The Department of Health has dismissed as “anecdote” a report from its own cooperation and competition panel that warned a “significant number” of NHS commissioners were at risk of legal challenge because they were not following procurement rules.

In the report, the panel said common breaches were excluding potential bidders for illegitimate reasons, being unclear about the selection criteria for awarding contracts, and failing to award contracts to the best bidders.

The panel has not investigated a procurement complaint to date and their conclusions seem to be based on anecdote

DH

But in a statement issued to HSJ,a DH spokeswoman dismissed the claim as “anecdotal”, saying: “The panel presents no evidence from casework to suggest poor procurement practice by commissioners. The panel has not investigated a procurement complaint to date and their conclusions seem to be based on anecdote.”

The panel’s report and the DH’s robust reaction follow the panel’s launch of an ongoing investigation into Great Yarmouth and Waveney Primary Care Trust, which has explicitly excluded private and third sector providers from bidding for a £25m a year contract to run its community services.

The PCT argues the exclusion is justified by health secretary Andy Burnham’s announcement last autumn that the NHS was the “preferred provider” for any NHS contracts.

The panel is effectively investigating whether those comments – set out in a letter to the general secretary of the Trade Unions Congress last September – are at odds with the DH’s principles and rules of cooperation and competition, first published in 2007.

The DH is now preparing to revise its competition principles and issue fresh procurement guidance.

A source close to the Great Yarmouth and Waveney dispute told HSJ the DH’s reaction to the panel’s criticism of procurement practice “smacks to me of being an outlet for other tensions behind the scenes”.

The panel was launched as an “interim” advisory body to the DH last year with a view to its establishment as a non-departmental public body from April this year. That timetable is now expected to slip, although staff contracts at the panel have recently been renewed for another 12 months.

The panel’s concern over sloppy and even illegal procurement practice in the NHS came as the European Court of Justice ruled that aggrieved parties to a tender can have much longer to reverse a decision than previously believed.

In a judgement against the NHS Business Services Authority, the court ruled decisions could be challenged in the court up to three months after the aggrieved party discovered they may have a case. Until now, the limit on taking a case to court has been three months from the date of the breach of procurement law.

Adrian Parker, partner at the law firm Hempsons, told HSJ: “Relying on the fact they might not find out [about a breach of procurement law] is not a good strategy any more.”

Typical cases that could now be caught by the law were contract renewals, when the NHS relied on other potential bidders not realising a contract had been renewed with an existing provider until the previous three month deadline had passed.

“Procurement law is supposed to be about getting a balance between fair processes and allowing the public sector to get on with what it needs to do. But the balance is being shifted in favour of the bidders,” Mr Parker said.