Goods and services must be procured by the book if healthcare organisations are to avoid costly challenges. Hill Dickinson LLP partner Mark Fitzgibbon explains.

While debate rages about the extent to which the NHS is to be subjected to open market competition, one thing which currently remains a constant is the application of the Public Contracts Regulations 2006.

Historically, what are seen as core NHS services are frontline patient facing services. These are “procured” in their own unique way on the basis that they are classified as “Part B” services. However, the NHS purchases significant amounts of ancillary goods, services and works which clearly do not, nor have they ever, come within the Part B classification.

Procuring Part B services

NHS funded health services need to be commissioned in accordance with the Department of Health publications Procurement Guide for Commissioners of NHS-funded Services and Principles and Rules for Cooperation and Competition. The former provides guidance to commissioners extracted from the relevant applicable parts of the regulations. Rules about specifications and the publication of a contract award notice are the only parts of the regulations which apply to Part B service contract awards. These  must be observed at all times – together with the general EU Treaty principles of transparency, fair treatment, non-discrimination and equal treatment – to ensure a level playing field among providers.

What is meant by transparency? In essence, this requires a high degree of visibility and clarity around the contract that is being sought to be let and where the goalposts are placed for a tenderer to be successful in that process. The contract must be advertised in a manner which is appropriate to the contract itself (taking into account for example the type of services, where they are being provided, value and duration) and then be very clear about what tenderers have to do to be considered.

Recent case law has involved circumstances where, even with Part B service contracts, public bodies have tried to be clever with their scoring matrices and have failed to disclose to tenderers critical factors. Attempts to unnecessarily complicate or conceal elements of a process significantly increase the risk of successful challenges being launched.

Procuring works, Part A services and goods

In respect of all other types of procurements, NHS bodies must always comply with the full requirements of the regulations.

Playing by the rules

Case law has been mounting in sheer volume, complexity and scope since the introduction of the Remedies Directive back in December 2009. This gives providers much greater opportunities to challenge procurement exercises and public bodies a yet greater incentive to ensure compliance at all stages.

Some useful tips that have emerged from current case law and practical experience from both a commissioning and providing perspective to assist are set out below.

For commissioners:

  • Establish from the outset whether a full blown process is required and, if so, which is appropriate to your circumstances. Factor those required timescales into the planning timeline.
  • Try to avoid material changes to the process mid-way through where possible – factor in all of the variable parameters into the pre-OJEU planning stages (for example do not introduce new parties or expand the contract significantly after the OJEU notice has been published).
  • Remember that joint working projects with other public sector bodies might be able to be structured in such a way as to avoid the need for a procurement exercise to be undertaken at all.
  • Do not work on the basis that issuing an OJEU notice is the start of the process.
  • Make the documentation consistent and clear – avoid over complicating.
  • Use readily justifiable evaluation criteria and ensure that criteria and any sub-criteria are very clearly published within the tender documentation. If using model answers, ensure they do not introduce further criteria otherwise failure to disclose such model answers could undermine your compliance with the transparency obligation.
  • If you are using an IT portal submission system, ensure that your server has capacity for the inevitable rush on the last day.
  • Bear in mind the implications of any freedom of information requests – manage documentation in accordance with an agreed protocol to enable requests to be easily and readily dealt with.
  • Remember that complaints about behaviour can be made to the Cooperation and Competition Panel as an alternative to expensive court action under the regulations.
  • Use common sense.

For providers:

  • Follow the rules of the process to the letter; failing to do so could be grounds to exclude your submission.
  • If you believe there is a flaw in the process flag it sooner rather than later – delaying acting will not be tolerated by the courts.
  • Answer questions correctly and carefully and always review before submitting – changes will not be permitted after submission unless for clarification purposes.
  • If an IT portal is being used, ensure your system is compatible well in advance so as to make alternative arrangements if necessary in good time of the closing date. Ensure you save all parts of your response before submitting.

Case study: second time lucky

Aintree University Hospital Foundation Trust jointly with Southport and Ormskirk Hospitals Trust required a managed service for its haematology and biochemistry services over a 10 year period for a contract value of £10m. A previous exercise faltered. Subsequently an accelerated restricted procedure was commenced. Within four months from issue of the OJEU notice, the contract was successfully awarded with only minor snags and delays being encountered.

How did this happen?

Sue Colbeck, head of procurement and supplies at Aintree, who led the procurement put it down to the following factors:

  • Constructive and inclusive internal communication throughout – allowing the procurement team to understand the service requirements and the clinical departments to understand what the procurement team needed;
  • Keeping the process as clear and straightforward as possible;
  • Lessons learnt from previous experience and processes tightened up accordingly;
  • Control retained in the hands of the trusts, not the tenderers, through comprehensive  planning;
  • Responsive communication with tenderers throughout;
  • Utilising a user-friendly e-tendering portal which controlled the volume of input but in a structured and intelligent fashion, making evaluation quicker and easier.

While Ms Colbeck was very happy with the results and the way in which the process unfolded, she admitted that, notwithstanding the fact that it was imperative that this project was implemented very rapidly, the timescale did in fact put a lot of additional pressure on the teams within the trusts, but everyone pulled together well and achieved a creditable outcome.

The future

The stakes are high. While familiarity with the regulations has been steadily increasing, the introduction of the stick that is the Remedies Directive has made public bodies yet more nervous about complying with what amount to a set of rigid and, some might say, overly bureaucratic procedural rules defeating the object of their desired purpose. That said, the EU is undergoing a review of procurement policy and implementation for the first time in a decade.

The hope for this review is that it recognises the issues which public bodies have faced in ensuring compliance while facing the prospect of defending challenges by aggressive suppliers. We have to hope that common sense will prevail and look forward to seeing the outcomes of the review process later this year.

Find out more

Procurement guide for commissioners of NHS-funded services: Principles and rules for cooperation and competition