The procurement landscape in the UK is due to change next year. A draft procurement bill (Bill) seeks to consolidate a number of different procurement regulations that originate from EU legislation, including the Public Contracts Regulations 2015 (PCR), into a single revised regime. The aim is to modernise and unify procurement systems and processes into a single piece of legislation and to develop the regime specifically for England, Wales and Northern Ireland.
In addition to the Bill, a proposed Provider Selection Regime, introduced by regulations made under the Health and Care Act 2022, will create a new set of rules for arranging healthcare services in England, and take NHS healthcare services outside the scope of the Bill. That said, some services of relevance to the NHS may still fall under the Bill, in particular, the procurement of goods and medicines.
The aim of both the proposed Bill and the Provider Selection Regime is to give more flexibility to procurers to adapt the procurement process to the services and goods being procured, and to make it easier for the most suitable bidders to win the bid, while at the same time maintaining transparency. Neither the Bill nor the Provider Selection Regime apply in Scotland given that these are devolved matters and the pre-existing regime will remain in place there. Since the existing procurement regime originated in European law, there is currently little, if any, divergence between Scotland and the rest of the UK. The new changes will bring about the potential for divergence.
In this post, we have set out some key takeaways about the new procurement regime under the Bill and the proposed Provider Selection Regime.
The Procurement Bill
The Bill applies to all contracting authorities in England, Wales and Northern Ireland, but it will not apply to Scotland which has its own pre-existing set of regulations. The Bill covers contracts awarded by most central government departments, including their arms-length bodies, and the wider public sector including local and health authorities. However, the Bill includes the power to disapply the Procurement Act, once finalised, to procurement by the NHS, including contracts for the supply or services or goods.
The new procedures under the Bill do not represent a complete overhaul of the current procurement regime; however, there will be new flexibility going forward, as well as a focus on transparency. There are also a number of new or modified terminology. Government guidance on the Bill makes it clear that competition continues to be at the heart of the consolidated procurement regime.
Set out below are a few of the key changes in relation to the Bill:
- Pre-tender notices – The Bill introduces two voluntary notices that could be published, which have similar roles as the prior information notice (PIN) under the PCR:
- the planned procurement notice, which tells the market about an intention to publish a tender notice;
- the preliminary market engagement notice, which tells the market about the intention to carry out market engagement.
- Preliminary market engagement – The Bill sets out a list of activities that would constitute market engagement, including developing the requirements and approach to the procurement, identifying suppliers who can meet supply needs, looking at contract terms and building capacity among suppliers.
- Supplier Selection – The spirit of the selection stage has not changed: requirements can still be set that suppliers have to meet to be awarded a public contract; this is known as “conditions of participation” under the Bill.
- Tender procedures – The Bill gives contracting authorities two choices of competitive tendering procedures:
- a single-stage tendering procedure without a restriction on who can submit tenders (the “open procedure”) – this is a single stage process where you would advertise and award a contract based on a single tender. This therefore preserves the current open procedure under the current legislation;
- such other competitive tendering procedure as the contracting authority considers appropriate (the “competitive flexible procedure”) – this is to ensure that contracting authorities can design a competitive process to suit their contract and the market. This can be a multi-stage procedure where it is possible to limit suppliers at certain stages and allows the option to build in dialogue or negotiation. The Bill is not prescriptive about the procurement procedure and simply sets out some parameters that need to be applied.
The Bill also includes a special regime for certain social, health and education services, which may be procured as ‘Light Touch Contracts’, which allows authorities to design procurement procedures that are more service-appropriate.
- Tender Notice – There will be no real change in relation to the tender notice, known as the contract notice under the PCR. However, the detail of the content to be included will come in future regulations.
- Timelines – The prescriptive timescales found in the PCR are still included in the Bill, however some have been shortened.
- Assessment criteria – As noted in the Green Paper to the Bill, there will be a shift away from the “most economically advantageous tender” (MEAT) to the “most advantageous tender” (MAT), thereby allowing scope for a broader range of criteria being included in the award criteria. The intention is to lessen the focus on price. However, the award criteria must still relate to the subject matter of the contract.
- Contract award notice – An award decision will require an assessment summary, although at present, there is limited information about what this will include.
