Procurement in a Nutshell: Provider Selection Regime – Independent Panel: First Review
11th July, 2024
This Nutshell will evaluate the Independent Panel's first decision relating to the award of a contract under the PCR.
The Provider Selection Regime (PSR), set out in the Health Care Services (Provider Selection Regime) Regulations 2023, came into force on the 1st January 2024.
The PSR removes the procurement of health care services from the scope of the current Public Contracts Regulations 2015 (the PCR) as well as the Procurement Act 2023, which is to come into effect from the 28th October 2024.
This new regime applies to NHS England, Integrated Care Boards, NHS Trusts, NHS Foundation Trusts, local authorities and combined authorities when they are procuring relevant healthcare services.
The procurement processes under the PSR include:
- Direct Award Process A
- Direct Award Process B
- Direct Award Process C
- Most Suitable Provider Process
- Competitive Process
The facts
The incumbent supplier (“Party A”) provided an online ADHD assessment, diagnostic and management service (“the Service”) to “Party B”.
The contract between Party A and Party B was due to expire on 31 March 2024. Party B told the Panel that they were seeking to review its specifications and commission new arrangements for the Service in 2025/2026. However, due to time constraints and the desire to ensure continuity of service while a review was conducted, Party B decided to follow Direct Award Process C of the PSR with a view to using Direct Award Process B in the future.
Party B conducted its evaluation in accordance with Direct Award Process C and published notice of intention to award the contract to Party A on 26 March 2024.
An alternative provider, Party C, submitted representations to Party B on 28 March 2024. Party B carried out an internal review of its decision and confirmed to Party C on 4 April 2024 its decision to enter into the contract as intended. Party C requested that the Panel review Party B’s decision.
Party C made the following arguments to the Panel (among others):
- the proposed contract award diminishes the scope for patient choice;
- the approach taken “lacks competitiveness within the market, not only in terms of cost but also in ensuring optimal patient care and protection of the public purse”; and
- Party B had attributed its decision to time constraints but effective planning would have allowed sufficient time to engage with the market and facilitate a more thorough procurement process.
The decision
The two main issues in which the Panel’s evaluation was focused were:
- whether the Online ADHD Service is a service where patients have a legal right to choose their provider; and
- if so, whether under the PSR Regulations Party B was free to use Direct Award Process C to award a new contract to Party A.
The Panel determined that patients did have the right to choose the provider of ADHD services. In applying paragraph 6(4) of the Regulations, the Panel therefore concluded that when contracting for services where patients have a legal right to choose their provider, such as the Service, commissioners must use Direct Award Process B. Contracting authorities do not have any discretion to choose an alternative provider selection process as Party B had sought to do in this case.
In light of this, the Panel concluded that any award of the contract under Direct Award Process C would be a breach of the PSR and therefore advised Party B that the only appropriate remedy is for it to abandon the current provider selection process.
What does this mean?
The recent decision by the Panel clearly demonstrates that, under the PSR, if Direct Award Process A or B applies, these must be adopted. For a detailed explanation of the procurement processes under the PSR, please see our Nutshell series.
The report also highlights how the Panel may, and often will, request information from both the provider and relevant authority when reviewing a decision to award a contract, exposing the importance of clear and accurate record keeping for all provider selection decisions.
For further information please contact Melanie Pears or Tim Care in our Public Sector Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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