Competitive tendering for contracts in the NHS is set to reduce significantly once the new framework for the procurement of health services – the Provider Selection Regime (PSR) – launches in January 2024. The new draft guidance outlining the PSR should consign to history the large-scale competitive tendering regime brought into being by the 2012 Health & Care Act.
As well as reducing the use of competitive tendering to choose providers, the new regime should make it easier for an existing provider to continue if they are performing to the satisfaction of the commissioning body.
The casualty of these changes, however, is transparency in the procurement process for those outside the system – the general public, with a much reduced requirement to publish procurement plans.
What is the Provider Selection Regime?
The Provider Selection Regime (PSR) brings in a range of approaches to selecting providers for services in the NHS. Contracts can be awarded by either a 'direct award' process, a 'most suitable provider' process. or the competitive process that has been used for many years.
Direct Awards
There are three options, A, B and C, for a ‘direct award’ of a contract. The process does not involve competition or consideration of more than one provider. The options are A, B and C, as follows:
A. Where there is no realistic alternative to the current provider due to the nature of the service provided, for example, Type 1 and 2 urgent and emergency services and associated emergency inpatient services;
B. Where service users are offered a choice between providers and where a large number of providers are available, for example, elective services where patients have a legal right to choice;
C. Where a new contract can be given to the existing provider to replace an existing contract that is coming to an end, if the existing provider is likely to be able to satisfy the new contract to a sufficient standard and the nature of the service provided is not changing considerably.
Most suitable provider
PSR also brings in the ‘most suitable provider’ process, which allows commissioners to make a judgement as to which provider is most suitable and award the contract based on a consideration of key criteria without running a competitive process.
Competitive process
The competitive process can still be used if commissioners do not want to follow the direct award process A, B or C, or the most suitable provider process.
What is not covered?
The PSR does not cover goods, such as medicines and medical equipment, nor services to the NHS, such as IT, catering, and administration and it does not cover social care or capital projects. All these are still covered under the existing rules on wider public procurement.
What changes are there to transparency?
One thing that competitive tendering did was increase the public’s ability to see what was going on in procurement in the NHS. Contracts, over a certain value, had to be advertised and award notices published in the public domain. Campaigns against privatisation were often triggered by contract notices found on publicly searchable databases.
The new PSR may have swept away much competitive tendering and associated bureaucracy, but may at the same time made it harder for the public to know what is going on in their local area when it comes to changes to providers in their healthcare services.
According to Annex B of the PSR on transparency, prior warning of how the commissioners plan to award a contract is much reduced; only in the ‘most suitable provider’ process and the competitive process will the public know of the commissioners intentions to begin the decision-making process.
If the direct award process A, B or C are used then the public will find out about the new contract only after all decision-making has taken place. With direct award process A and B, this will be when the contract award is published, and with direct award process C when an intention to award is published.
If the direct award process C, the most suitable provider process or the competitive process are used, commissioners must publish in the public domain their decision to award a contract and observe a standstill period (eight days minimum), during which representations can be made and the decision questioned, including to an independent PSR review panel, before the contract can be awarded.
In the case of framework contracts, only if the framework contract is established using a competitive process, will a notice be published. If the framework is set up without a competitive process or an established framework uses direct contract awards to those listed on the framework, then the public will not find out until the award notice has been published.
