Government tendering rules will lead to big shake-up in services, lawyers warn

Secondary legislation, laid before Parliament earlier this month, will make it easier for independent sector providers to get contract decisions overturned if they feel they should have been open to tender.

Lawyers working in the NHS told HSJ the regulations could have wide-reaching implications on the mix of providers of NHS-funded services.

The rules ban “any restrictions on competition that are not necessary”.

They say contracts can only be awarded without tender for “technical reasons, or reasons connected with the protection of exclusive rights” or for “reasons of extreme urgency”.

The regulations say the final exemption can only be used if “strictly necessary” and if it was “brought about by events unforeseeable by, and not attributable to, the relevant body”.

One health service lawyer told HSJ: “I think this is a real move towards privatisation, towards opening up a market.”

The regulations’ apparently far reaching effect appears to contradict government assurances during the passage of the Health Act that commissioners would be able to decide where they wanted competition to apply.

In a speech to the Lords in March last year Earl Howe also said: “Commissioners would not have to create markets against the interests of patients. Clinicians will be free to commission services in the way they consider best.

“We intend to make it clear that commissioners will have a full range of options and that they will be under no legal obligation to create new markets, particularly where competition would not be effective in driving high standards and value for patients.

“As I have already explained, this will be made absolutely clear through secondary legislation and supporting guidance, as a result of the bill.”

However, a government source told HSJ this week it had always been clear that commissioners would have to comply with the procurement rules if they did not want to run a tender, and that any decision to be exempt must meet criteria as have now been set out.

The source said competition in the interest of patients could not be over-ruled simply because commissioners wanted to do so.

Further detail on the application of the regulations is expected to be published in a Choice and Competition Framework, expected at the end of March, shortly before the regulations become law.

However, a Monitor spokesman said the framework was expected after March, in “late-Spring”.

HSJ understands the framework will cover the areas of the NHS where price competition is deemed to be acceptable and where the Any Qualified Provider framework will be used.

The government said in its impact assessment that the rules will not apply to contracts transferred to the new system from the Secretary of State, strategic health authorities or primary care trusts.