Executive summary

The NHS Long Term Plan set out the need to transform health and care services to meet increasing demand, deliver better care and outcomes and ensure the health and care system is financially sustainable.

To meet these goals, as well as recover service delivery following the COVID-19 pandemic, the health and care landscape in England is changing. NHS bodies, local authorities and their partner organisations are increasingly working together to plan and deliver more integrated care and improve health outcomes for local people and communities.

The Health and Care Act 2022 (the 2022 Act) amended the National Health Service Act 2006 (the 2006 Act) to put in place legislative changes that support this, including the creation of integrated care systems. The legislation sets an expectation that all those involved in planning, purchasing, and delivering health and care services work together to agree and address shared objectives, and makes it easier for them to do so.

A key component of the changes introduced by the 2022 Act – and strongly supported by stakeholders across the NHS and local government – is the Provider Selection Regime (the PSR, or the regime), which is set out in the Health Care Services (Provider Selection Regime) Regulations 2023 (the Regulations), to replace the previous procurement rules for NHS and local authority funded health care services.

The PSR replaced the National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 (the PPCCR) and, alongside its introduction, removed the procurement of health care services, when procured by relevant authorities under the PSR, from the scope of the Public Contracts Regulations 2015 (the PCR). The PCR and the PPCCR had set the expectation that competitive tendering is used to award contracts for health care services. The PSR has been designed to give the relevant authorities to which it applies more flexibility in selecting providers for health care services.

Under the regime, competitive tendering is one tool for organisations to use when it is of benefit, alongside other routes that may be more proportionate, and which better enable the development of stable partnerships and the delivery of integrated care. The regime still requires relevant authorities to consider value for money as an important criterion, and to be transparent, fair, and proportionate in their decision-making. 

The regime is established under section 12ZB of the 2006 Act (as amended) and is set out in the Regulations. This statutory guidance sits alongside the Regulations to support organisations to understand and interpret the PSR.

Why introduce the PSR for health care services?

In keeping with the intent of the 2022 Act, the PSR has been designed to introduce:

• a flexible and proportionate process for selecting providers of health care services (so that all decisions can be made with a view to securing the needs of the people who use the services, improving the quality of the services, and improving the efficiency in the provision of the services)
• the capability for greater integration and collaboration across the system, while ensuring that all decisions about how health care is arranged are made transparently
• opportunities to reduce bureaucracy and cost associated with the current rules.

NHS England has iteratively co-created the PSR proposals with integrated care boards (ICBs) (and their predecessor organisations), NHS trusts and foundation trusts, commissioning support units, local authorities, government departments and key membership bodies, drawing on the expertise of commissioning and procurement professionals. In addition, NHS England and the Department of Health and Social Care have consulted widely on the policy, commanding strong support across the NHS and local government.

How does the PSR work?

This statutory guidance sets out how the PSR should be adopted by the relevant authorities to which it applies – these are: ICBs, NHS England, local authorities, combined authorities, NHS trusts and foundation trusts. A relevant authority must have regard to this guidance.

The PSR applies to the arrangement of health care and public health services arranged by relevant authorities and irrespective of who the provider is (i.e., whether the service is provided by NHS providers, other public sector bodies, local authorities, or providers within the voluntary, community, social enterprise (VCSE) and independent sectors).

The PSR does not apply to goods and non-healthcare services (such as medicines, medical equipment, cleaning, catering, business consultancy services and social care), unless arranged as part of mixed procurement. What constitutes mixed procurement is set out in the Regulations and is explained further in this guidance.

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

1. direct award processes (direct award process A, direct award process B and direct award process C)
2. most suitable provider process
3. competitive process.

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).

There are three potential direct award processes (A, B, C). Further detail is outlined below.

Direct award process A must be used when all of the following apply:

• there is an existing provider of the health care services to which the proposed contracting arrangements relate
• the relevant authority is satisfied that the health care services to which the proposed contracting arrangements relate can only be provided by the existing provider (or group of providers) due to the nature of the health care services.

Direct award process A must not be used to conclude a framework agreement.

Direct award process B must be used when all of the following apply:

• the proposed contracting arrangements relate to health care services where patients are offered a choice of provider
• the number of providers is not restricted by the relevant authority
• the relevant authority will offer contracts to all providers to whom an award can be made because they meet all requirements in relation to the provision of the health care services to patients
• the relevant authority has arrangements in place to enable providers to express an interest in providing the health care services.

Where relevant authorities are required to offer choice to patients under the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012 (as amended), they cannot restrict the number of providers and therefore direct award process B must be followed.

Direct award process B must not be used to conclude a framework agreement.

Direct award process C may be used when all of the following apply:

• the relevant authority is not required to follow direct award processes A or B
• the term of an existing contract is due to expire, and the relevant authority proposes a new contract to replace the existing contract at the end of its term
• the proposed contracting arrangements are not changing considerably
• the relevant authority is of the view that the existing provider (or group of providers) is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard.

Direct award process C must not be used to conclude a framework agreement.

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.

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).

The most suitable provider process must not be used to conclude a framework agreement.

The competitive process

This involves running a competitive process to award a contract. 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.

The competitive process must be used if the relevant authority wishes to conclude a framework agreement.

