This page forms part of a suite of guidance setting out the processes for reviewing and assuring complex change, including transactions between NHS trusts and foundation trusts.

• Scope of this guidance
• Reporting of risk assessment
• Reporting thresholds
• Assurance approach
• Decision making
• Contact

Scope of this guidance

It provides a framework for the review of significant service contracts that expose trusts and the ICSs they are part of to significant incremental risk; that is, risk over and above that faced from any existing arrangements. This risk could be in relation to the implementation of the contract (e.g. operational risk arising from taking on new services), finances (e.g. arising from complex commercial arrangements), reputational or other.

Such contracts could include:

• significant contracts between trusts and non-NHS organisations that have risk/gain share arrangements (noting that our powers would be in relation to the NHS organisations only)
• award of NHS healthcare contracts to trusts that would materially change the scale or scope of their activity
• significant novel or complex contracts to support the delivery of integrated care where the preferred bidder is a trust
• contractual joint ventures (but not joint ventures that are separate legal entities, which are subject to separate guidance.

The above list is not exhaustive, and we may consider initiating an assurance process for other proposed contracts that we deem could create material risk to the NHS

This guidance is not designed to capture standard annual contracting arrangements between commissioners and trusts, nor arrangements that transfer financial risk only between NHS organisations.

Our role in reviewing certain contracts falls under our general responsibilities to ensure foundation trusts can comply with the conditions of their provider licence, and the equivalent of these conditions for NHS trusts.

Reporting and risk assessment

No contracting arrangement will be reportable by the trust to NHS England unless it exceeds the financial limits outlined below.

Reporting thresholds

Trusts and ICSs considering contracting arrangements that exceed the above thresholds and could reasonably create material risk to the NHS should discuss these with their NHS England regional team at the earliest opportunity.

Trusts and ICSs considering contracting arrangements that exceed the above thresholds and could reasonably create material risk to the NHS should discuss these with their NHS England regional team at the earliest opportunity.

NHS England will then take a view on the level of potential risk and whether an assurance process is required. This assessment will be made with reference to applicable elements of the risk assessment framework in Section 2 of Assuring and supporting complex change: Statutory transactions, including mergers and acquisitions. The risk assessment process will also incorporate a decision on whether the transaction is significant or material, as defined in this guidance.

The most recent audited accounts should generally be used to calculate the ratios set out above. However, where there has been a material change in the financial position of the trust since the date of the most recent accounts, we may choose to recalculate the ratios on a pro forma basis using current year or forecast figures.

In any case we may, following discussions with the contracting parties, choose to recalculate the ratios using data that we reasonably consider to be a more appropriate measure of the relative size of the transaction.

For the purposes of determining whether multi-year contracts are reportable, trusts should calculate the whole-life cost of the contract versus turnover.

Transactions completed with the same counterparty during the 12 months before the date of the latest transaction should be aggregated with that transaction for the purposes of the above reporting thresholds. Trusts need to inform us of the latest transaction at an early stage in such cases.

Assurance approach

The scope of any assurance process will depend on the nature of the contract in question. The approach could incorporate some or all of the key lines of enquiry and broader process set out in Assuring and supporting complex change: Statutory transactions, including mergers and acquisitions [link to B1464_ii]. Further key lines of enquiry may need to be explored based on the nature of the proposed arrangement.

Where more than one NHS England assurance process applies to the contract in question, we will avoid duplication of work wherever possible.

Decision making

Following an assurance process, one of our committees will make a decision regarding support for the proposed contracting arrangement. This will be communicated to trusts in a letter outlining a narrative outcome of the review.

It is for the contracting trust to decide whether or not to proceed with the contract, but we may use enforcement powers to stop a contracting process from proceeding if we have significant concerns.

Contact

England.complex-change@nhs.net