NHS Procurement: The Provider Selection Regime – Second and Third Panel Decisions

The Independent Patient Choice and Procurement Panel (“the Panel”) recently handed down its second and third decisions as to compliance by a relevant authority with the Health Care Services (Provider Selection Regime) Regulations 2023 (“the PSR”).

The PSR came into force on 1 January 2024 removing the procurement of health care services from the scope of the Public Contracts Regulations 2015. 

One effect of creating a new regime is that the remedies available to a supplier under the Public Contracts Regulations 2015 are not available in respect of contract award decisions made under the PSR. However, if a provider is dissatisfied with an award decision, it may in some scenarios be able to access a route of appeal by taking its concerns to the Panel. In May 2024, the Panel handed down its first decision which dealt with Direct Award Process B. We now have two fresh decisions, handed down on 6 and 9 September 2024 that examine different procedures available under the Regulations. These are the first decisions relating, respectively, to the Competitive Process and the Most Suitable Provider Process. 

Panel Review 1: Same Day Urgent Care Unit Services at Aintree Hospital Site – Competitive Process

The relevant authority, Liverpool University Hospitals NHS Foundation Trust (“LUHFT”) utilised the Competitive Process to award a contract for Same Day Urgent Care Unit services, for the purpose of providing primary care support to the A&E department. The successful bidder was Primary Care 24 (“PC24”). The losing bidder, ID Medical Group Limited (“ID Medical”), wrote to LUHFT during the standstill period to ask for more information to explain the scoring against the award criteria. Further rounds of correspondence and an internal review by LUHFT followed pursuant to which LUHFT reaffirmed its decision to award the contract to PC24 and ID Medical escalated its complaints to the Panel on 31 July 2024. LUHFT confirmed that it would hold open the standstill period for the duration of the Panel’s review. 

ID Medical’s complaint was summarised by the Panel as comprising four grounds:

1. That LUHFT evaluators unfairly took into account ID Medical’s CQC registration for a different service despite the service in question not requiring the provider to be CQC registered;
2. That LUHFT had acted unfairly in making requests for clarifications of prices and in permitting PC24 to make changes to its pricing submission after the deadline for submission had passed where ID Medical was not granted this opportunity;
3. That the score awarded to PC24 for one of the questions appeared not to comply with the scoring scale published; and
4. That the treatment of bidders’ presentations in the evaluation of bids was unclear and inconsistent.

The Panel upheld grounds 1, 2 and 4 as amounting to a breach of LUHFT’s duties of transparency and fairness enshrined in Regulation 4 of the PSR and concluded these breaches had a material effect on the outcome. The Panel advised LUHFT that, at a minimum, it should start a new competitive process with ID Medical and PC24, ensuring that the information and requirements are clear and accurate.

Lessons for a Competitive Process 

Some of the points considered by the Panel have general relevance that commissioners should consider when running competitive processes under the PSR. Notably:

1. The importance of the procurement principles. 

The Panel’s focus returned repeatedly to considering whether LUHFT had acted in accordance with Regulation 4(1)(d) i.e. “transparently, fairly and proportionately”. These are key touchstones by which a relevant authority’s actions will be assessed by the Panel. 

2. How the transparency obligation manifested.

Experienced users of the Public Contracts Regulations 2015 will note that some of the complaints centred around issues such that crop up time and again in claims under those regulations (which also contain a transparency obligation): whether the evaluation adhered to the published evaluation methodology, whether post-tender clarifications meant that the tender submitted was changed after the deadline had passed, whether the evaluators erred in their scoring decision, and how the commissioners took into account bidder presentations said to be for information only. Lessons from procurements under the Public Contracts Regulations 2015 will continue to be relevant for the PSR including the importance of carrying out processes in accordance with the published tender rules. 

3. Acting fairly may require equal treatment.

LUHFT was found to have acted unfairly in its handling of post-tender price clarifications by not affording ID Medical the same opportunity to clarify and resubmit its pricing proposal that it did PC24. There is no express obligation of equal treatment in the PSR but this decision may point towards a panel conclusion that, typically, it will be contrary to the principle of fairness to afford one supplier favourable treatment over another (certainly without justification or considering the applicability of the principles).

4. The audit trail remains important.

In the tender document LUHFT had stated that bidders would be required to provide a presentation, ‘for information only’ which would not be weighted or scored. However, the Panel concluded that it was apparent from the reasons recorded for the scores that PC24’s presentation was in fact taken into account in evaluation. This was a breach of transparency which was compounded by the Trust’s failure to retain copies of the presentations or to take and retain any notes of the presentations that it could rely on to show precisely what had happened.

Panel Review 2: All Age Continuing Care Service for Staffordshire and Stoke-on-Trent

In this decision the Panel considered, for the first time, the use of the Most Suitable Provider process and the Panel’s report will be very useful reading given that this is an entirely new procedure that does not exist elsewhere in public procurement regulations. In this case, an unsuccessful supplier (“Xyla”) asked the Panel to review the selection of a provider by Staffordshire and Stoke on Trent Integrated Care Board (“SSOT”) for its All Age Continuing Care service (“AACC”). 

