View all news

All Change for Procurement

Navigating through the maze of procurement regulations has long been a challenge for both commissioners and providers. The pressures on procurement and supply chains posed by the Covid crisis, which has, in some cases, attracted unfavourable publicity, together with the end of the Brexit transition period on 31st December 2020, and proposals for NHS legislative changes with greater emphasis on integration rather than competition, have all combined to ensure that some significant changes to procurement regulations resulting in more flexibility and reduced bureaucracy were inevitable and now there is some light at the end of the tunnel reports procurement specialist Alan Turrell.

During the Covid-19 crisis, it was evident at an early stage that urgent actions needed to be taken so that that normal tendering procedures could be by-passed and, accordingly, various central Government communications (including PPNs (Procurement Policy Notes) 01/20, 02/20, 04/20 and 01/21) reminded commissioners that existing rules did allow, under urgent circumstances, contracts to be awarded without competition together with the need to support suppliers during the crisis. However, these included a word of caution that decisions and the justifications for relaxing competition should be fully documented including evidence that risks, such as poor value for money, unequal treatment of suppliers and conflicts of interest, had been considered and addressed.

The first significant procedural change was a result of the end of the transition period with it no longer being applicable for commissioners to advertise contracts and publish contract awards in OJEU/TED (Official Journal of the European Union/Tenders Electronic Daily). Instead a new portal, Find a Tender Service (https://www.gov.uk/find-tender) is now being used and this is the place that potential providers of healthcare services, including primary care, should look for potential supply opportunities relating to high value contracts together with the existing Contracts Finder (https://www.gov.uk/contracts-finder) for lower value opportunities.

For the time being, the remainder of other public procurement procedures and regulations which were based on the EU public procurement directives continue to apply as these have been embedded into UK law such as the Public Contracts Regulations 2015 incorporating the Light touch Regime which governs much of the procurement activity for the commissioning of healthcare services. However, Brexit provides an opportunity for a wholesale review of public procurement regulations and these were set out in December’s Green paper, “Transforming Public Procurement”. Although it is intended that the new single procurement regime proposed in this paper does not apply to the procurement of healthcare services it very much sets the tone with: fewer and more simplified procedures; a broader definition of “value“ (MAT = Most Advantageous Tender) in the evaluation of tenders including consideration of the social value to be delivered, the degree of innovation being proposed and a provider’s previous performance; and a standardised approach to the collection and publication of procurement data.

Clearly any changes to the procurement regulations specific to the commissioning of healthcare needed to be consistent and supportive of the wider legislative changes being proposed for the NHS as detailed in the February 2021 White Paper, “Integration and Innovation: working together to improve health and social care for all”. These proposals are driven by the three aims of improving integration, removing bureaucracy and increased accountability with the key structural change being the designation of ICSs (Integrated Care Systems) as statutory bodies. However to meet these broad aims changes to the existing procurement and competition regime were essential and therefore the paper proposes the abolition of the controversial ‘Procurement, Patient Choice and Competition Regulations’ (Section 75 of the 2012 Health and Social Care Act), the removal of healthcare services from the general public procurement regulations, and the abolition of the Competition and Markets Authority (CMA) jurisdiction over NHS Trust mergers.

Accordingly, the vision for the future commissioning and procurement of healthcare services was set out in an accompanying paper, “NHS Provider Selection Regime: consultation on proposals”. The proposed regime seeks to use competitive procurement sparingly so it is not a barrier to integration: “In future, we want competitive tendering to be a tool that the NHS can choose to use where it is appropriate, rather than being an imposed, protracted process that hangs over all decisions about arranging services, drives competitive behavior where collaboration is key and creates barriers where integrating care is the aim.”

