Following a public consultation process, NHS England (NHSE) and NHS Improvement (NHSI) released their proposal document ‘The NHS’s recommendations to government and parliament for an NHS bill’ in September 2019. These wide-ranging recommendations for new legislation aim to improve the speed of implementation of the NHS Long Term Plan (the Long Term Plan) and take into account the report and recommendations of the parallel inquiry by the Health and Social Care Select Committee undertaken during 2019. Recommendations include provisions to enact a new more flexible NHS procurement regime for healthcare services.

The current law

The current procurement regime for healthcare services in the NHS is underpinned by:

  • the Public Contracts Regulations 2015 (PCR), which are derived from EU law
  • the NHS (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 (the NHS Regulations), made under section 75 of the Health and Social Care Act 2012

The general EU Treaty principles of procurement require that:

  • all potential bidders are treated equally
  • suppliers of goods and services have the right to take action against public bodies, if contracts are not advertised or awarded on an open and fair basis

Subject to Brexit…

At the time of writing, it is unclear whether the UK will leave the EU with or without a deal, and Brexit may bring into question the long-term status of the PCR in relation to other NHS-commissioned, nonclinical, supplies, works and services. However, as it stands, the draft Public Procurement (Amendment etc) (EU Exit) Regulations 2019 will ensure that the PCR are re-enacted on much the same terms following its repeal due to Brexit. This means it is likely that, whatever happens in relation to healthcare services, supplies of goods, services (other than healthcare services) and works to the NHS will continue to fall under rules similar to those currently in place under the PCR.

Proposed changes for healthcare services

The House of Commons Health and Social Care Committee found that the procurement had created complexities and costs, particularly with regard to community and mental health services. The Committee recommended that the Department of Health and Social Care, NHSE and NHSI work together with the NHS Assembly to co-produce a ‘best value’ test to replace the current procurement rules and govern the way that decisions to commission healthcare services are made. The report went on to recommend a broad definition of value, underpinned by outcomes, and warned against an approach that has developed in local government where value has become synonymous with cost-cutting.

NHSE/NHSI’s proposal document, produced following public consultation, agrees that a more flexible NHS procurement regime is required. Recommendations include:

  • Revoking the NHS (Procurement, Patient Choice and Competition) (No.2) Regulations 2013 (though the patient choice provisions will be replicated elsewhere)
  • Removing NHS healthcare services (but not non-healthcare services) from the requirements of the Public Contracts Regulations 2015, thereby removing the current presumption that NHS healthcare services valued at over £615,278 must be advertised to the market
  • Introducing a new NHS procurement regime for healthcare services only, based on statutory guidance

Putting change into practice

These recommendations align with the views of the Health and Social Care Committee. However, the public consultation undertaken by NHSE/NHSI raised a number of requests for further clarification of what ‘best value’ means in practice, along with similar concern about the risk that best value would automatically equate to the cheapest provider. To underline that this is not the case, the term ‘best value’ is to be replaced with a ‘better suggestion’ as and when this is forthcoming. In the meantime, the new process is simply referred to as the ‘new NHS procurement regime’.

The proposed regime will allow commissioners discretion as to whether or not they undertake a full tendering exercise when awarding contracts for healthcare services. Commissioners will be required however in taking that decision to act in the best interests of patients, taxpayers and the local population and in accordance with criteria within the new statutory guidance. To ensure there is clarity about how the new regime will operate, NHSE/NHSI intend to set out draft statutory guidance, which will be issued for public consultation at the same time that the draft NHS Bill is released.

NHSE/NHSI also clarify that the new regime is intended to apply to all providers of NHS services, not just NHS statutory providers. This addresses concerns about the ability of independent sector providers, including the voluntary sector, social enterprises and mutual organisations to continue to provide services. Likewise, this clarification should also ensure that the integration agenda is supported.

Remedies

At present, a procurement challenge could be brought by an interested provider either as a complaint to NHSI as a breach of the NHS regulations, or through the courts on the basis of a breach of the EU Treaty principles under the PCR. The latter route is usually the favoured approach, where the provider wants to mount a serious challenge to the decision but will presumably no longer be open to those aggrieved by decisions made without a full tendering exercise.

While not dealt with in detail in the report, NHSE/NHSI do underline that ‘appropriate scrutiny and oversight mechanisms’ will be required. They highlight the following existing accountability routes:

  • NHSE’s formal accountability relationship with CCGs
  • Internal audit to ensure that CCGs have acted in the interests of patients, taxpayers and the local population in accordance with the new regime’s criteria
  • Health and wellbeing boards’ engagement in deliberations about key service developments

Under the current regime, a potential challenger would also have the option of bringing a judicial review of the procurement decision, which could result in the original decision to award contracts/to not undertake a compliant procurement, being taken again. While it is not entirely clear how providers would be able to challenge processes under the new regime, judicial review would remain an avenue of challenge.

What next?

In the current political climate, it is difficult to predict with any certainty when and/or if any piece of draft legislation will come before parliament, however the recent Queen’s Speech (14 October 2019), confirms an intention to enact ‘new laws….to help implement the National Health Service’s Long Term Plan in England’. While no further detail is given, this does suggest provision is being made for the legislative changes required.