- Standstill – Publication of the contract award notice continues to trigger the standstill period, and the contract cannot be awarded until the standstill period expires. The mandatory standstill period will be 8 working days, compared to 10 calendar days under the PCR. It will also be possible to specify a longer period in the contract award notice.
- Notices – There are new post-award notices to be aware of: a “contract details notice”, to be published after the award with the details of the contracts; a “procurement termination notice”; a “pipeline notice”; and “notices for modifications”. The requirements to publish notices is the foundation for the new standards of transparency in the new regime.
- Challenge – The Bill details the remedies available to suppliers for breach of the new regime by contracting authorities, where that has resulted in loss or damage. Regarding the time limits for bringing any claims, a supplier must generally commence proceedings within 30 days of becoming aware of the circumstances giving rise to a claim. Any claims made during an applicable standstill period (i.e., between the award decision and the execution of the contract) will result in the procurement being automatically suspended.
Provider Selection Regime
As mentioned above, the Bill provides the power to exclude the procurement of healthcare services for the NHS in England. Further, the Health and Care Act 2022 makes provisions in relation to the arrangement of healthcare services in England. This has been set out in the Provider Selection Regime, which is stated to be aimed at changing the procurement rules when commissioning healthcare services.
Unlike under the Bill, it is intended that the Providers Selection Regime will move away from competition in all circumstances towards a collaboration model. It aims to give decision-makers more flexibility in how to arrange healthcare services, thereby fitting in with the integrated, collaborative approach to healthcare commissioning being established in the Health and Care Act 2022. In particular, the Regime aims to provide a decision-making process that allows for collaboration, and that ensures all decisions about how healthcare is arranged are made transparently and fairly, and in the best interests of patients, taxpayers, and the population.
Set out below are a few of the key changes in relation to the Regime:
- Scope – The Provider Selection Regime will apply to the commissioning of NHS and public health services provided to individuals in England as part of the health service. The ‘health service’ is defined in the National Health Service Act 2006 as “comprehensive health service designed to secure improvement in the physical and mental health of the people of England, and in the prevention, diagnosis and treatment of physical and mental illness”. The intention is that, once it is introduced, the Provider Selection Regime will be followed by key decision-makers when commissioning healthcare.
- Exclusions – The Regime will not apply to certain contracts, including the procurement of goods or medicines. It is important to note that the procurement of some services within the healthcare space may sit in a grey area where there will be a mix of procurement under the new regulations and the Provider Selection Regime. For example, social care services when not procured alongside healthcare services in a single contract are not included, but will be covered by the Bill once finalised. Guidance will be published on mixed procurements that combine health and social care services.
- Principles – The principles underpinning the Providers Selection Regime include quality, innovation, value, integration, collaboration, sustainability, access inequalities, choice, and social value.
- Flexibility – Decision-makers covered by the regime will have three ways to procure healthcare services, namely to:
- continue with an existing service provider, subject to certain conditions;
- choose who they deem is the best qualified provider without any competitive bids as competition is not appropriate (without a procurement process); or
- go out to tender in the usual way.
- Transparency – All three come with stringent transparency requirements, including that the authority should set out how the decision is taken in each case.
- Complaints – There will be a 30-day standstill period following a decision to award a contract to allow providers to make representations to decision-makers, and discuss any concerns or issues, and for decision-making bodies to respond to representations. If a provider has been impacted by a decision and has reasonable grounds to believe the decision-maker has failed or potentially failed to apply the regime correctly, they will be able to make representations to the decision-making body within 10 days of the start of the standstill period. Once a legitimate representation has been received, the decision-making body will have the remainder of the 30-day standstill period to resolve the issue. A decision-maker will either decide not to proceed and revisit the process, or conclude that the regime has been followed correctly and an appropriate, defensible decision has been made.
- Legal Process to Challenge – It is important to note that, unlike with the procurement regime under the Bill, there is no legal process to challenge a decision. Similarly, there is no protection for a bidder in the form of suspension of the contract award process when litigation commences. Therefore, it seems that judicial review will be the only formal redress, which will lead to an increase of judicial review proceedings if the internal complaints/representation process mentioned above is not carried out satisfactorily from a provider’s perspective.
The Bill has recently completed the report stage in the House of Lords, and will now be passed to the House of Commons before the final stages.
The Provider Selection Regime is currently at consultation phase and there is no draft of the regime. It is not expected to be in use in time for the 2023/2024 NHS contracting round.