At the core of this are three sourcing routes available to commissioners or “decision-making bodies” as they are referred to in the document (which include local authorities commissioning health care services including public health, as well as ICSs and NHS England) to determine the optimum provider(s):

  1. Continuation of existing arrangements – This will apply where a change of provider is not feasible, for example where there is no alternative provision such as for type 1 and 2 urgent and emergency services and “core primary care contracts commissioned on the basis of continuous contracts, where patients have the right to exercise choice at the point of registration with the GP surgery”, and in situations where there is no value in seeking another provider.
  2. Identifying the most suitable provider for new/substantially changed arrangements – By using a set of key criteria commissioners will determine if one provider or group of providers is the most suitable and may award the contract without conducting a competitive procurement. The nominated provider could of course be the existing provider.
  3. Competitive procurement – This will only be used where the most suitable provider cannot be determined by using the process set out in 2) above or the commissioner wants to use a competitive process.

For commissioners this seems a much simpler and flexible menu of options for determining the optimum provider as compared with the current task of interpreting two seemingly conflicting sets of regulations represented by the Procurement, Patient Choice and Competition Regulations and the Public Contract Regulations 2015. However, the proposed Regime clearly puts the onus on commissioners to act transparently by, for example, publishing their intended approach, keeping a record of decision-making, identifying and managing any conflicts of interests and conducting annual audits and publishing annual reports.

For providers, it offers an opportunity to retain existing contracts without having to tender if they can demonstrate good previous performance and, under route 2) are assessed as being the most suitable provider against the specified key criteria which are:

Quality (safety, effectiveness and experience) and innovation – This includes consideration of innovation and service improvement.
Value – This embraces health and well-being outcomes to both individuals and the community rather than merely the ‘cheapest’ option.
Integration and collaboration – The most suitable provider would need to be assessed as having an appetite for collaboration and being committed to integrating care and delivering joined-up services consistent with local plans.
Access, inequalities and choice – The extent to which providers will provide accessibility to all, maintain patient choice, and contribute to reducing health inequalities are all considerations here.
Service sustainability and social value – As well as ensuring long-term stability of services, decision-making bodies will give consideration to the extent that providers are able to deliver social value. Although it is not specifically referred to in the paper, the recent PPN 06/20 advocating the use of the Social Value Model in all procurements provides a good indication of the elements to be considered including supporting communities to: recover from the impact of Covid-19; create new jobs & skills, deliver environmental benefits; provide employment opportunities for the disabled & disadvantaged; and improve health and well-being & community integration.

A particular challenge for providers is that where they are seeking new business and a competitive procurement process is not being advocated, they will need to ensure that decision-makers are aware of the services that they can offer and their ability to meet these criteria so that they have some chance of being considered as the “most suitable provider”. This is likely to require proactive communication with commissioners but also represents a challenge to commissioners to ensure that they keep abreast of the potential providers and relevant market developments. Some may conclude that, in fact, the best way of doing this is to use the competitive procurement process!

Further good news for providers is that in order to be included in an AQP (Any Qualified Provider) arrangement they will no longer be expected to participate in a procurement exercise to do so but will need to meet minimum requirements such as evidencing their ability to deliver the required service, be registered with CQC and licensed by Monitor (where appropriate) as well as accepting the terms of the NHS Standard Contract and the proposed pricing structure.

Another area of interest to providers and, indeed potential controversy, is the proposal to remove the legal right to challenge contract award decisions through Monitor and to claim for damages although there will be a right of representation to the decision-making body and an option for judicial review.

Although these proposals are initially for consultation before any changes are made to the prevailing regulations, it is clear that changes are on the way which will enable commissioners and providers to work together to ensure that they result in a more efficient and effective system in determining the best providers so as to deliver the “triple aims” set out in ”Integration and Innovation” of better health and well-being for everyone, better quality of health services for individuals, and the sustainable use of NHS resources.

Alan Turrell is a former Associate to PCC and on its behalf has hosted workshops on procurement and primary care contracts and has provided bid writing support to many PCC clients. He is a Fellow of the Chartered Institute of Procurement and Supply and is a Chartered Procurement and Supply Professional.