How do you comply simultaneously with the Public Contracts Regulations 2015 and the regime enforced by Monitor under the NHS (Procurement, Patient Choice and Competition) (No 2) Regulations 2013?
From 18 April 2016, the procurement of NHS health care services will be regulated by both the Light Regime provisions of the PCR 2015 and the NHS (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 ("the NHS Procurement Regulations"). The objectives of the two regimes are different, with the Light Regime seeking to ensure equal and transparent competition in accordance with EU principles and the NHS Procurement Regulations setting out a threefold objective to secure the needs of people who use the services, improve the quality of the services and improve efficiency in the provision of the services.
The key question for CCGs from April 2016 is how to comply with both regimes simultaneously? We expect to receive guidance from Monitor in the early part of this year which will be welcomed as there are currently some areas of uncertainty which we explore in this Byte.
The Light Regime
Our article of 28 October 2015 set out the key features of the Light Regime which will apply to all NHS health care services falling within the list of services in Schedule 3 of the PCR 2015 with a value of over £589,148 (€750,000) from 18 April 2016. The major change for CCGs is that these contracts will now be required to be OJEU advertised using a standard form notice, either by way of a contract notice or a prior information notice (PIN) as a call for competition.
Beyond that, the emphasis of the Light Regime is flexibility, and the CCS "Guidance on the new light touch regime" is very keen to stress that commissioners should take advantage of the ability to run a procurement flexibly. The Light Regime emphasises that commissioners may take into account criteria such as the specific needs of different categories of service users and the involvement and empowerment of users. All of these things should help commissioners to run Light Regime-compliant procurements with the objectives of the NHS Procurement Regulations in mind and to allow the implementation of different solutions such as AQP lists.
The NHS Procurement Regulations
CCGs are also subject to the separate regime under the NHS Procurement Regulations. The Regulations do not expressly require CCGs to advertise contract opportunities, although the general requirements to act in a transparent and proportionate way and treat providers equally is often interpreted as imposing such an obligation. There is no set-in-stone obligation, however, and the mix of duties a CCG is subject to under the Regulations mean that sometimes tendering may be avoided (for example, where the CCG's duty of economy leads to a conclusion that the cost of tendering would outweigh the benefits).
Complying with both regimes
There is clearly an overlap between the two regimes, both of which require a contract award process to be carried out in a transparent manner that ensures the equal treatment of providers. However, there are also requirements of both regimes that appear to contradict each other or are currently uncertain. For example:
- Under Regulation 5 of the NHS Procurement Regulations a commissioner may award a contract without advertising when it is satisfied that there is only one provider capable of providing the service. This sole supplier exemption has been generously interpreted to date by Monitor. There is a question whether the Light Regime restricts this right given that it requires advertisement of all above threshold contracts for healthcare services. In this respect, there is an exemption from advertisement under the Light Regime where the negotiated procedure without prior publication could have been used in accordance with Regulation 32. That exemption applies where the services can only be provided by one provider for technical reasons or reasons associated with the protection of exclusive rights. Does this equate to the same thing? Is it possible to argue that because the exemption under Regulation 5 of the NHS Procurement Regulations applies, it must be the case that the negotiated procedure without prior publication can be used because technical grounds exist? That seems a tricky position to reconcile with the fact that the technical exemption under the procurement regulations has always been very narrowly interpreted by the Courts. Further guidance on this point is needed.
- The Light Regime requires commissioners to conduct the procurement in conformity with particular information included in the OJEU notice (contract notice or PIN as a call for competition). The information must include conditions for participation, time limits for contacting the contracting authority and the award procedure to be applied. However, the Light Regime also allows commissioners to vary the process as published provided that in doing so, they do not breach the principles of transparency and equal treatment and that they fully document the process and inform bidders. How often will a later change to the process as described in the OJEU notice not be a breach of the principles of transparency and equal treatment? Commissioners will need to make sure that they have clear and robust decision making and audit trails on this issue.
- There is some uncertainty around which parts of the PCR 2015 apply to Light Regime procurements. At a recent public procurement conference we attended an EU official expressed the view that only very limited provisions apply – general principles, the specific Light Regime provisions and record keeping and reporting obligations. However the CCS guidance highlights a number of more detailed procedural obligations which, in the CCS's view, do apply to the conduct of a Light Regime procurement. These include the requirement under Regulation 53 to make available electronically all procurement documents. It will be interesting to see whether Monitor has any further comment to make.
- There has also been some debate about whether standstill obligations apply to Light Regime procurements. Our advice is that, wherever possible, in the interests of transparency and equal treatment, authorities should operate a standstill period prior to awarding a contract. The CCS guidance adopts a similar approach. We explore in more detail how flexible commissioners can be in Commissioning Byte 3.
We will provide further updates for clients once the Monitor guidance has been published.
For more information, please contact:
Emily Heard, Partner
David Owens, Partner
Fran Mussellwhite, Associate