Key criteria

Relevant authorities must consider five key criteria when applying direct award process C, the most suitable provider process or the competitive process. These are:

• quality and innovation
• value
• integration, collaboration and service sustainability
• improving access, reducing health inequalities and facilitating choice
• social value.

How does the PSR support fair and transparent decision-making?

The flexibility in decision-making processes given to relevant authorities under the PSR is underpinned by strong transparency requirements. These requirements, which enable proper scrutiny of, and ensure accountability for, decisions, include:

• In all circumstances, relevant authorities are required to keep records of their decisions and publish notices confirming the outcome of their decision-making.
• When following the most suitable provider process or the competitive process, relevant authorities must make their intentions to use these processes clear in advance.
• When following direct award process C, the most suitable provider process, or the competitive process, the relevant authority must:
  • maintain a record of decisions on the relative importance of each of the key criteria, and how the assessment of providers against the key criteria was made
  • observe a standstill period during which representations can be made, and respond to any representations received before confirming their decision and awarding a contract to the selected provider.
• When following direct award process C, the most suitable provider process, or the competitive process, provider selection decisions may be reviewed during the standstill period – including the Independent Patient Choice and Procurement Panel.

How do organisations use the PSR?

This statutory guidance provides detail on how organisations are expected to adopt the PSR to make arrangements for the delivery of health care services, so that they comply with the Regulations. In addition, NHS England has developed implementation products that organisations may use to help them apply the PSR.

The PSR places an emphasis on relevant authorities behaving in a transparent, fair, and proportionate way when making their arrangements with providers (across any of the NHS, public, independent, and voluntary sectors). Adopting these behaviours will enable the successful application of the PSR, and in turn deliver the intent of the 2022 Act to integrate service delivery through increased collaboration in the NHS and with local government.  

Introduction

Based on recommendations by NHS England, and in keeping with the NHS Long Term Plan ambition for the NHS to work more collaboratively to make better decisions for patients, the Health and Care Act 2022 (the 2022 Act) amended the National Health Service Act 2006 (the 2006 Act) to put in place legislative changes focused on integrating care.

As part of these legislative changes, under section 12ZB of the 2006 Act, the Health Care Services (Provider Selection Regime) Regulations 2023 (the Regulations) introduces a new regime for arranging health care services for the NHS and local authorities – the Provider Selection Regime (the PSR or the regime).

The Regulations replace the National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 (the PPCCR) and, alongside their introduction, remove procurement of health care services, when procured by relevant authorities under the PSR, from the scope of the Public Contracts Regulations 2015 (the PCR). Engagement with the health and care system identified that the PCR and PPCCR could at times create barriers to integrating care, as their focus on competition made development of stable collaborations and new models of care harder, and at times resulted in complex procurement processes.

NHS England has co-developed the regime iteratively by drawing on the expertise of commissioning and procurement professionals working in NHS organisations and across local authorities. NHS England and the Department of Health and Social Care (DHSC) have also consulted on the PSR (NHS England undertook consultations in 2019 and 2021, and the DHSC in 2022). NHS England’s public consultation in 2019 received more than 180,000 unique responses supporting the proposals. Subsequent engagement on the detail continued to receive strong support, with over 70% of respondents agreeing or strongly agreeing with the proposals in 2021. Respondents welcomed the move away from competition and the greater focus on integration and collaboration and acknowledged the benefits of the proposed regime in reducing unnecessary costs and bureaucracy.

Under the new regime, relevant authorities are expected to:

• act with a view to securing the needs of the people who use the services, improving the quality of the services, and improving the efficiency of in the provision of the services
• ensure decisions about which organisations provide health care services are robust and defensible, with conflicts of interest appropriately managed
• adopt a transparent, fair, and proportionate process when following the PSR.

The regime makes it possible to continue with existing arrangements for service provision where those arrangements are working well and there is no value for people who use the service in seeking an alternative provider. Where there is a need to consider changing arrangements for service provision, it provides a fair, transparent, and proportionate process for decision-making, which includes the option of using competitive tendering.

This guidance is published under section 12ZB of the 2006 Act, which requires NHS England to publish guidance about compliance with the requirements imposed by the Regulations.

This guidance sets out how the PSR must be followed by the relevant authorities to which it applies – integrated care boards (ICBs), NHS England, local authorities, combined authorities, NHS trusts and foundation trusts. It also details the scope of the PSR and how relevant authorities must apply it while considering key criteria and transparency requirements. The guidance also outlines how relevant authorities are expected to manage conflicts of interest.

Relevant authorities must apply the Regulations and must have regard to this guidance and are expected to read it alongside its annexes, which give further detail on the PSR and the transitional arrangements in place now that the PSR is in force.

NHS England has also developed a toolkit to accompany this guidance, which organisations may use in applying the regime to arrange the provision of health care services.

When exercising functions to comply with the PSR, relevant authorities must continue to comply with other legal obligations where applicable, including but not limited to the following:

• 2006 Act
• Local Government and Public Involvement in Health Act 2007
• Equality Act 2010
• Modern Slavery Act 2015
• Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012
• Subsidy Control Act 2022
• Transfer of Undertakings (Protection of Employment) Regulations 2006.

