The changes to the NHS brought about by the coalition government are comprehensive with perhaps the most fundamental transformation being the enabling of private providers to deliver services alongside public and third sector bodies. This opening up to competition will alter the face of the NHS forever and has given rise to significant opposition. This article considers the changes to the procurement regime which underpin the developments.

The NHS Commissioning Board (the Board) established under the Health and Social Care Act 2012 (the Act) is tasked with securing best value for NHS patients through commissioning services that require a national approach such as primary care services spanning GP, dental and ophthalmology services as well as secure mental health services and prison based health services. It is estimated that the Board will be responsible for commissioning as much as 25% of all NHS services. In addition, the Board will be responsible for regulating the commissioning activities of the Clinical Commissioning Groups to which every GP will be required to belong.

The Board will have a range of flexible 'tools', including managing providers' performance, extending and varying contracts, widening the choice of qualified providers and tendering. Part of the remit of the Board is therefore ensuring best procurement practice and delivery of best value.

There has, of course, been significant debate over the relationship between this duty to, in effect, promote competition and the imperative to ensure protection of patient’s rights to make choices regarding their treatment whilst delivering an NHS capable of acting in the patient’s best interests.

Procurement practices

Section 75 of the Act empowers the Secretary of State to enact regulations to sit alongside the Public Contracts Regulations 2006. These regulations set out the objectives of the Board when procuring services and provide an exception to the obligation to conduct a competition in circumstances where only one provider is capable of providing the service.

The NHS (Procurement, Patient Choice and Competition) Regulations 2013 had something of a false start as the regulations as adopted on 13 February were subsequently withdrawn following outcry that they did not sufficiently protect the NHS from competition from private providers.

Replacement regulations (the NHS (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 (the Regulations)) seek to remedy the apparent introduction of full scale competition among potential providers in a number of ways:

  1. The objectives set out in the Regulations are qualified by a direction that patient need and quality and efficacy may be secured through provision of services in an ‘integrated way’. The aim of integration is also listed as a reason that anti-competitive behaviours may be justified.

While reducing the possibility of a multiplicity of small providers (whether from the private, public or voluntary sectors) this perhaps does not go far enough to reassure critics that the private sector will not encroach on the NHS.

  1. The rules on circumstances in which the exception that only a single provider is capable of providing a given service and a competitive tendering exercise is therefore not required have been removed from the Regulations.

The absence of a firm direction regarding when a service may be treated as one only a single provider may deliver, may appear to grant discretion to the Board to determine circumstances in which this is the case and expand the class of contracts which fall outside the Regulations. There is a risk, however, that the exercise of such discretion may be open to challenge by would-be bidders denied the opportunity to compete for contracts. We may therefore need to look to the courts to establish when a procurement exercise must be conducted, rather than the government taking the opportunity to set out clear rules in legislation.

Commissioners will also be required to comply with the Public Contracts Regulations 2006 as the regulations sit alongside them. Obligations to observe equal treatment, fairness and transparency therefore remain.