Suppliers could challenge PCTs under European rules

The warning is spelled out in the PCT Procurement Guide, published by the Department of Health's commercial directorate last week.

The EU remedies directive will give the courts power to overturn contracts. At present companies believing they have been unfairly overlooked to supply services to the NHS can only attempt to reverse the decision through the courts if the contract has not been signed off.

The directive also stipulates a "standstill period" between a contract being awarded and formally signed so aggrieved parties can consider whether to mount a challenge.

Although most EU procurement rules do not strictly apply to clinical services, the remedies directive will apply to them where it is considered good practice that procurements follow EU rules.

The guidance says these rules should be followed for clinical procurements that are of high value or have a number of potential providers. "The greater the value of the contract, the stronger the case" for competitively tendering, it says.

A DH commercial directorate official said: "We do not expect actions against PCTs. The world class commissioning competencies, coupled with this guide and the PCTs' own standing financial instructions will ensure that PCTs are following best practice. Having said that, there is nothing stopping providers from making challenges."

PCT Network director David Stout said: "There is a lot of discretion for PCTs doing procurements but they need to be clear they have been transparent and their decisions have been documented so they show why and how they have made their decisions, because legal challenge is normally about process."

He said the guidance - which the network was involved in drafting - would form the basis of assessments by the co-operation and competition panel, which the DH is setting up to assess disputes within the NHS marketplace.

Mr Stout said PCTs needed to develop sophisticated governance procedures to deal with concerns over conflicts of interest, which are likely to arise from practice based commissioning when GPs wish to extend the services they offer, and with them their potential income.