Cooperation and Competition Panel Ruling on “AWP” Procurement

In the first substantive decision of any regional Cooperation and Competition Panel (CCP) the West Midlands CCP has just published its decision in relation to a matter concerning the use of Any Willing Provider (AWP) procurement in Worcestershire.

18/06/2009

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David Owens

Partner

In the first substantive decision of any regional Cooperation and Competition Panel (CCP) the West Midlands CCP has just published its decision in relation to a matter concerning the use of Any Willing Provider (AWP) procurement in Worcestershire.  The decision has important implications for the way PCTs procure services, particularly where vertical integration may exist.

It is just over a year since the NHS Principles and Rules for Cooperation and Competition were first introduced to guide and regulate NHS procurement. Any bidder for a health services contract, whether an NHS body, social enterprise, practice-based commissioner or independent sector organisation, can use the Principles and Rules to challenge the structure and outcome of an NHS procurement.  The recent referral to the West Midlands CCP is an early indicator that these panels can indeed be an effective alternative to a formal procurement challenge under the Public Contracts Regulations 2006.

The Principles and Rules have been developed in the context of the NHS’ ongoing focus on commissioning clinically-driven, innovative, quality outcomes.  They establish the baseline for the independent Cooperation and Competition Panel, and apply to all levels and types of NHS commissioning.  There are ten key principles, out which the related rules fall.  For example, Principle 7 provides that the “Payment regimes must be transparent and fair” and Principle 10 that “Vertical integration is permissible when demonstrated to be in the patient and taxpayers’ best interest….”

The NHS West Midlands complaint illustrates how the Principles and Rules are applied - in this case to primary care commissioning.  The procurement was for echocardiography within a target geography, priced on the basis of a locally-defined tariff.  An unsuccessful bidder contested the basis of the contract award, which it believed served to distort the market and lock out competition, citing principles 7, 9 and 10.  The bidder was not satisfied with the PCT’s response and so referred its complaint for dispute resolution by the strategic health authority.

The decision can be read in full here

For Commissioners the decision warrants more careful scrutiny and has implications for PCTs in:

  • The extent of market research and analysis they undertake before reaching decisions on the form of procurement and any tariff set under AWP
  • The use of AWP and whether it is appropriate in all circumstances
  • The need to identify with greater care where vertical integration may exist
  • Where vertical integration does exist to provide greater safeguards that it will not distort local competition.

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