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Which NHS contracts will be competitively tendered?

There has been considerable debate about whether NHS contracts will have to be competitively tendered, forcing GPs and other primary care providers to bid for work through an expensive bid process. This article looks at the strict legal position, although it should be remembered that politics may influence the outcome in this controversial area!

European Competition Law separates public contracts into ‘Part A’ which are subject to the full rigour of competitive tendering and must be open to all providers from across the EU, and Part B which are not. Contracts for the provision of medical services are included in Part B, and so have an exemption from EU competition law.

The 2012 Health and Social Care Act requires the DoH to introduce Regulations which “may (authors underlining) impose requirements relating to the competitive tendering for the provision of services.” The Act also requires NHS England to publish guidance to CCGs on the discharge of their commissioning functions.

The new Procurement Regulations came into force on 1 April 2013. These Regulations enshrine into law the 4 procurement principles of; transparency; proportionality; non-discrimination; and equality of treatment. They also state that a commissioning body may award a new healthcare contract without a tender process contract where they are satisfied that “the services to which the contract relates are capable of being provided only by that provider”. The Regulations further provide that a commissioning body “must not engage in anti-competitive behaviour, unless to do so is in the interests of people who use healthcare services”. Such situations include where it is of benefit for the services to be provided in an integrated way or through cooperation between the various bodies who provide services.

The new Regulations will be enforced by Monitor, and parties who feel that the rules have not been followed will be able to ask Monitor to investigate. Monitor’s guidance on how they will interpret the Regulations gives a very broad definition of anti-competitive behaviour, but provides examples where anti-competitive behaviour (such as not tendering contracts) would be in the interests of patients. These include clinical benefits such as increasing the number of patients treated by a provider where higher patient volumes result in better outcomes, and non-clinical benefits such as longer and/or more convenient opening hours, improved surroundings or better amenities. Any claimed benefits of anti-competitive behaviour would have to be substantiated and attributable to the reduction in competition.

It will take some time for a consensus to emerge over the full interpretation of the rules, but it is already possible to draw several conclusions.

  1. Commissioners will have to decide on a case-by-case basis how to secure high-quality, efficient services that meet the needs of patients
  2. Their decision processes will be based on the 4 principles of transparency; proportionality; non-discrimination; and equality of treatment
  3. The ‘default choice’ for all contracts regardless of size or scope will be that they should be competitively tendered
  4. If commissioners wish to procure a contract without tendering, they will have to justify this decision in terms of clinical and/or non-clinical benefits to patients.

Posted on June 9th 2014 in News and Publications, Newsletters

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