Health Services Procurement: Recent Decision of the Patient Choice and Procurement Panel – clean sweep for commissioning Council
The Independent Patient Choice and Procurement Panel (the “Panel”), established by NHS England to advise on issues relating to the application of the Health Care Services (Provider Selection Regime) Regulations 2023 (the “PSR”), has recently published a helpful report concerning a commissioner’s successful use of the PSR competitive process.
The Panel acts as an independent review body in certain circumstances where a provider has concerns about a commissioner’s provider selection decision.
Review of a proposed contract award for Drug and Alcohol Services in Bath and North East Somerset
Towards the end of last year, Bath and North East Somerset Council (“Council”) conducted a PSR competitive process leading to its decision to award a contract to Turning Point (Services) Ltd (“TPS”) for the provision of Drug and Alcohol Services, with an indicative value of £28 million. This contract sought to bring several drug and alcohol services in the area under one contract.
Developing Health & Independence Limited (“DHI”), a charitable organisation, was one of the four bidders participating in the competitive process, and was also an incumbent provider of certain of the services (along with local GPs and local pharmacies) by way of a sub-contract with HCRG Care Group.
Following stage 2 of the competitive process, whereby bidders were asked to submit responses to questions relating to Quality, Social Value and Value (which included pricing), TPS was selected as the successful bidder, and DHI’s proposal was ranked fourth out of the four proposals.
Following correspondence between DHI and the Council, DHI took its complaint to the Panel and asked for the Panel’s formal review of the Council’s selection process. The Panel considered seven issues in total and, in respect of each of those issues, the Panel found that the Council had not breached the PSR Regulations.
Of the seven issues, four related to the Council’s scoring and evaluation process. The other three related to stakeholder engagement as part of the Council’s formulation of the key criteria; the Council’s decision to use the Competitive Process, rather than the Direct Award Process C (applicable where an existing provider is performing adequately and considerable changes are not planned); and the Council’s consideration of service and provider sustainability issues in the provider selection process.
We consider issues five (stakeholder engagement in the formulation of key criteria) and seven (consideration of service and provider sustainability issues), to be particularly interesting, as they are different to the more common disputes around the scoring of submissions and documenting of decision making. They also demonstrate the potentially wider angles that providers are willing to pursue when challenging PSR decisions and processes. We therefore explore issues five and seven in further detail below.
Issue five: Stakeholder engagement in formulating key criteria
This issue focussed on the way in which the Council applied the PSR key criteria to determine the contract award criteria in accordance with Step 1 of the competitive process under Regulation 11 of the PSR. In DHI’s view, the Council had not conducted the required engagement. DHI asserted that the “the failure to engage meaningfully with local stakeholders undermines the transparency, fairness, and overall effectiveness of the procurement process, and potentially jeopardises the success of the service for the local community”.
The Council responded that “the development of the key award criteria for the future service was led by two Public Health Development and Commissioning Managers”, and that the key criteria were “further informed by the Health Inequalities Manager” particularly in relation to “improving access, reducing inequalities and facilitating choice”.
The Panel noted that commissioners are expected to develop and maintain their knowledge of relevant providers “including an understanding of their ability to deliver services” as part of their planning work. However, there are no specific stakeholder engagement requirements in the PSR regulations or statutory guidance for commissioners when formulating the key criteria to be used in a competitive process.
Given this, the Panel’s view was that there was no evidence that the Council, in formulating the key criteria, breached any stakeholder engagement requirements. The Panel therefore found that the Council, in formulating the key criteria, did not breach the PSR regulations and, in particular, the obligation to act fairly and transparently.
Issue seven: Consideration of service and provider sustainability issues
DHI raised concerns about the impact of the Council’s provider selection decision on the sustainability of other services and on providers.
DHI stated that the loss of the contract would “have a very significant impact on the whole charity” and could have “far-reaching implications for the wider community and other public services…” including resulting in fractured provision of other services.
Under the PSR, when selecting providers under the competitive process, one of the five key criteria that commissioners must consider concerns “Integration, collaboration and service sustainability, that is the extent to which services can be provided in: (i) an integrated way (including with other health care services, health-related services or social care services); (ii) a collaborative way (including with providers and with persons providing health-related services or social care services); and (iii) a sustainable way (which includes the stability of good quality health care services or service continuity of health care services)”.
The Council’s position was that, in preparing the business case for the new contract, it had identified several inter-dependent, but separately commissioned, drug and alcohol services. Its view was that moving to a single contact for the services would, given their inter-related nature, ensure their sustainability, continuity and the stability of the service provision.
The Panel’s view was that the evidence showed that the Council considered the potential impact on other services as part of its decision-making in relation to the provider selection process for the Drug and Alcohol Service.
The Panel also considered that the impacts identified by DHI were either unlikely to be material (eg. any effects on other providers that use DHI facilities) or were capable of being mitigated by the Council or other commissioners (eg. any effects on other services supplied by DHI).
The impact on providers was specifically considered by the Council in its assessment of risks for the outline business case. The Panel’s view was that the evidence demonstrated that the Council considered the potential impact on providers as part of its decision-making in relation to the provider selection process for the Drug and Alcohol Service.
The Council’s response therefore satisfied the Panel that the Council had considered the potential impact on providers as part of its decision making, and therefore its conduct did not breach the PSR, and in particular the requirements of Regulation 11 which govern the conduct of a competitive process.
Key points
It is noteworthy that, in addition to the more common and expected scoring allegations, DHI raised issues concerning stakeholder engagement and sustainability as part of its challenge, highlighting that providers may raise points that are potentially wider ranging than those that are pursued under the Public Contracts Regulations (or the Procurement Act).
A further key point that the Panel report reinforces is the importance of accurate record keeping. It was clearly of relevance and influence throughout the review that the Council was able to demonstrate, by reference to appropriate records, both the reasons for its decisions and the factors that had been considered in formulating the requirements of the process.
If you have any questions about the topics discussed above, or if you require any specialist procurement advice concerning the application of the PSR, please do get in touch with a member of our expert procurement team.
The full decision of the Panel can be found here.
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