This guidance does not specify how to comply with these other legal obligations. A reference to legislation or a legislative provision is a reference to it as amended, extended or re-enacted from time to time.

Relevant authorities are advised to also be aware of other requirements and duties not set out in legislation. For example, NHS England, ICBs, NHS trusts and NHS foundation trusts are expected to adhere to NHS England’s net zero emissions requirements, the application of net zero and NHS social value, and Carbon Reduction Plan requirements in the procurement of NHS goods and services (this list is not exhaustive).

Scope of the PSR

Which organisations does this guidance apply to?

This guidance applies to the following relevant authorities, which, under section 12ZB of the 2006 Act, are required to comply with the Regulations:

• NHS England
• Integrated care boards (ICBs)
• NHS trusts and foundation trusts
• Local authorities or combined authorities

When do these rules apply?

The Regulations specify that these rules apply specifically when relevant authorities procure health care services for the purposes of the health service in England (subject to provisions on mixed procurements). For the purposes of this guidance ‘health care services’ means ‘relevant health care services’ in scope of the Regulations, and the ‘arranging of health care services’ refers to when a relevant authority procures relevant health care services under the PSR.   

The ‘health service’ is defined in section 275(1) of the 2006 Act as the health service, continued under section 1(1) of the 2006 Act. Section 1(1) refers to:

“Comprehensive health service designed to secure improvement in the physical and mental health of the people of England, and in the prevention, diagnosis and treatment of physical and mental illness.”

This definition encompasses NHS health care services and the comprehensive health service that is provided in the delivery of the public health functions of the Secretary of State for Health and Social Care or local authorities under the 2006 Act.

Additionally, for the purposes of this regime, ‘health care services’ has the meaning as given in section 150(1) of the Health and Social Care Act 2012, which defines health care as:

“Health care” means all forms of “health care provided for individuals, whether relating to physical or mental health”, with a reference [in the Regulations] to “health care services” being read accordingly

As such, the health care services subject to this regime only includes those services that provide health care (whether treatment, diagnosis or prevention of physical or mental health conditions) to individuals (i.e., patients or service users) or groups of individuals (e.g., where treatment is delivered to a group such as in the forms of group therapy).

The PSR however only covers “relevant” health care services, defined by the CPV codes set out in Schedule 1 to the Regulations (listed in Annex A).

In summary, a service is in scope when a relevant authority is commissioning or subcontracting a service that:

• is provided as part of the health service, whether NHS or public health
• consists of the provision of health care to individuals or groups of individuals
• falls within one or more of the specified CPV codes.

In-scope health care services include services provided by NHS providers, other public bodies, local authorities, and providers within the voluntary, community, and social enterprise (VCSE) and independent sectors. In broad terms, these are services arranged by the NHS such as hospital, community, mental health, primary health care, palliative care, ambulance, and patient transport services for which the provider requires Care Quality Commission (CQC) registration, as well as services arranged by local authorities focused on substance use, sexual and reproductive health, and health visits.

This definition purposefully excludes ‘non-health care’ or ‘health-adjacent’ services from being arranged under the regime. This means, for example, that business consultancy, catering, administrative services, patient transport services that do not require CQC registration, or other services that may support health care infrastructure, but do not provide health care directly to people, must not be arranged under the regime (other than when legitimately part of a mixed procurement.

Health care services in scope of the regime must fall within one or more of the common procurement vocabulary (CPV) codes, which are set out in Schedule 1 of the Regulations. Annex A lists the available CPV codes that correspond to the services covered by this regime and procurement practitioners must use these to support decisions around scope. Relevant authorities must use the most relevant CPV code(s) for the health care service they are procuring. Where a more detailed code is not available, relevant authorities are expected to use the overarching parent code for ‘health services’.

Which organisations must not use the regime?

Only organisations defined as relevant authorities in section 12ZB(7) of the 2006 Act can use this regime. As such, the Secretary of State for Health and Social Care or executive agencies of DHSC, such as the UK Health Security Agency (UKHSA), must not use it to arrange health care services directly. Other ministerial departments must not use it to arrange health care services directly.

It is possible that these organisations (i.e., DHSC or UKHSA) may commission health care services from relevant authorities (i.e., NHS England, ICBs, local authorities, NHS trusts or NHS foundation trusts). In such cases, if that relevant authority is then further subcontracting these in-scope services, that relevant authority must follow the PSR when sub-contracting.

What must not be arranged under the regime?

Goods and services that are not health care services in scope of the regime must be arranged under the rules governing wider public procurement unless they fall within the definition of a mixed procurement set out in the regime.

Examples of procurements not in scope of this regime are:

• goods (e.g., medicines, medical equipment)
• social care services
• essential and advanced pharmaceutical services arranged under the terms of the Community Pharmacy Contract Framework
• non-health care services or health-adjacent services (e.g., capital works, business consultancy, catering, hospital administrative services, hospital bedding services or public health marketing campaigns) that do not provide health care to an individual.

Sector-specific considerations

Primary medical, dental, pharmaceutical and ophthalmic services

Most primary care services are in scope of the regime, including primary medical, primary dental (community dental services commissioned under s3B(1)(a) of the 2006 Act are also included in the scope of the PSR, although not classified as primary care services as defined in the 2006 Act) and eye care services. Community pharmaceutical services provided by arrangements made under the National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 are not in scope of the PSR. The way different forms of primary care may be dealt with under the regime will depend on the situation and contracts/agreements involved.

