CCGs will need to acquire various contracting skills. Here, Mills & Reeve highlight how they can handle contracting with confidence.

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This article was part of the Commissioning Legal Adviser channel, in association with Mills & Reeve. The channel is no longer being updated.

CCGs will need to acquire various contracting skills including:

  • Negotiating robust contract terms
  • Ongoing contract management to ensure that outcomes are achieved
  • Drawing up comprehensive service specifications, so that the contract will be fit for purpose and will place the right obligations on the provider

Contract terms

The Department of Health’s current procurement guide for commissioners makes it clear that all commissioners, including PBC clusters and any aspiring CCGs, must use the standard NHS contracts provided by the Department, for all NHS funded services they commission. 

These are lengthy and complex contracts, which contain many mandatory terms. While the mandatory terms cannot be amended, the areas left for local negotiation are crucial to the correct operation of the contract. Negotiations of those sections is therefore critical and the parties will need to consider the tactics that need to be adopted to achieve the best end result. See our separate guide to the standard NHS contracts for further information.

Contract management

Ongoing contract management is essential to get the best out of a contract. Contract management tools include:

  • Key performance indicators (KPIs)
  • Regular reviews
  • Escalation processes
  • Contractual notices
  • Remedial plans

It will be essential for CCGs to employ people with expertise in contract management, or buy in that expertise from commissioning support organisations. There is little point negotiating robust contract terms if no one will enforce them. Many parties assume that to use contract management tools is overly aggressive. However, they often come to regret that approach when problems become very serious or persistent and there is no track record of contract management to justify more severe contractual action. 

Service specification

A clear specification of the services is vital to ensure that both parties know what they are expecting/providing. Managing expectations correctly and anticipating potential pitfalls in areas of performance, such as quality and quantity of services, will increase the likelihood that the contract will be successfully performed.

Unclear specifications in contracts are the cause of many legal disputes. For this reason, it is essential that the specification is clear, correct and complete. Ultimately, it is not going to be possible to show that the provider has failed to perform the contract properly if the obligations placed on the provider are unclear.

Governance issues

What is “governance”?

Governance refers to the system by which organisations (whether established as companies, statutory bodies or otherwise) are directed and controlled.

In adopting appropriate governance structures, it is essential to balance the need to reduce risk via robust structures against the speed and efficiency savings that can be achieved through adopting a streamlined, efficient structure. No CCG will want to have an overly bureaucratic governance structure and so the essential elements of good governance will need to be adopted in a way which best fits the particular organisation.

A fundamental aspect of governance is “comply or explain”. In both the public and private sector, rules are established as parameters within which organisations must operate. Adopting appropriate safeguards will ensure CCG leaders are held to account for their stewardship of the CCG, without unnecessary constraints imposed by reporting and approval requirements.

Why is good governance important?

Effective governance will allow CCGs to achieve their commissioning objectives over a sustained period, while promoting transparency and ensuring financial responsibility. It will also reduce the risk of challenges to their decisions and the way in which they operate.

Organisational structures and decision making processes

Since the drive behind the reorganisation within the NHS is to achieve efficiency savings, streamlining is necessary. This is likely to lead to fewer committees than existed in the previous commissioning bodies. However, a robust structure must still be in place to ensure risks are properly managed.

In considering the appropriate governance structure for your CCG and the decision making processes to adopt, it is important to ensure that your chosen structure will lead to a streamlined organisation with the appropriate arrangements in place to allow effective decision making, within a flexible and accountable framework.

Reporting to stakeholders

Like any other organisation, be it public or private, CCGs exist in order to achieve certain objectives on behalf of stakeholders.

The goal of governance is to create safeguards to enable these objectives to be achieved. Each CCG will be accountable for its activities to its stakeholders, in terms of stewardship of resources, efficiency and effectiveness. CCGs must therefore be managed and controlled appropriately to demonstrate that the control system works at both policy and operational levels.

Factors to address

When considering governance arrangements, factors to be considered include:

  • Leadership
  • Efficiency and effectiveness
  • Accountability
  • Remuneration
  • Relationship with stakeholders 

In the public sector, it is also important to consider:

  • Reliability and predictability
  • Openness and transparency 
  • Integrity
  • Fairness and timeliness

Potential governance models for aspiring CCGs

During this transitional phase, aspiring CCGs need to develop robust governance structures in order to carry out the necessary commissioning functions. At present, the governance arrangements for CCGs have not been specified and so it is open to each CCG to decide the most appropriate form for them to take. This may include a membership agreement between practices specifying a clear delineation of responsibility between individual members, their rights and their duties to the CCG.