Introduction of the ‘light touch’ regime and higher thresholds for healthcare services

The revised Public Contracts Directive introduces a ‘light touch’ procurement regime for social services, health and education contracts above €750,000, with contacts below this threshold assumed to have no-cross-border interest. Member states have discretion to put in place national rules for the award of above threshold contracts to ensure compliance with principles of transparency and equal treatment.

The push for the involvement of mutuals and co-operatives in the delivery of public services, championed by Francis Maude, has been successful. Competition for certain healthcare services contracts can be limited to these organisations for a period of three years’ subject to qualifying criteria including reinvestment of profits and active participation by employees or stakeholders.

Healthcare services and the current procurement regimes

Currently, healthcare services are ‘Part B services’ under the Public Contracts 2004 Directive/2006 UK Regulations. As such, there are no strict procedural requirements governing how these services must be procured. Instead, contracting authorities are to respect the transparency/non-discrimination EU Treaty principles when awarding these contracts.

As part of reforms to abolish the Primary Healthcare Trusts and replace them with the NHS Commissioning Board and clinical commissioning groups (CGGs), regulations were passed earlier this year for the procurement of healthcare services in England: the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 under the Health and Social Care Act 2012. These regulations impose procedural requirements for the procurement of healthcare services to protect patient choice and prevent anti-competitive behaviour. Pharmaceutical services are excluded.

Although the regulations were of immediate effect, the results of two parallel consultations with a view to guidance on the procurement of such services are outstanding. Issues covered in the consultations include the factors that the Monitor may take into account to assess whether the board or a CCG has complied with its duties and the powers that the Monitor may exercise in response to breach including when the Monitor may make a declaration of ineffectiveness of a contract.

The role of the Monitor and ineffectiveness under the NHS regulations

The regulations enable the Monitor to declare ‘an arrangement’ (not currently defined) for healthcare services ineffective, where the Monitor has found a ‘sufficiently serious’ failure to comply with the regulations.

The Monitor has other powers including directing the procuring entity to vary or withdraw an invitation for a particular tender.

These steps may be taken by the Monitor following a complaint received from a person with ‘sufficient interest in the arrangement to which the complaint relates’ or following an investigation that the Monitor started on its own initiative.

The Monitor cannot investigate where the party making the complaint has brought an action under the 2006 Regulations (and presumably the next set of regulations following implementation of the revised Public Contracts Directive).

Until further guidance is published, the scope of the Monitor’s powers are uncertain. For example: the regulations lack a timeframe within which the Monitor has to commence or conclude its investigations or within which a complaint must be made. This raises the question of whether a challenge that might be time barred under the 2006 Regulations (or the next version) could be pursued under the regulations. It’s also uncertain what type of breach might lead to a declaration of ineffectiveness, ie what is a ‘sufficiently serious’ failure? Finally, there is no express power for the Monitor to award damages, suggesting that litigation may be necessary in any event to make a recovery following a declaration of ineffectiveness.

The interface between the 2013 Regulations and the revised Public Contracts Directive

The regulations expressly recognise and require compliance with the EU Treaty principles including the requirement to treat providers equally and in a non-discriminatory manner. To that extent, the position in England at least is ‘ahead of the game’ with the regulations apparently satisfying the requirement for national rules to be put in place for the award of these contracts. However, there are ambiguities in the regulations outlined above. Given that a driving force behind the revisions to the Public Contracts Directive is greater procedural and legal certainty for more efficient public expenditure, it is hoped that the consultations recently conducted by the Monitor will bring clarity to how the regulations will operate in practice.