NHS procurement - the rules on tendering

Traditionally, health services contracts, classified as 'part B' services in EU directive parlance, have enjoyed a relatively light touch in terms of EU regulation.

However, there is rising awareness in EU case law and in the Commission information notice published in 2006 that contracts for health services must be let in accordance with the EU regime, including the principles of the EU Treaty in general and the principle of non-discrimination in particular.

Significant contracts

Best procurement practice requires that these part B services contracts, if their award is likely to be of 'significance' to the market and the contract is likely to be of interest to providers in other EU member states, must be advertised enough to allow competition. The awarding authority must also ensure a fair and impartial procurement process.

But determining what is 'significant' to the market, what the relevant market is, and which contracts are or are not likely to be of interest to potential providers in the EU is not always easy.

There is little consistency in the methods used to advertise potentially large contracts, with actual practice varying from using the Official Journal of the European Union to placing a tiny advert in the back page of the local press.

Provider mix

What is clear is that the developing NHS market, especially in primary care, is of significant interest to a number of independent, third sector and NHS providers.

GP commissioning groups and companies are playing an increasing role in the provision of services that may have traditionally been the preserve of the NHS acute sector.

Many NHS trusts, particularly foundation trusts, are considering opportunities to play a greater role in the delivery of primary care. At the same time, they want to ensure they have an equal chance to bid for contracts for services they currently provide, as well as non-traditional and innovative services.

Fair and transparent?

However, a number of foundation trusts are voicing concern that some major contracts are being awarded by PCTs to independent providers or GP groups without a sufficiently open and transparent tender process in which foundation trusts can participate.

Acute trusts are increasingly concerned that if they are not properly engaged in the tender process, then important information could be missed and decisions mishandled. For example, they are aware that any staff of the acute trust who are substantially engaged in the provision of the current service could transfer to a new provider or providers under the Transfer of Undertakings (Protection of Employment) Regulations 2006.

Any commissioning PCT must also ensure it complies with its statutory duty to consult over any proposed reconfiguration of services, particularly if the net effect of commissioning decisions could affect the viability of services provided by a local NHS hospital and its ability to retain staff.

For organisations that believe health services contracts may have been awarded without proper regard to the EU Treaty principles, there is still no real effective remedy against the awarding authority. There is, however, the spectre of judicial review if consultation obligations have not been followed.

PCTs should consider whether their processes for deciding whether or not to competitively tender are robust and informed enough, or whether they are potentially exposing them to the risk of a multi-layered challenge.