Regulating the commissioning of health services – revised regulations now laid
From 1 April 2013, Clinical Commissioning Groups (CCGs) and the NHS Commissioning Board (the Board) must comply with new statutory requirements, being brought in under s.75 of the Health and Social Care Act 2012, when procuring or commissioning health care services. The National Health Service (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (SI 2013/500) ("the new regulations") cover not only the award of new contracts but also the setting up of qualified provider lists and frameworks.
The new regulations have quickly followed the initial regulations (SI 2013/257) after widespread concerns in the health sector on their potential implications as originally drafted. This article sets out what the new regulations say and what they will mean for commissioners, and highlights some of the areas which still lack clarity and where further guidance may be needed.
It is important to emphasise that obligations which apply to the procurement of healthcare services under the Public Contracts Regulations 2006, as amended (PCRs) and EC Treaty principles remain. Commissioners need to remember to comply with those requirements to use non-discriminatory technical specifications, to publish a contract award notice in the OJEU where the relevant financial threshold is exceeded, to treat economic operators equally and in a non-discriminatory way, and to act transparently.
Failure to comply with the new regulations can result in action by Monitor. This does not mean that the courts will no longer be involved – it will still be possible for bidders or other interested parties to take action in the courts for breach of the PCRS or by using a judicial review route.
In this article, the term “commissioners” is used to refer to CCGs and the NHS Commissioning Board, as appropriate.
Overarching objective and general requirements: When procuring health care services commissioners must act in accordance with the overarching objective: to secure the needs of the people who use the services, improve the quality of the services and improve efficiency in the provision of the services, including through the services being provided in an integrated way. Compliance with this objective is an ongoing obligation, which flows through the entire procurement process.
Other general, ongoing, requirements applying throughout the procurement process, include acting transparently and proportionately, treating providers equally and in a non discriminatory manner and avoiding conflicts of interest.
Anti-competitive behaviour: Whilst the regulations prescribe against anti-competitive behaviour when commissioning health care services for the purposes of the NHS, the amended regulations now include circumstances where anti-competitive behaviour may be engaged. This includes where the services are being provided in an integrated way or where there is cooperation between service providers to improve the quality of the services.
Pre-procurement planning: at the procurement planning stage the objective of improving quality and efficiency means that commissioners must consider how the service can be best delivered to meet that objective. They are required to consider three key delivery options: integrated provision, provider competition and patient choice. The decision as to which is the best method of delivery will then impact on the way in which the service is procured.
Award of a contract without competition: in certain specified cases it is permissible for a commissioner to award a new contract to a single provider without advertising in advance. This will apply where the commissioner is satisfied that there is only one provider capable of providing the services to which the contract relates, where contractual rights and liabilities are transferred under statute or where changes to terms of a contract are made pursuant to terms and conditions drafted by the Board for inclusion in commissioning contracts.
Advertising: when advertising, commissioners are obliged to advertise an intention to seek offers for a new contract on the Board’s website. An advertisement for a new contract must include a description of the required services and also the tender evaluation criteria to be used to evaluate bids received, but not the qualification / selection criteria.
Qualification of providers: commissioners are required to establish and apply transparent, proportionate and non-discriminatory qualification criteria. There is no specific obligation to publish these criteria but this can probably be implied from the general principles in the legislation. For qualified provider lists the commissioner must accept all providers who meet the qualification criteria. In other cases the commissioner is able to limit the number of providers or contractors.
The tender stage and award of contract: there are no detailed rules or timescales governing the conduct of the tender stage - the overarching objective and general principles will apply. When evaluating tenders, commissioners must apply the criteria which were set out in the advertisement published on the Board’s website.
Commissioners are also obliged to procure the services from the providers who are most capable of delivering the overarching objective and provide best value for money in doing so.
Post award: there are specific record keeping requirements relating to awarded contracts and also an obligation to publish a record of each contract awarded on the Board website. The record of contract award published on the Board website must include the name and address of the provider, the description of the healthcare services, total amount to be paid or amounts payable, dates when services will be provided and a description of the process adopted for selecting the provider.
Consequences of breach of the new statutory requirements: Monitor will have power to investigate a complaint that a commissioner has failed to comply with requirements under the new regulations. Monitor will not be able to investigate a complaint where the person making the complaint has brought an action under the PCRs in relation to that matter.
Monitor can direct a commissioner to carry out a range of actions including withdrawing an invitation to tender or varying an arrangement for the provision of health care services. Where Monitor investigates and finds a sufficiently serious failure it can declare a term or condition of an arrangement ineffective or even declare a whole arrangement ineffective. However, Monitor may not direct commissioners to hold a competitive tender for a contract for the provision of healthcare services for the purposes of the NHS.
The new regulations are not entirely clear on a number of points. For example:
Anti-competitive behaviour: do the exemption provisions only relate to inter-NHS arrangements or can cooperation arrangements include non NHS providers? Cooperation arrangements can only be relied on as exempt from the PCRs where the public/public cooperation exception is satisfied.
Advertisement: does the obligation to advertise a new contract opportunity on the Board website apply also to the setting up of qualified provider lists and frameworks and the proposed awards of contracts under those arrangements? The general principle of transparency would seem to require, at the very least, advertisement prior to establishing these arrangements.
Qualification: the regulations permit the number of providers to be limited but there are no provisions setting out how or on what basis this can be done. The general principles of transparency and equal treatment should, in our view, be interpreted to mean that the criteria used to limit numbers of qualified providers or contractors should be disclosed
Award of contract: the regulations provide that commissioners are obliged to procure the services from the providers who are most capable of delivering the overarching objective and provide best value for money in doing so. Does this mean that these requirements will need to be expressly incorporated as standard evaluation criteria which must be used in all procurements which are subject to these regulations?
Contract award notice: no timescale is specified for publication of the record of contract award on the Board website. If this is intended as a measure to increase transparency then the time scale should be relatively short.
It is clear that the new regulations add a further layer of regulatory complexity to the new Board and CCG commissioners in procuring health services. In considering the application of the new regulations, commissioners will also need to consider the PCRs. If you would like to discuss the new regulations and your organisation’s procurement policies please contact one of our Procurement team.