Procurement in a Nutshell – Provider Selection Regime
4th April, 2025
This Nutshell will evaluate the Panel’s decision relating to the award of a contract by a relevant authority utilising the Most Suitable Provider process (MSP process).
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 Procurement Act 2023, which came into effect from the 24th February 2025.
The PSR applies to NHS England, Integrated Care Boards, NHS Trusts, NHS Foundation Trusts, local authorities and combined authorities when they are procuring relevant healthcare services.
Background
The Independent Procurement Panel (the Panel) provides advice under the PSR to relevant authorities in circumstances where a provider is aggrieved by an award decision, and the provider believes the PSR Regulations have not been complied with.
The role of the Panel is to provide independent expert advice (as referred to in Regulation 23 of the PSR Regulations) and publish this advice for each review it undertakes.
Relevant authorities should note that, while the advice of the Panel is not legally binding, it is highly persuasive.
The facts
Staffordshire and Stoke on Trent Integrated Care Board (the Board) sought to procure, using the MSP process under Regulation 10, a provider for three continuing care patient services.
The Board received nine submissions following the publication of the Prior Information Notice. Prospective providers were required to answer 31 questions from the basic criteria, which related to the providers suitability to perform the contract being procured, and 29 questions from the key criteria, relating to (among others) quality and innovation.
Following receipt of the submissions, the Board’s Assessment Panel agreed that MPFT was the only provider to satisfy both the basic and key criteria. Xyla (another prospective provider) was not successful as it had failed to adequately respond to a question regarding its CQC registration, under the basic criteria, due to a ‘technical error’.
However, the Board’s Assessment Panel was advised that as Xyla had only failed the basic criteria as a result of a technical error, Xyla’s participation in the procurement should be reinstated and its response to the key criteria should be evaluated.
Following this, the Assessment Panel requested further information from MPFT and considered Xyla’s response to the key criteria. The Assessment Panel found that Xyla “did not meet requirements” in relation to several key criteria, and as a result Xyla was again eliminated from the provider selection process. The Assessment Panel therefore recommended that MPFT be awarded the contract.
In light of the circumstances explained above, the Panel considered the following issues in its review:
- Whether the Board’s decision to use the MSP process complied with the PSR Regulations; and
- Whether the Board’s conduct of the MSP process complied with its obligations under the PSR Regulations to act transparently, fairly and proportionately.
The decision
In relation to point 1, the Panel explains that the MSP process is open to a relevant authority who “taking into account likely providers and all relevant information available” is likely to be able to identify the most suitable provider (Regulation 6). The Panel determined that the Board’s knowledge of likely providers and their capabilities before deciding to use the MSP process was limited. As such, it was held that the Board did not take into account likely providers and all relevant information in its initial decision to use the MSP process nor did it do so at any point thereafter. Rather, the Board’s decision to use the MSP process was driven by a view that it could be carried out more quickly than a competitive process. As a result, the decision to use the MSP process was held to be in breach of the PSR Regulations.
With regards to the second point, the Board were held to have used the MSP process as a means of confirming its pre-existing preference for MPFT as the most suitable provider rather than as an open decision-making process. The Panel’s decision explains that, when utilising the MSP process, relevant authorities should have a general awareness of likely providers and be able to identify the most suitable provider based on their market knowledge. The Panel stresses that knowing about likely providers should be distinguished from identifying the most suitable provider before the process starts, and then using the MSP process to confirm that decision.
Further, the Board’s requirement that potential providers have a CQC registration meant that a significant number were unable to participate in the selection process. The Panel found that the Board, by requiring potential providers to be CQC registered, when no such registration was required, did not act fairly with respect to those potential providers that were excluded from the process.
The Panel also found that because potential providers had no information regarding the relative importance of each of the criteria to which they were to be assessed, the Board did not act fairly nor transparently in its methodology.
Finally, the Panel explained that the PSR regulations do not prohibit the provision of feedback to participants in an MSP process, and that the obligation on relevant authorities to act transparently means that it will generally be appropriate for feedback to be provided where this is requested. As such, the Panel found that the Board did not act transparently when refusing to provide feedback on Xyla’s submission.
The breaches of the PSR Regulations identified by the Panel (as discussed above) were determined to have had a material effect of the procurement process, and so the Panel’s advice was that the Board abandon the current provider selection process.
What does this mean?
In light of the Panel’s decision discussed herein, we would advise that relevant authorities, when conducting procurements under the PSR, retain detailed internal records covering (among others):
- discussions and justifications for the particular type of procurement chosen;
- the methodology to be utilised when assessing prospective providers;
- records of clarifications requested and the responses to them;
- the rationale for selecting a provider with reference to the basic and key criteria;
- notes of the evaluators explaining why a score was given and notes of any consensus or moderated scoring process.
By doing so, relevant authorities will be able to evidence their decision-making process in the event of challenge, and demonstrate transparency which was a key issue in this decision.
For further information please contact Tim Care or Melanie Pears 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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