Core primary care services are often commissioned on the basis of continuous contracts that run until terminated and do not need to be routinely rearranged by relevant authorities. When a relevant authority is arranging primary care services, it must consider which provider selection process is appropriate (see making decisions under the PSR). Further detail on how the PSR applies to primary care can be found in Annex C.

Mixed procurement

Contracts to deliver health care services may contain multiple elements, some of which are health care services clearly within the scope of the PSR, and some of which, if procured alone, would be within the scope of the wider public procurement regulations (see the PCR).

The PSR must not be used for the procurement of goods or non-health care services alone.

When a contract comprises a mixture of in-scope health care services and out-of-scope services or goods, relevant authorities may only use the PSR to arrange those services when both of the below requirements are satisfied:

• The main subject-matter of the contract is in-scope health care services
• The relevant authority is of the view that the other goods or services could not reasonably be supplied under a separate contract.

The main subject-matter of the contract is determined by the component that is higher:

• the estimated lifetime value of the health care services

or

• the estimated lifetime value of the other goods or services.

A relevant authority may only determine that other goods or services could not reasonably be supplied under a separate contract where the relevant authority is of the view that procuring the health care services and the other goods or services separately would, or would be likely to, have a material adverse impact on the relevant authority’s ability to act in accordance with the procurement principles.

Relevant authorities must keep an internal record of the rationale for their decision, as this would be a reason for the decision made (see transparency).

Where the above tests are met, then the regime applies, and a mixed procurement can be undertaken using the PSR. Where these tests are not met, then this regime does not apply and the procurement must be undertaken as per the rules on wider public procurement (see the PCR).

A notable area of the use of mixed procurement may be the arrangement of health care and social care services together in a single contract. This may be done under the regime when the highest estimated value of the contract is attributable to the health care services, and when procuring the health care services and social care services separately would have a material adverse impact on the relevant authority’s ability to follow the procurement principles, e.g., to improve the quality or the efficiency (which may include value) of the procured services.

Other examples of services that can be arranged under the PSR, but that might require some extent of mixed procurement of health care and non-health care services to achieve their core objectives, include but are not limited to:

• health care and social care services under a section 75 partnership arrangement
• patient transport, which includes health care services (for which the provider requires CQC registration) and non-health care services (where no CQC registration is required)
• packages arranged under the Better Care Fund
• discharge to assess services
• mental health aftercare services, such as support services arranged under section 117 of the Mental Health Act 1983
• prison services that include health care services
• asylum seeker services that include health care services
• veteran services that include health care services.

Applying the regime

General notes

The specific processes to be followed when selecting providers are detailed in the Making decisions under the PSR section. When following any of the PSR processes, relevant authorities must act transparently, fairly, and proportionately.

Relevant authorities are expected to also consider issues relating to governance, planning, and provider landscape when applying the regime.

The Regulations allow the award of a contract to more than one provider, either jointly or otherwise.

Procurement principles

Relevant authorities are expected to ensure that when following this regime, they make decisions in the best interests of people who use the service. To do this, they must act with a view to all of the following:

• securing the needs of the people who use the services
• improving the quality of the services
• improving efficiency in the provision of the services.

Relevant authorities must also act transparently, fairly, and proportionately when procuring health care services.

Relevant authorities may consider the value of providing services in an integrated way, including with other health care services, health-related services, or social care services, when acting in accordance with the procurement principles.

Governance

Relevant authorities are expected to establish how best to follow this regime within their wider structural and governance arrangements. This regime does not require relevant authorities to structure their decision-making arrangements in any specific way or require provider selection decisions to be taken by particular committees or at a particular level within an organisation or system. Relevant authorities are expected to ensure that their internal governance supports the effective application of this regime.

Planning

To apply this regime effectively, relevant authorities are expected to have a clear understanding of the services they want to arrange and the outcomes they intend the services to deliver.

These are prerequisites to any decision about selecting a provider. We expect these intentions to be clearly established in good time via the routine planning activity that takes place across a system. Relevant authorities are expected to reflect these intentions in their commercial pipeline, and decisions taken under this regime are also expected to serve and reflect these intentions.

The regime also sets out how to deal with unplanned urgent situations (see urgent award or contract modifications).

Provider landscape

Relevant authorities are expected to develop and maintain sufficiently detailed knowledge of relevant providers, including an understanding of their ability to deliver services to the relevant (local/regional/national) population, varying actual/potential approaches to delivering services, and capabilities, limitations, and connections with other parts of the system. Relevant authorities may wish to consider undertaking pre-market engagement to update or maintain their provider landscape knowledge.

We expect this knowledge to go beyond knowledge of existing providers and to be a general feature of planning and engagement work, developed as part of the commissioning or subcontracting process rather than only at the point of contracting. Without this understanding, relevant authorities may not have enough evidence to confirm the existing provider is performing to the best quality and value, miss opportunities to improve services and identify valuable innovations, and ultimately lead providers to make representations (see standstill period).

We expect relevant authorities not to treat providers from VCSE and independent sectors differently from NHS trusts and foundation trusts or local authorities solely based on that status.

