Procurement in a Nutshell – Provider Selection Regime: Independent Panel Decision CR0008-24
17th April, 2025
This Nutshell will evaluate the Independent Procurement Panel's decision relating to the award of a contract by a relevant authority utilising the competitive 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
Bath and North East Somerset Council (the Council) is part of the local Integrated Care System (ICS), known as BSW Together, which brings together the NHS, local government and local third sector groups.
BSW Integrated Care Board (ICB) had a prime provider contract with HCRG Care Group (HCRG) for the delivery of drug and alcohol services in Bath and North East Somerset. HCRG’s delivery of drug and alcohol services was sub-contracted to DHI. Outside the HCRG contract, the Council directly commissioned Tier 4 drug and alcohol services in which local GPs and pharmacies prescribe, dispense and supervise the consumption of controlled drugs.
As the HCRG contract was due to expire on 31 March 2025, the Council decided to commission all drug and alcohol services under a single contract.
The Council published a Contract Notice inviting providers to participate in Stage 1 of the competitive process by responding to a Standard Selection Questionnaire (SQ). The highest scoring applicants would then be invited to take part in Stage 2 of the competitive process.
The Council received four completed SQs, including a response from DHI. All four bidders who returned the SQs proceeded to Stage 2 of the competitive process. At Stage 2, the bidders were asked to submit responses to three sets of questions, namely Quality, Social Value and Value (which included pricing). Submissions were scored by an evaluation panel, and TPS was selected as the successful bidder.
Following representations from DHI, the Panel considered the following issues (among others) in its review:
- the Council’s scoring of responses and the calculation of weighted scores;
- the level of expertise available on the Council’s evaluation panel; and
- the Council’s decision to use the competitive process to select a provider.
The decision
Evaluation of bids
DHI submitted to the Panel that “there have been errors and issues in the evaluation of bids” and thus had “no confidence that the scores set out in the Award Letter were correct”.
The Council provided the Panel with a description of its evaluation process and a copy of the guidance that was supplied to evaluators. The Council also told the Panel that two briefing sessions were held ahead of the evaluation. The Panel noted that the evaluation guidance addressed how proposals should be scored, and specifically referenced the importance of consistency.
The Panel determined that the Council had put in place processes that were sufficiently robust to ensure that its evaluation delivered a consistent approach to evaluating bidders’ proposals. As a result, the Panel found that the Council did not breach the PSR regulations and, in particular, the obligation to act fairly and transparently.
Evaluation panel expertise
Furthermore, DHI argued that the Council did not select experienced evaluators. HCRG had been responsible for commissioning drug and alcohol services under its provider contract and, as a result, DHI believed that there were gaps in the Council’s knowledge of the particular service being procured.
In response, the Council provided biographies of the evaluation panel members, and explained the rationale for allocating specific questions to certain panel members. The Council further explained to the Panel that, notwithstanding the provider contract with HCRG, it had maintained expertise through its direct commissioning of services outside the HCRG contract.
In light of the information provided, the Panel was not persuaded that the evaluation panel lacked the expertise needed for the Council to: (a) act fairly in reaching its provider selection decision; or (b) secure the needs of people who use its drug and alcohol services. As a result, the Panel found that the Council, in selecting the evaluation panel, did not breach the PSR regulations.
Choice of procurement process
DHI stated that the Council, by choosing to utilise the competitive process as opposed to Direct Award Process C (DAPC), acted “inconsistently with the PSR’s core principles and objectives”.
Direct Award Process C may be used when a relevant authority is of the view that the existing provider is satisfying its existing contract, will likely satisfy the new contract to a sufficient standard, and the proposed contracting arrangements are not changing considerably from the existing contract (Regulation 6(5)).
The Council argued that as DHI was sub-contracted by HCRG, DHI was not the Council’s existing provider, and therefore awarding the new contract to DHI under DAPC was not appropriate. The Panel agreed with this position.
The Panel was also of the view that the new contract for drug and alcohol services was “materially different in character” to the existing contract held by HCRG as so DAPC was not a suitable procurement process for the Council to use.
Ultimately, the Council was found to not be in breach of the PSR in selecting a provider for its Drug and Alcohol Service, and as such, the Panel found no reason to advise the Council against continuing with the proposed contract award as originally intended.
What does this mean?
The Panel’s decision discussed herein is the first to find in favour of a relevant authority.
The Panel’s review reinforces the importance of maintaining robust and transparent evaluation processes, supported by clear guidance and appropriate preparation for evaluators. Relevant authorities must also be able to demonstrate that evaluation panels are equipped with the relevant expertise. The decision also emphasis that the nature of the services being procured should be carefully considered when selecting a procurement route.
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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