Procurement in a nutshell – healthcare services contracts

Subject to only a few exceptions, NHS Commissioners now have a statutory duty to advertise healthcare services contracts.

On 21 October 2016, the Department of Health published a guidance note summarising the PCR 2015 requirements for NHS Commissioners and those supporting them with their procurement of healthcare services.

This week’s update highlights the key elements of the regime of which Commissioners need to be aware.

Light touch regime – new threshold

Health, social and other specific services are subject to a “light touch regime” under the PCR 2015 where the value of the contract is more than €750,000 (£589,148). The minimum requirements of the light touch regime are:

• publication of a contract notice or a prior information notice (PIN) in the Official Journal of the European Union, where there is an intention to award a public contract with a lifetime value meeting the threshold limit; and
• the use of an award procedure complying with the principles of transparency and equal treatment set out in regulation 76(4) of the PCR 2015.

Retention of flexibility

The light touch regime affords Commissioners the flexibility of designing their own procurement procedure when awarding a contract, providing that the transparency and equal treatment principles are adhered to.

Negotiated procedure without prior publication

Commissioners also retain the ability to use the negotiated procedure without prior publication, where this can be justified in accordance with regulation 32. This applies where:

• no tenders, no suitable tenders, no requests to participate or no requests to participate in response to an open procedure or a restricted procedure have been received, provided that the initial conditions of the contract are not substantially altered; or
• where, for the following reasons, the services can be supplied only by a particular provider:
  • competition is absent for technical reasons, or;
  • the protection of exclusive rights, including intellectual property rights; and
  • in both circumstances above, where no reasonable alternative or substitute exists and the absence of competition is not the result of an artificial narrowing down of the parameters of the procurement.

Additional requirements of the PCR 2015

NHS Commissioners will of course also need to have regard to the following requirements of the PCR 2015:

• publication of standstill award notices;
• retaining documentation of decisions and procurement reports to ensure clear audit trails; and
• identifying and remedying any conflicts of interest.

While many Commissioners may have been fulfilling these requirements to varying degrees, it is important that there is now full compliance as they now have full applicability to healthcare services contracts, on a statutory legal footing.

Why is this important?

NHS Commissioners now need to comply with two key sets of regulations – the PCR 2015 and the National Health Service (Procurement, Patient Choice and Competition) (No2) Regulations 2013 (PPCCR).

The PPCCR provisions are designed to achieve the overall objective of securing the needs of patients and improving the quality and efficiency of services. The provisions of the PCR 2015 and the PPCCR are broadly consistent with each other and share some common features.

One potential area at conflict is that the PPCCR allow a direct award where the Commissioner is content that there is only one capable provider, which is not the same test as PCR regulation 32.

Compliance with one set of regulations does not guarantee compliance with the other, particularly in the case of exemptions from the regimes and in law, because the PCR 2015 is derived from an EU Directive, that must take precedence.

However, compliance with both sets of regulations is vital to ward off costly and undesirable legal challenges.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.