Taking a proportionate approach

The regime applies to the arranging of all health care services; there is no minimum threshold for application of the regime. Therefore, when applying this regime, relevant authorities are expected to take a proportionate approach. They are expected to ensure that their approach to implementing this regime does not create disproportionate burden relative to the benefits that will be achieved.

It is also important that decisions are defensible and made following relevant considerations.

Due diligence, basic selection criteria and exclusions

When applying this regime, relevant authorities are expected to undertake reasonable and proportionate due diligence on providers. Relevant authorities are expected to consider whether the organisation they enter into a contract with has the legal and financial capacities and the technical and professional abilities to deliver the contract.

• For direct award process C, the most suitable provider process, and the competitive process, and when establishing a framework agreement, relevant authorities must assess if providers are considered suitable to provide a service by applying the basic selection criteria as outlined in Schedule 16. All basic selection criteria requirements must be related and proportionate to the subject-matter of the contract or framework agreement.
• Relevant authorities are not required to apply the basic selection criteria when following direct award processes A or B, or when awarding a contract based on a framework agreement.
• Relevant authorities must not award a contract to a provider, and may exclude a provider from any of the PSR processes, if the provider meets the exclusion criteria detailed in Regulation 20. A provider may offer evidence that it has taken measures to demonstrate its reliability despite meeting a criterion for exclusion; if the relevant authority considers these measures to be sufficient, they must not exclude the provider. If the relevant authority does not consider the measures to be sufficient, they must respond to the provider with a statement of the reasons for this decision.

The basic selection criteria may relate to:

• The provider’s suitability to pursue a particular activity. Where the provider is required to possess a particular authorisation or be a member of a particular organisation in order to be able to perform the required services, the relevant authority may require a provider to prove that they hold such authorisation or membership.
• The provider’s economic and financial standing. The relevant authority may impose requirements ensuring that the provider possesses the necessary economic and financial capacity to perform the contract.
• The provider’s technical and professional ability. The relevant authority may impose requirements ensuring that a provider possesses the necessary human and technical resources and experience to perform the contract to an appropriate quality standard.

Making decisions under the PSR

This regime must be applied whenever relevant authorities are making decisions about awarding contracts for health care services.

The first step for relevant authorities applying this regime is to identify which of the following provider selection processes are applicable.

Direct award process A must be used when all of the following apply:

• there is an existing provider of the health care services to which the proposed contracting arrangements relate
• the relevant authority is satisfied that the health care services to which the proposed contracting arrangements relate are capable of being provided only by the existing provider (or group of providers) due to the nature of the health care services.

Direct award process A must not be used to conclude a framework agreement.

Direct award process B must be used when all of the following apply:

• the proposed contracting arrangements relate to health care services in respect of which a patient is offered a choice of provider
• the number of providers is not restricted by the relevant authority
• the relevant authority will offer contracts to all providers to whom an award can be made because they meet all requirements in relation to the provision of the health care services to patients
• the relevant authority has arrangements in place to enable providers to express an interest in providing the health care services.

Where relevant authorities are required to offer choice to patients under regulation 39 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012, they cannot restrict the number of providers and therefore direct award process B must be followed.

Direct award process B must not be used to conclude a framework agreement.

Direct award process C may be used when all of the following apply:

• the relevant authority is not required to follow direct award processes A or B
• the term of an existing contract is due to expire and the relevant authority proposes a new contract to replace that existing contract at the end of its term
• the proposed contracting arrangements are not changing considerably
• the relevant authority is of the view that the existing provider (or group of providers) is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard.

Direct award process C must not be used to conclude a framework agreement.

The most suitable provider 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).

The most suitable provider process must not be used to conclude a framework agreement.

The competitive 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.

The competitive process must be used if the relevant authority wishes to conclude a framework agreement.

Once the relevant authority has identified which of these circumstances applies and has identified the appropriate provider selection process to follow, it will then need to follow that provider selection process as set out in detail in the sections below.

Relevant authorities are expected to identify which provider selection process is applicable sufficiently in advance of a contract coming to an end. The fact that a particular decision-making approach was used to select a provider in the past does not mean the same approach must be used for that service in future.

It is permitted to make certain modifications during the term of a contract to allow for changes to services or circumstances. The section on contract modifications sets out the conditions and transparency requirements for these modifications.

In limited circumstances relevant authorities may need to act rapidly, for example, to address immediate risks to patient or public safety, within which it would be impractical to follow the steps required under this regime. The section on urgent awards or contract modifications sets out these circumstances and how relevant authorities must act if they arise.

Direct award process A

The type of service means there is no realistic alternative to the current provider. This process must not be used to award contracts when establishing a new service.

Direct award process A must be used to award contracts to the existing provider (or group of providers) when the nature of the service means there is no realistic alternative to the existing provider (or group of providers). Even when there are alternative providers in the market, as long as these are not considered to be realistic alternatives for the relevant authority’s specific requirements, direct award process A must be used to award a contract.