The Panel considered three main issues in SSOT’s conduct of the procedure including:

1. Whether the services in question did truly fall (or at least wholly fall) within the scope of the PSR;
2. Whether SSOT’s decision to use the Most Suitable Provider process complied with the PSR; and
3. Whether SSOT acted fairly, transparency and proportionately in its conduct of the process;

Applicability of the PSR

The Panel expressed concern, without reaching a firm conclusion, that the services that were the subject matter of the contract were not entirely health care services but comprised a mixture of health care services and non-health care services, and that there was real potential that the contract was not governed by the PSR. The Panel criticised SSOT for its lack of a robust and documented audit trail to support its conclusions on this point. It noted that it would generally expect that any service falling within the scope of the PSR would need to be supplied by a CQC registered provider, and that while it might not be impossible for services that do not require CQC provider registration to fall within the PSR, the authority would need to provide very clear justification of why the service fell within the regime.

Choice of process

Where Direct Award processes A, B or C are not available and the authority “is of the view, taking into account likely providers and all relevant information available to the relevant authority at the time, that it is likely to be able to identify the most suitable provider” then the Most Suitable Provider process and the Competitive process will be available to it. The choice between those two processes is at the discretion of the relevant authority.

Here, the Panel scrutinised SSOT’s decision-making and found that SSOT did not have sufficient knowledge about likely providers to permit it to use the Most Suitable Provider process at all. SSOT had not carried out pre-market engagement nor did it have any documentary evidence in its audit trail showing its knowledge of the possible providers in the market. SSOT had published a Prior Information Notice alerting the market to its intentions but this had referenced a requirement that the provider be CQC-registered which providers in this market may not be (CQC-registration not being required) so this did not save SSOT. Finally, the Panel commented that in fact it appeared that SSOT had chosen the Most Suitable Provider process simply because it was the only process capable of being completed in time.

Use of the key criteria

In running a Most Suitable Provider process the relevant authority must (1) identify potential providers who may be the most suitable provider, with reference to the key criteria (and the basic selection criteria); and (2) determine which of the potential providers is the most suitable again by taking into account the key criteria (and applying the basic selection criteria).

Here, SSOT asked providers to respond to 29 questions designed to assess how they would deliver the service. The Panel concluded that approach was to essentially run a Competitive process under the badge of the Most Suitable Provider process which lacked fairness, transparency and proportionality and breached the PSR. 

Information requests

On conclusion of the procedure SSOT published an intention to contract award notice. In response Xyla sought feedback to understand why it had not been successful. SSOT refused those requests and, in submission to the Panel, explained that it did not consider that there was any requirement to provide feedback following conclusion of a Most Suitable Provider process. 

The Panel took a different view noting that the PSR does not prohibit the provision of feedback and, in tandem with the overarching transparency obligation, it will generally be appropriate for feedback to be provided when this is requested. The failure to do so breached the transparency obligation.  

Pre-determination

The Panel found, when considering issue 3, that SSOT had used the Most Suitable Provide process simply as a means of confirming its pre-existing preference for the successful supplier. The Panel confirmed that “relevant authorities are required to know about likely providers, based on their provider landscape monitoring, and be able to form a view – based on this knowledge – that they are likely to be able to identify the most suitable provide if they use the MSP process”. This is different to identifying the most suitable provide before the Most Suitable Provider process starts and then using the process to confirm a decision that has already been made.

Finding

The Panel’s advice to SSOT was that it should abandon the current provider selection process 

Lessons for the Most Suitable Provider process

The Panel identified numerous concerns with the process run by SSOT however, some key lessons applicable to all relevant authorities that can be drawn from this decision are:

1. The importance of properly considering the scope of what is to be procured, whether it falls into the PSR or the Public Contracts Regulations 2015 or is mixed such that the mixed procurement rules must be applied.
2. It is important to stress test whether the authority has the internal knowledge of the market to run a Most Suitable Provider process: the Panel appears to have quite high expectations in this regard.
3. Remember that transparency underpins the regime.
4. A linked point: the audit trail remains of fundamental importance – documenting, with reasons, the decisions made at all points in the process is an authority’s primary means of protecting itself from an adverse finding by the Panel.

A note on the Panel review process itself

Finally, it is notable that the Panel review for the first case was made on 31 July 2024 and the Panel decision published on 6 September. For the second the review was made on 2 August and the decision published on 12 September. 

During that short time period both ID Medical and LUHFT met with the Panel, both appear to have made written representations to the Panel and, at least LUHFT were asked to (and did) respond to a Panel requests for further information. 

This is a far quicker review process than is realistically achievable for a claim issued under the Public Contracts Regulations 2015 (which must be issued in the High Court and is governed by the Civil Procedure Rules – which do allow for expedition in certain cases). The Panel explained that it was not at capacity so did not need to apply its prioritisation criteria so it remains to be seen how quickly decisions will be turned around when greater numbers of referrals are being made but suppliers and relevant authorities will be interested to know that the Panel is currently offering very rapid review. 

For more information, please contact Fran Mussellwhite, Kyle Duggan or Connor Williams.