Many of the initial commissioning contracts put in place for the transfer of PCT provider arms to new providers under the Transforming Community Services initiative will come to an end in less than a year on 31 March 2014. CCGs will need to rapidly address replacement arrangements including how this may advance the transformation of community services and deliver improvements in quality and cost effectiveness. This is particularly the case where procurement will be needed to select the new provider(s).

In this article we address some of the key issues that commissioners will need to consider in putting in place the new arrangements.

Considerations in developing the service model

CGGs will need to address what services are going to be commissioned and how these will be structured. This will involve a multiplicity of considerations including:

  • Should the services be integrated with other health or social services or alternatively be unbundled or sub divided in order to ensure the delivery of effective services which are viable for providers?
  • How the entire care pathway is to be managed and provided e.g. through prime contracting (with a prime contractor responsible for whole care pathway) or through the alliance contracting model (with separate contracts of individual providers with shared common objectives) or through separate commissioning of different components?
  • Is the year of care model for particular client groups (rather than contracting for individual elements of care) a possible structure?
  • How is the interface with primary care and any other aspects of care commissioned by NHS England going to be managed?
  • Who are the current providers and who else could provide services, including new market entrants?
  • Are the services suitable for AQP arrangement and when should choice be offered?

In considering this a CCG will need to factor in the various statutory duties it has under the National Health Service Act 2006, the Equalities Act 2010 and the Public Services (Social Value) Act 2012 (“the Commissioning Regulations”). These include acting with a view to securing improvements in services, securing integrated provision (including provision of social services) where this will improve quality and a prohibition on anti-competitive behaviour except where it is in the interest of service users. CCGs will also need to consider their commissioning plans and the views of the Health and Wellbeing Board as well as comply with their statutory duties of public involvement and consultation. Where proposed decisions will result in a substantial development or variation in the provision of health services in the area of a local authority, CCGs will also need to consult with the local authority.

The multiplicity of duties and obligations to which CCGs are subject, some of which may conflict with each other in particular situations, can be a useful weapon for those seeking to challenge commissioning decisions e.g. as in the unsuccessful challenge to NHS Devon’s proposed integrated children’s services. It is therefore important that CCGs consider all of their duties and carry out their decisions in a transparent way with a well documented audit trail in order to be best placed to justify their actions in the event of challenge.

Do the new services need to be procured?

An important consideration for CCGs will be whether they need to compete out services which may historically have been provided continuously by the same provider. In a number of areas commitments have already been made that the existing services will be competed on the expiry of the current arrangements and these should normally be honoured. Legal advice should be taken if a CCG considers that it is no longer appropriate to compete out such a service.

CCGs will need to consider the position under the Commissioning Regulations.  Regulation 5 only permits a CCG to award a new contract for the provision of health care services to a single provider without competition when it is satisfied that the relevant services are capable of being provided only by that provider. This is a difficult area and there has been much public discussion about when there will be only a single provider capable of providing a service and we await statutory guidance from Monitor to commissioners on this. CCGs should also consider the EU procurement rules and the level of advertising required for services which will be tendered. Whilst any complaints regarding breach of the Commissioning Regulations are heard by Monitor, complaints can still be brought in the courts for breach of the EU procurement rules.

Careful consideration will need to be given to the structuring of any procurement including the process to be carried out, the requirements of the procurement and the evaluation criteria, in order to ensure that the selection delivers the CCG’s objectives in a cost effective way. Pre-procurement CCGs must also consider their obligations under the Public Services (Social Value) Act 2012, in particular how a planned procurement may promote or improve the economic, social and environmental wellbeing of the relevant area and how this can be secured in the procurement. 

Managing conflict of interests in decision making

The Commissioning Regulations provide that a relevant body may not award a contract where conflicts or potential conflicts “between interests involved in commissioning such services and the interests in providing them affect or appear to affect the integrity of the award of the contract”. Where there is a conflict in relation to a contract which is awarded then the relevant body must maintain a record of how it managed that conflict. Therefore CCGs need to ensure that they maintain clear and transparent procedures both for identifying and managing conflicts in their decision making on the services to be commissioned and for the process followed for the award of contracts to demonstrate that any conflicts did not affect and could not reasonably be taken to have affected the award.

Getting the contract right

CCGs are required to use the new NHS Standard Contract for their contracting arrangements for clinical services. The expectation is that the 2014/5 contract will be used but advice will be needed on the approach to be adopted in procurement before the contract is released. Based on the current year contract, CCGs will need to consider how the Particulars are completed in order to ensure effective delivery of the aims and objectives of the procurement and to support and incentivise good performance. Areas of particular focus are likely to be:

  • the specification;
  • the local quality requirements and the consequences of failing to meet these;
  • the length of the contract and in particular whether the limited circumstances for a contract of longer than one year is justified;
  • pricing where this is not fixed by National Tariff (including under Monitor’s new regime for 2014/15).  Consideration should be given to whether innovative pricing arrangements may drive CCG objectives or transfer risk in a cost effective way.  Examples include outcome-based payments, capitation based payments (as is being looked at by Cambridgeshire and Peterborough CCG for older people services),  risk sharing arrangements and gain sharing;
  • information reporting requirements.

Other considerations

CCGs will also need to address commercial aspects of the new arrangements and the best way to manage  any risks that this may raise including:

  • What estate may be needed for procured services? Is this is a matter for the provider or will the CCG prescribe or offer potential estate for the services? Where the CCG is offering estate the CCG will need to consider how this will be obtained, which may include from the current provider.
  • Will staff transfer under TUPE from the existing provider to the new provider? What obligations does the current provider have in relation to this under the current contract arrangements? How will this impact on pricing by bidders?
  • How will IT arrangements work?

It will be important to resolve these issues pre award if possible in order to avoid post award negotiation.


The development of your plans for your TCS refresh needs careful consideration.  Bevan Brittan brings extensive experience of both supporting clients in ensuring robust decision making and using the procurement process to deliver our clients’ aims. We pride ourselves on our creative thinking and have a long history of being at the forefront of developing innovative approaches. We also adopt a practical and proactive approach in providing solutions to commercial issues.

If you would like to discuss how we can support you in developing your TCS refresh arrangements please contact us.

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