Such services may include, but are not limited to:

• Type 1 and 2 urgent and emergency services and associated emergency inpatient services
• 999 emergency ambulance services
• NHS urgent mental health crisis services
• services established as a commissioner requested services (CRS)*
• services provided by NHS trusts designated as ‘essential services’ in their NHS Standard Contract
• a service that is interdependent with, and cannot realistically be provided separately from, another service which only that provider can realistically provide (e.g., because of a need for cross-specialty or cross-service working).

*A service is established as a commissioner requested services (CRS) by following the processes set out in the provider licence (for foundation trusts or independent sector providers) or designated an ‘essential service’ under an NHS contract (for trusts). Relevant authorities are expected to periodically review CRS designations, in line with the Guidance for commissioners on ensuring the continuity of health care services, as markets and alternative provision may evolve. Providers that have been designated to provide CRS can still be replaced if the relevant authority considers this to be appropriate.

Direct award process A must not be used to conclude a framework agreement or to award a contract based on a framework agreement.

Relevant authorities must follow the required transparency steps (see transparency section and Annex B) when they award contracts to the existing provider (or group of providers) using this approach.

Direct award process B

People have a choice of providers, and the number of providers is not restricted by the relevant authority.

Direct award process B must be used to award contracts to providers where people are offered a choice between providers and where the number of providers is not restricted by the relevant authority through provider selection. Services arranged using direct award process B may include, but are not limited to:

• elective services led by a consultant or mental health care professional where patients have a legal right to Choice (as set out in Part 8 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012)
• other elective services where patients do not have a legal right to Choice, but for which relevant authorities voluntarily offer patients a choice of providers and where the number of providers is not restricted by the relevant authority through provider selection (eg mandatory eye health services, audiology, podiatry services, NHS continuing health care services, public health services such as over-forty health checks).

Where the number of providers is not restricted or cannot be restricted (due to the legal right to Choice requirements), there are qualification criteria that providers must meet before a provider can be offered a contract. Those criteria (which must be applied by ICBs and NHS England) sit outside the PSR decision-making processes and are set out in the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012 (as amended) and are further explained in NHS England’s Choice guidance.

When awarding a contract using direct award process B, relevant authorities must ensure that:

• arrangements are in place to enable providers to express an interest in providing the required services
• all providers that meet the requirements in relation to the provision of the health care services are offered contracts.

Relevant authorities must consider the exclusions in Regulation 20 and apply as appropriate.  

Direct award process B must not be used to conclude a framework agreement or to award a contract based on a framework agreement.

The relevant transparency steps (see transparency section and Annex B) must be followed before contracts are awarded under this approach.

If relevant authorities are seeking to voluntarily establish other pools of providers from which patients can choose (i.e., for services where there is no legal right to choice) and they intend to select a limited number of providers to be available, they must use the most suitable provider process or the competitive process to make this selection.

Direct award process C

The existing provider is satisfying the existing contract and likely to satisfy the new contract, and the proposed contracting arrangements are not changing considerably from the existing contract.

Direct award process C may be used to award a new contract to the existing provider (or group of providers), to replace an existing contract that is coming to an end, when all the tests below are met:

• the relevant authority is not required to follow direct award processes A or B
• the term of an existing contract is due to expire, and the relevant authority is proposing a new contract to replace that existing contract at the end of its term
• the proposed contracting arrangements are not changing considerably from the existing contract (see establishing that a proposed contracting arrangement is not changing considerably)
• the relevant authority is of the view that the existing provider is satisfying the existing contract to a sufficient standard, according to the detail outlined in the contract, and also taking into account the key criteria and applying the basic selection criteria
• the relevant authority is of the view that the existing provider will likely satisfy the proposed contract to a sufficient standard taking into account the key criteria and applying the basic selection criteria
• the procurement is not to conclude a framework agreement or to award a contract based on a framework agreement.

Once the relevant authority has ascertained that it can use direct award process C, it must follow the below steps:

1. Publish a notice containing its intention to award the contract to the chosen provider (see transparency) and observe the standstill period (see standstill period).
2. Enter into a contract with the chosen provider after the standstill period has concluded.
3. Publish a notice confirming the award of the contract within 30 days of the contract being awarded.

Even where the proposed contracting arrangements are not changing considerably from the existing contract and the provider is satisfying the existing contract and will likely be able to satisfy the new contract, relevant authorities do not have to use direct award process C. Relevant authorities may still choose to follow the most suitable provider process or the competitive process, for example because they wish to test the market.

Relevant authorities must consider the exclusions in Regulation 20 and apply them as appropriate.  

Establishing that the proposed contracting arrangements are not changing considerably from the existing contract

To use direct award process C, the relevant authority must be satisfied that the requirements for the provision of health care services are not changing considerably, i.e., they don’t meet the considerable change threshold as set out in Regulation 6(10).

Under this regime, the threshold for considerable change is met where the change:

a. renders the proposed contracting arrangements materially different in character to the existing contract when that existing contract was entered into

or:

b. meets all the following:

• the change, (to the proposed contracting arrangements as compared with the existing contract), is attributable to a decision made by the relevant authority
• the lifetime value of the proposed new contract is at least £500,000 higher (i.e., equal to or exceeding £500,000) than the lifetime value of the existing contract when it was entered into
• the lifetime value of the proposed new contract is at least 25% higher (i.e., equal to or exceeding 25%) than the original lifetime value of the existing contract when it was entered into.

