02/06/2025
When running a public procurement it is obviously important to ensure that the correct law is applied and complied with. Whilst in most cases it ought to be straightforward to work out what legislation applies, there can be some complexity involved.
In particular, healthcare bodies (and sometimes local authorities and other public bodies) in England will need to determine whether the Procurement Act 2023 (“PA 2023”) or the Health Care Services (Provider Selection Regime) Regulations 2023 (“PSR”) applies. There is also the added complexity of considering the PA 2023 transitional regulations [1], as there are certain circumstances in which the Public Contracts Regulations 2015 (“PCR 2015”) may still apply despite the PCR 2015 having been replaced by the PA 2023 on 24 February 2025.
Health care services
The starting point is that the PSR should be applied where an authority is procuring “relevant health care services” for the purposes of the health service in England. This includes where the health care services are being procured as part of a mixed contract provided the main subject-matter of the procurement is health care services and the authority is of the view that the other goods or services could not reasonably be supplied under a separate contract.
“Relevant health care services” are defined in the PSR as “health care services which fall within one or more of the CPV [common procurement vocabulary] codes specified in the table in Schedule 1”. The PSR also refers to the definition of “health care service” in section 150 of the Health and Social Care Act 2012 which provides that “‘health care’ means all forms of health care provided for individuals, whether relating to physical or mental health.”
Typically, the CPV codes are helpful in clearly identifying which services fall within the remit of the PSR. By way of example, the codes include things such as “85121282-3 Dermatology services”, “85150000-5 Medical imaging services” and “85144100-1 Residential nursing care services”.
However, the recent Independent Patient Choice and Procurement Panel (“Panel”) decision in its review of a proposed contract award for an Adult and Paediatric Orthotics and Wheelchair Service in Leicester, Leicestershire and Rutland highlights that sometimes a more nuanced assessment of the service is required.
In that case, the service was a joint service covering orthotics (which the ICB considered was a relevant health care service covered by the PSR) and the wheelchair service (which the ICB was less certain the PSR applied to). On that basis, the ICB considered the mixed contract provisions and concluded that even if the wheelchair element of the service was not a relevant health care services, those provisions meant that the mixed contract could still be procured under the PSR, and proceeded to award a new contract to Opcare under Direct Award Process A.
Another wheelchair services provider, AJM Healthcare (“AJM”) raised written representations to the Panel asserting that the contract should have been procured under the PCR 2015 on the basis that the wheelchair service was not a relevant healthcare service.
The Panel decided that although there is no CPV code for wheelchair services in Schedule 1 of the PSR, the service’s characteristics were consistent with the definition of health care services under the PSR and therefore the use of the parent CPV code (“85100000-0 Health services”) in Schedule 1 was appropriate, allowing the wheelchair service to be treated as a relevant health care service. Although the providers of the service were not registered with the CQC, the service specification, pathways for patients accessing the service, and clinician involvement in delivering the service all supported the conclusion that the wheelchair service is a health care service. This point is of particular interest given that the statutory guidance that accompanies the PSR explains that in broad terms, services arranged by the NHS for which the provider requires CQC registration will fall within the definition of relevant healthcare services, and the same guidance makes an explicit distinction between non-emergency patient transport services which are defined as relevant health care services where they are required to be CQC registered, but are not where they are not required to be CQC registered.
In this case, the Panel noted that:
- patients have their needs assessed (akin to a diagnosis) and treatment is provided through the provision of a tailored wheelchair;
- such assessment is undertaken by clinically qualified and registered staff; and
- patients are typically referred to the service by other clinicians.
On that basis, the Panel’s view was that the wheelchair services in question fell within the definition of “relevant healthcare services”.
In its decision, the Panel also acknowledged that where a large proportion of the service’s expenditure is on equipment, it may be appropriate to assess whether the equipment could be procured separately (for example, as goods under the PA 2023). However, the Panel concluded that in this case, such an arrangement would be likely to involve considerable practical difficulties and therefore the balance of expenditure on clinical goods as compared to other goods and services was not grounds for finding that the wheelchair service is not a health care service.
Other goods, works and services
Another potential pitfall for procurement professionals is incorrectly assuming that all public contracts (that do not encompass relevant health care services) are now governed by the PA 2023, rather than predecessor legislation such as the PCR 2015.
The transitional regulations set out the rules for which legislation applies to ongoing procurements and contracts awarded under predecessor legislation.
Two of the key points are that:
- any procurements commenced prior to the PA23 coming into force continue to be governed under previous legislation such as the PCR 2015; and
- contracts awarded through framework agreements or dynamic purchasing systems that were established under the PCR 2015, will continue to be governed by that legislation.
Therefore, it is possible to enter into new contracts post 24 February 2025 that are still governed by the PCR 2015. In addition, the transitional regulations confirm that modifications to contracts awarded under the PCR 2015 will need to be modified in accordance with Regulation 72 of the PCR 2015, rather than the modification provisions contained in Section 74 and Schedule 8 of the PA 2023.
It is therefore important to ensure that processes are in place to identify which contracts fall under the PCR 2015 and which contracts fall within the PA 2023 as it will be relevant to any future contract variations.
Key points
Where health care goods or services are being procured, the relevant authority should consider the guidance set down by the Panel in the Leicestershire decision. Even where a service does not obviously fall within one of the relevant CPV codes, if the overall nature of the service involves the provision of health care to individuals (including clinician-led needs assessments), the generic health services CPV code is likely to apply.
Whilst many would assume that the question of “what law applies to my procurement?” should be easily answerable, the question ought to be given proper consideration as it can sometimes require a detailed analysis of: (a) the scope of the contract and whether specific parts could be procured separately; (b) the timing of the procurement; and (c) the vehicle used to award the contract.
Getting the answer to that question wrong can have serious consequences, leaving the whole procurement susceptible to challenge. We would therefore recommend that where there is any doubt, legal advice is taken and a proper audit trail of any decision making is produced and retained.
If you would like advice in relation to the issues raised in this article, please get in touch with our team.
- The Procurement Act (Commencement No. 3 and Transitional and Saving) Regulations 2024 and The Procurement Act 2023 (Commencement No. 3 and Transitional and Saving Provisions) (Amendment) Regulations 2024
