publish a notice of the modification, on the UK e-notification service, within 30 days of the modification, including the information in Schedule 12.
Modifications to contracts originally awarded under Direct Award Process C, the Most Suitable Provider Process, or the Competitive Process
Where the original contract was awarded under Direct Award Process C, the Most Suitable Provider Process, or the Competitive Process (including framework agreements), modifications are permitted when:
- the modification is clearly and unambiguously provided for in the contract or framework agreement;
- the modification is solely a change in the identity of the provider due to succession, following corporate changes, and the relevant authority is satisfied that the provider meets the basic selection criteria;
- the modification is made in response to external factors beyond the control of the relevant authority and the provider including, but not limited to:
- changes in patient or service user volume, or
- changes in prices in accordance with a formula provided for in the contract documents
- the modification is attributable to a decision of the relevant authority and does not render the contract or framework agreement materially different in character, and the cumulative change in the lifetime value of the contract or framework agreement since is either:
- below £500,000; or
- less than 25% of the lifetime value of the original contract or framework agreement when it was entered into.
If the modification is attributable to a decision of the relevant authority and the cumulative change in the lifetime value of the contract is £500,000 or more, the modification is still permitted, but the relevant authority must submit a notice of the modification for publication, on the UK e-notification service, within 30 days of the modification, including the information in Schedule 12.
Relevant authorities must note that contracts entered into before the commencement of the PSR must be modified in line with Regulation 13.
The requirements expected of relevant authorities to modify a contract or framework agreement urgently is explored in another Nutshell.
What this means
The PSR regime seeks to avoid processes that only bring limited value to those who utilise the relevant healthcare services. Therefore, this regime allows for certain modifications to be made to contracts or framework agreements during their term without reassessment of the existing provider.
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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