The considerable change threshold is not met, where either:

• The material difference in character from the existing contract (when that existing contract was entered into) applies solely as a result of a change in the identity of the provider due to succession into the position of provider following corporate changes including takeover, merger, acquisition or insolvency and the relevant authority is satisfied that the provider meets the basic selection Additionally, all of the following three conditions do not apply:
  • attributable to a decision of the relevant authority
  • the lifetime value of the proposed contracting is at least £500,000 or higher than the lifetime value of the existing contract when it was entered into
  • the lifetime value of the proposed new contract is at least 25% or higher than the original lifetime value of the existing contract when it was entered into.

• The proposed contracting arrangements are not materially different in character to the existing contract when that existing contract was entered into, and the following three points all apply:
  • the changes in the relevant health care services to which the proposed contracting arrangements relate (compared with the existing contract) are attributable to a decision of the relevant authority; however, that decision had to be made due to external factors beyond the control of the relevant authority or the provider, such as changes in patient or service user volume or changes in prices in accordance with a formula provided for in the contract document 
  • the lifetime value of the proposed contracting arrangement is £500,000 or higher than the lifetime value of the existing contract when it was entered into
  • the lifetime value of the proposed new contract is 25% or higher (i.e., equal to or exceeding 25%) than the original lifetime value of the existing contract when it was entered into).

Lifetime value of a contract means the total value of the contract over the full length of the contract. If there is an option to extend stated explicitly in the contract, then the value of the extension should also be considered in the lifetime value. For example, a contract may be worth £1 million per year and is for a duration of three years; the lifetime value of that contract when it was entered into would be £3 million. If there was an option to extend for an additional 2 years, worth £1 million per year, then the lifetime value of the contract when it was entered into would be £5 million. Unplanned modifications made to the contract during its term are not to be included in this calculation.

Establishing that the existing provider is satisfying the existing contract, and is likely able to satisfy the new contract to a sufficient standard

Once the relevant authority has established that the proposed contracting arrangements are not changing considerably, it must assess whether the existing provider is both:

• satisfying the existing contract to a sufficient standard, according to the detail outlined in the existing contract, and taking into account the key criteria and applying the basic selection criteria
• will likely be able to satisfy the new contract to a sufficient standard, according to the detail outlined in the new contract, taking into account key criteria and applying the basic selection criteria.

To do this, the relevant authority must decide the relative importance of the key criteria for the service in question, before assessing the existing provider in relation to each of the key criteria.

The relevant authority must be of the opinion, based on its assessments, that the existing provider is satisfying the existing contract and will likely be able to satisfy the new contract to a sufficient standard. The relevant authority must also assess whether the existing provider is continuing to meet the basic selection criteria.

If direct award process C is not applicable because the proposed contracting arrangements are changing considerably from the existing contract, or the existing provider is not satisfying the existing contract or is not likely to be able to satisfy the new contract, then the relevant authority must follow the most suitable provider process or the competitive process.

Relevant authorities must keep records of these considerations (see transparency) and the resultant decisions, as they may need to disclose information on the rationale for their decision if a representation is made (see standstill period).

The most suitable provider process

The relevant authority is able to identify the most suitable provider without running a competitive exercise.

This provider selection process is designed to allow relevant authorities to make an assessment on which provider (or group of providers) is most suitable to deliver the proposed contracting arrangements based on consideration of the key criteria and the basic selection criteria, and to award a contract without running a competitive exercise.

This provider selection process gives relevant authorities a mechanism for reasonable and proportionate decision-making without running a competitive exercise. It is suitable for circumstances where a relevant authority is of the view, taking into account likely providers and all relevant information available to it at the time (see provider landscape), that it is likely to be able to identify the most suitable provider to deliver the health care services to the relevant population (local/regional/national). Relevant authorities are advised to follow this provider selection approach only when they are confident that they can, acting reasonably, clearly identify all likely providers capable of providing the health care services and passing any key criterion or sub-criterion which has been designated as pass/fail.

The most suitable provider process must not be used to conclude a framework agreement or to award a contract based on a framework agreement.

Following this provider selection process

This provider selection process may be followed where any of the following apply:

• the relevant authority is not required to follow direct award processes A or B
• the relevant authority is changing an existing contracting arrangement considerably (such that it must not be continued under direct award process C)
• a new service is being arranged
• the existing provider no longer wants to provide the services
• the relevant authority wants to consider potential providers (even where the proposed contracting arrangements are not changing considerably or otherwise), as this is in the best interest of people who use the service, but there is no benefit to running a competitive process or it is disproportionate to do so.

