Virgin Care has lost its bid to hold on to community services in part of Surrey, with the local trust and GP federation chosen as preferred bidder for the Guildford and Waverley area.

The move will see the company, which had provided both children’s and adults’ services across western Surrey from 2012 to 2017, potentially reduced to providing only adult services in one corner of the county, covering Surrey Heath and Farnham.

The western Surrey contract was one of the first major community services contracts to be won by a private company. In 2016, some clinical commissioning groups re-tendered and Virgin Care, in partnership with other organisations including Royal Surrey County Hospital Foundation Trust and the county council, became the preferred provider for services in Guildford and Waverley.

However, mobilisation of this service halted in February when the CCG became concerned about lack of progress. The CCG said that it lacked confidence that the provider could implement the new services specification in an integrated way “with the key partners that had been identified in their bid submission”.

Virgin Care has continued to run the services in the area on an interim basis while the CCG procured a new provider from April 2018. Virgin Care would not comment on the outcome of the new procurement or confirm whether it had bid for the contract again.

Royal Surrey and GP federation Procare have now been chosen as preferred bidders to enter the final negotiations for the contract, which will potentially run for nine years with an annual value of just under £14m. The partners plan to integrate more closely with adult social services, as part of the Surrey devolution plan.

Paula Head, chief executive of the trust, said: “This is an incredibly exciting opportunity for us and our partners to integrate services across our patch to make patients’ lives better. Having led a community trust previously, I know what a wonderful and positive impact these teams have on patients and I look forward to welcoming our new staff in the near future.”

Phil Ridsdill Smith, chief executive of Procare, said: “Procare is delighted to be working in partnership with the Royal Surrey County Hospital to deliver the adult community contract. This is the first time that a community service will be provided in this way in the UK and it represents a huge opportunity to deliver more integrated and efficient patient care to the population that we both serve.”

Virgin Care currently provides adult community services for Surrey Health CCG and Farnham – which is in Surrey but falls under North East Hampshire and Farnham CCG – under a direct award for one year, running on from the 2012-17 contract. An announcement has not yet been made about what the plans are for after April 2018 but it is possible the arrangement could continue for another year.

Adult community services in north west Surrey – also part of the original Virgin Care contract - were awarded to CSH Surrey, which took over in April 2017.

The county-wide contract for children’s services, which Virgin Care previously held in the west of the county, was awarded to Surrey and Borders Partnership FT and two social enterprises – CSH Surrey and First Community Health Care – bidding as Surrey Healthy Children and Families Service. This three year contract has been running since April but earlier this year HSJ revealed Virgin had issued court proceedings against NHS England, Surrey County Council and Surrey’s CCGs, claiming there were “serious flaws” in the procurement process.