To:

• ICB:
  • Board Chairs
  • Chief Executives
  • Directors of Finance
  • Directors of Commercial
  • Directors of Strategy
  • Directors of Commissioning
• Trust and Foundation Trust:
  • Board Chairs
  • Chief Executives
  • Directors of Finance
  • Directors of Commercial
  • Directors of Strategy

cc: Regional Directors

Dear colleagues,

Provider Selection Regime: update on implementation

The Provider Selection Regime (PSR) will be a new set of rules for the procurement of health care services by relevant authorities, which have been co-developed with colleagues across the NHS and local government by NHS England and the Department of Health and Social Care (DHSC). 

We are writing to inform you that DHSC introduced the PSR regulations into Parliament on 19 October 2023. Subject to parliamentary scrutiny and approval, DHSC intends for the PSR regulations to come into force on 1 January 2024. 

NHS England has published final draft statutory guidance to support implementation of the regulations, setting out what relevant authorities must do to comply with them. We are sharing this in advance of the regulations coming into force, which are subject to the scrutiny and approval of Parliament, to support you ahead of expected implementation.

This letter provides an update on the timeline for introducing the new regime, how organisations need to prepare and what support will be available to you over the coming months.

Key points

• The PSR was developed in response to feedback from system leaders on barriers to integration created by current procurement rules. The regime is designed to remove those barriers and help facilitate greater collaboration within the NHS and between the NHS and its partners, as part of wider measures to enable more integrated care and ultimately better care for patients.
• Once in force, the PSR must be followed by relevant authorities (NHS England, integrated care boards (ICBs), NHS trusts and foundation trusts, and local authorities and combined authorities) when procuring healthcare services.
• The PSR applies to relevant healthcare services only. It does not apply to the procurement of goods (including medicines) or non-healthcare services (including health-adjacent and social care services) which will continue to be procured under the Public Contracts Regulations 2015 (PCR).
• The PSR introduces greater flexibility when making decisions about how best to arrange healthcare services, with competitive tendering one of several potential processes that may be followed (see annex). In each of these cases, your organisation will, when the regulations are in force, be required to follow specific processes, and meet defined transparency requirements, set out by the regulations and statutory guidance.

Resources and support that will be available ahead of implementation

To support implementation, NHS England will be issuing a set of resources including more detailed implementation tools such as process maps and template documents. These will be made available on the NHS England PSR website.

We are also running a series of policy webinars, online practitioner workshops and regional events to support preparation over the next three months. Sign up for the online events is now available on NHS England’s PSR website.

Next steps and how to prepare

Subject to parliamentary scrutiny and approval, DHSC intends for the PSR regulations to come into force on 1 January 2024. There will be no changes to how healthcare services are procured until then. Any contracting processes started before 1 January must be concluded under the current procurement rules.

In the meantime, we advise you to access and use the implementation resources to review internal procurement policies and processes and to consider whether any new governance or oversight arrangements may be necessary to support with the proper application of the PSR. NHS England will provide ongoing support to help you develop these arrangements.

The PSR will also apply to local authorities and combined authorities when they are commissioning healthcare services, including public health services covered by the regime. DHSC will be communicating formally to local authorities about the PSR via the Local Government Association and the Department for Levelling Up, Housing and Communities.

Please work with your partners locally to ensure that colleagues are aware and that implications for joint commissioning arrangements are considered.

If you have any questions on the PSR or would like to provide feedback on the support and resources available, please e-mail our dedicated helpdesk on psr.development@nhs.net.

More information is available on the PSR website.

We are particularly grateful to all of you who have taken the time to share your expertise and contribute to this process.

Yours faithfully,

Chris Hopson, Chief Strategy Officer, NHS England

Steve Russell, Chief Delivery Officer, NHS England

Annex: Summary of the PSR provider selection processes

 Relevant authorities can follow three different provider selection processes to award contracts for health care services under the PSR:

1. The direct award processes: These involve awarding contracts to providers when there is limited or no reason to seek to change from the existing provider; or to assess providers against one another, because:

• the existing provider is the only provider that can deliver the health care services (direct award process A)
• patients have a choice of providers and the number of providers is not restricted by the relevant authority (direct award process B)
• the existing provider is satisfying its existing contract, will likely satisfy the new contract to a sufficient standard, and the proposed contracting arrangements are not changing considerably (direct award process C).

2. The most suitable provider process: This involves awarding a contract to providers without running a competitive process, because the relevant authority can identify the most suitable provider. The most suitable provider process must not be used to conclude a framework agreement. This provider selection process may be used when all of the following apply:

• the relevant authority is not required to follow direct award processes A or B
• the relevant authority cannot or does not wish to follow direct award process C
• the relevant 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 (without running a competitive process).

3. The competitive process: This involves running a competitive process to award a contract. The competitive process must be used if the relevant authority wishes to conclude a framework agreement. This provider selection process must be used when all of the following apply:

• the relevant authority is not required to follow direct award processes A or B
• the relevant authority cannot or does not wish to follow direct award process C, and cannot or does not wish to follow the most suitable provider process.

Authorities should consult the final draft statutory guidance for further detail.