The new NHS tendering process | The NHS PRS
On January 1st, 2024 the government introduced a new statutory process which sets out how public bodies should manage the procurement of healthcare services in England. The new process is called the NHS Provider Selection Regime (PRS) and has been duly adopted by all the bodies responsible for commissioning healthcare services in England, namely:
- NHS England
- Integrated Care Boards (ICBs); ICBs assumed the commissioning responsibilities previously managed by Clinical Commissioning Groups or CCGs, in 2022
- NHS Trusts and NHS Foundation Trusts
- Local Authorities and Combined Authorities; these bodies commission public health services e.g. sexual health, health visiting, school nursing and substance misuse services
The stated intention behind the PSR is to introduce:
- A flexible and proportionate process for selecting healthcare service providers, in the best interests of patients
- Greater integration, collaboration and transparency across healthcare systems
- Opportunities to reduce bureaucracy and cost e.g. avoiding the need to run an unnecessary tendering process
The three Provider Selection Regime processes
The Provider Selection Regime defines three processes which healthcare commissioners can use to procure healthcare services, as follows:
- Direct award process. Commissioners may use the direct award process to re-award a healthcare contract to an existing provider when there is little or no reason either to change provider or to assess potential providers against one another. There are three variants of the direct award process, which may be used in the following circumstances:
- The existing provider is the only entity which “realistically,” could deliver the commissioned healthcare service. This is known as direct award process A.
- There are a variety of healthcare providers in the market from which patients may choose; the commissioner of the service will offer contracts to any provider who can meet all service requirements; the commissioner has established a process to enable potential providers to express an interest in delivering the service in question. Known as direct award process B.
- The existing provider has satisfied the conditions of their existing contract; the conditions will remain similar under the new contract; the commissioner believes the existing provider will continue to meet contract conditions to a sufficient standard if they are re-appointed to deliver the service. Known as direct award process C. Commissioners must consider the provider’s performance against basic selection criteria and mandated key criteria (see below) when following direct award process C.
- Most suitable provider process. Commissioners can follow this process to award a healthcare contract to a provider without following a competitive process, where the commissioners know that the identified provider is the only suitable provider. To use the suitable provider process, commissioners must be confident that they can identify all potential providers who could deliver the service. As with the direct award process C, commissioners must also apply “basic selection criteria” and mandated “key criteria” when selecting the most suitable provider from amongst potential candidates.
- Competitive process. Where none of the above scenarios apply, commissioners must use a competitive process to select a provider. A competitive process must also be used; when “concluding” a framework agreement i.e. when selecting provider(s) who will be party to the agreement when it is first established; and when adding provider(s) to an established framework agreement. A competitive process or a direct award may be used when awarding a contract based on a framework agreement.
The Competitive process
Commissioners are required to consider “basic selection criteria” and 5 “key criteria” when procuring a service using the competitive process (and when using the direct award process C or the most suitable provider process). Basic selection criteria might include e.g. economic and financial standing and technical ability in the relevant fields.
The five key criteria are:
- Quality and innovation
- Value
- Integration, collaboration and service sustainability
- Improving access, reducing health inequalities and facilitating choice
- Social value
Commissioners are free to determine weighting i.e. relative importance across the key criteria. This might involve a % weighting being given to each criterion or commissioners might set a minimum, “pass or fail” value against one or more criterion.
The following NHS England diagram summarises the decision making process commissioners must follow to select the most appropriate selection process.
PRS and competitive healthcare tenders
There is much to like about the Provider Selection Regime, or at least, reason for optimism. For starters, there are definitely situations where it will be beneficial for commissioners to have the power to re-award a contract to a competent, incumbent provider without having to run a competitive tendering process. Where this is appropriate, it will save significant time, money and stress not only for commissioners but also for providers and provider staff, with all the resources otherwise required for tendering available to support patient care and ongoing service improvements.
Re-awarding of contracts to high performing incumbents should also help to support stable relationships across systems and thus to deliver more integrated care. The obvious potential concern is that contracts may be awarded to incumbents whose performance is less than adequate, in the hope that performance will improve and to avoid the (genuine) disruption to the system and patients associated with a tendering process. The PRS guards against this by placing transparency requirements on commissioners to ensure “proper scrutiny and accountability of decisions” and an ability to defend decisions if challenged.
The PRS guidelines also stress the need for commissioners “to develop and maintain sufficiently detailed knowledge of relevant providers” and suggest commissioners “may wish to consider undertaking pre-market engagement to update or maintain their provider landscape knowledge”. Certainly, for the PRS to deliver maximum benefit, it will be essential for commissioners to develop a real depth of insight into the provider landscape and individual provider capabilities. This must include providers with whom commissioners have never previously worked.
A broader and deeper understanding of what is on offer in the market should also help commissioners to ensure that services are innovative and that delivery standards are set at the highest possible level – equivalent to the best performing provider.
Today, it is not uncommon to see specifications which do not reflect innovative practice or KPIs/Quality schedules which mandate levels of activity / performance substantially below that achieved by other providers.
With limited budgets it has never been more important nor more difficult to keep abreast of market developments.
Hopefully, with fewer competitive tenders to manage, commissioners will be able to dedicate appropriate resources and time to researching the market and engaging with providers.
Further reference
There is a comprehensive suite of documentation on the NHS England website including: