Interpretation of EU regulations about advertising when commissioning healthcare is changing

Traditionally, the procurement of health services has not been treated as coming under the full European Union procurement regime as set out in the EU Directive and the Public Contracts Regulations 2006. These regulations impose requirements for advertisement in the Official Journal of the European Unionand a range of defined processes through which the procurement must be run.

However, health services are classified as what are commonly known as 'part B' services and, as such, are exempt from most of the advertisement and procedural requirements under the regulations. There has also been a secondary argument to take NHS healthcare contracting outside the overview of the EU, which is that, at least in the context of contracts between NHS bodies, these were arguably merely internal NHS arrangements and technically not contracts at all.

This latter argument is becoming increasingly difficult to maintain with the advent of binding contracts with foundation trusts. There is also much greater involvement of independent providers in the provision of healthcare.

More seriously, the European Court of Justice and now the European Commission are seeking ways of applying EU principles to contracts that fall outside the directive and the regulations. They are seeking to do this by emphasising that, even though the detailed EU procurement rules may not apply, the EU Treaty principle of non-discrimination imposes an obligation of transparency on contracting authorities. In a case called Telaustria, the court indicated this meant that there was a need for a sufficient degree of advertising to enable the market to be opened up to competition and the impartiality of the process to be used.

The commission has now followed this up with an interpretative communication on contracts not fully subject to the EU directive. This suggests that all public bodies, including health service bodies, will need to consider advertisement, effectively in any case where there may be cross border interest.

This will require not just a fair and unbiased process so that all bidders are treated fairly and equally, but also a degree of advertisement which, although it may not require advertisement in the OJEU, will need at least active advertisement of the opportunity to enable organisations to identify this and for them to have the chance to express an interest to bid. In practice, this is likely to involve at least some degree of open advert and merely contacting prospective bidders will not be enough.

In the healthcare context, this may impose procurement obligations on the development of new services unless it can be properly said that, given the existing contracts, no cross--border interest would be likely. The addition of a new local enhanced service taken up by individual GPs in respect of their own patients might be sufficiently small scale and linked to the existing contract to avoid the need for advert and competition, but a PCT-wide service to be provided by a single provider probably would not.

This is an area where there is still considerable controversy about the European Commission's approach and contracting authorities are recommended to take advice around the level of risk that any particular course of action may involve.

David Owens is a partner with law firm Bevan Brittan.