When following the most suitable provider process, the relevant authority:

1. Is advised to take account of any relevant existing contractual provisions relating to termination and contract exit where there is an existing contract with an existing provider in place, whether the existing provider no longer wants to or is no longer able to provide the services,
2. Is advised to consider undertaking a pre-market engagement exercise (see provider landscape) to help identify all suitable providers and develop the service specification.
3. Must decide the relative importance of each of the key criteria for the service in question (see key criteria); carefully considering the relative importance of the value criterion. It is advised that for provider selection processes with higher contract values, greater focus is given to value for money and the quality and efficiency of the services to be provided, unless this means the service does not best meet the needs of the population it is serving.
4. Must be of the view that by considering providers it understands are likely to have the ability to deliver services to the relevant (local/regional/national) population, and all relevant information available at the time (see provider landscape), it is likely able to identify the most suitable provider.
5. Must publish a notice setting out its intention to follow the most suitable provider process (see transparency). The relevant authority must not proceed to the assessment of likely providers until at least 14 days after the day on which the notice of intention is submitted for publication. The relevant authority is also advised to make potential providers aware that they are being considered for the award of the contract.
6. Is advised to ask the providers it identified as likely to have the ability to deliver services to the relevant (local/regional/national) population, and any provider(s) that responded to the notice publishing the intention to follow the most suitable provider process, for further information that would help decision-making, as necessary.
7. Must identify potential providers that may be the most suitable provider, taking into account the providers it understands are likely to have the ability to deliver services to the relevant (local/regional/national) population and any provider(s) that responded to its notice publishing the intention to follow the most suitable provider process, with reference to the key criteria and the basic selection criteria.
8. Must assess the potential providers identified, considering the key criteria and applying the basic selection criteria in a fair way across them (i.e., on the same basis), and choose the most suitable provider(s) to which to make an award.
9. Must publish a notice containing its intention to award the contract to the chosen provider (see transparency) and observe the standstill period (see standstill period).
10. May enter into a contract with the chosen provider after the standstill period has concluded.
11. Must publish a notice confirming the award of the contract within 30 days of the contract being awarded.

Relevant authorities are expected to use their established knowledge of potential providers (see provider landscape). Relevant authorities may approach providers and ask for information as necessary but are advised to take a proportionate approach.

Relevant authorities must be able to demonstrate that they have understood the alternative providers and reached a reasonable decision when selecting a provider – but this does not need to be via a formal competitive exercise. Relevant authorities must keep robust records of these considerations and follow the relevant transparency requirements (see transparency). They may need to disclose information on the rationale for their decision if a representation is made (see standstill period).

If at any point in the most suitable provider process the relevant authority has insufficient information to make an assessment under the most suitable provider process, for example, because it did not receive sufficient information to help its decision-making, it is advised to use the competitive process. If the relevant authority fails to identify the most suitable provider (or a group of providers), then it must follow the approach for the competitive process to select a provider or abandon the selection process all together if appropriate.

If the relevant authority decides to switch provider selection approach after it published its intended approach notice, then it must abandon the selection process before switching provider selection approach.

Relevant authorities must consider the exclusions in Regulation 20 and apply as appropriate.  

Further information

Relevant authorities are expected to develop and maintain a sufficiently detailed knowledge of relevant providers that have the capability to meet the needs of patients within the relevant geographical footprint, which can be used to identify suitable providers (see provider landscape). Relevant authorities may identify suitable providers through market research, regular engagement with providers, registers of relevant providers or responses to their intention to follow the most suitable provider process notice.

The competitive process

Conducting a competitive procurement exercise

This provider selection process must be followed when the relevant authority is not required to follow direct award processes A or B, and the relevant authority cannot or does not wish to follow direct award process C or the most suitable provider process (for example, because it has not been able to identify a most suitable provider or because it wishes to test the market).

This provider selection process must be used when concluding a framework agreement and may be used when awarding a contract based on a framework agreement, in accordance with the terms of that framework agreement (see framework agreements).

Following this provider selection process

The steps outlined in the Regulations and the transparency requirements must be adhered to. Relevant authorities may determine additional procedures to be applied in selecting a provider using the competitive process, taking into account the specificities of the services in question to design a bespoke procedure.

When following the competitive process, relevant authorities:

1. Will need to develop a service specification setting out the relevant authority’s requirements for the service. In doing so, relevant authorities may consider undertaking a pre-market engagement exercise.
2. Must determine the contract or framework award criteria for the service in question, taking into account the key criteria and applying the basic selection criteria (see key criteria and basic selection criteria).
3. Must formally advertise the opportunity to bid (see transparency) and ensure providers are given a reasonable timeframe to respond. The advertisement must include information relating to how bids will be assessed, including whether the different award criteria will be assessed in stages.
4. Must assess any bids received by following the assessment process – that is, against the award criteria, and the exclusion criteria set out in Regulation 20, in a fair way across all bids (i.e., on the same basis). This may be done in stages, in accordance with step 3 above.
5. Must identify the successful provider (or group of providers).
6. Must inform in writing the successful provider (or group of providers) of its intention to award a contract or conclude a framework agreement, and must also inform in writing each unsuccessful provider that its bid has been unsuccessful.
7. Must publish a notice of its intention to award the contract to or conclude a framework agreement with the chosen provider (or group of providers) (see transparency) and observe the standstill period (see standstill period).
8. May enter into a contract or conclude a framework agreement with the chosen provider (or group of providers) after the standstill period has concluded.
9. Must publish a notice confirming the award of the contract within 30 days of the contract being awarded.

The award criteria referred to above consist of the basic selection criteria, the key criteria and any other elements of the contract award. These components can be assessed in stages – for example, a provider that does not meet the basic selection criteria may be discounted without further assessment.

Relevant authorities may engage in dialogue or negotiate with all bidders or with shortlisted bidders prior to determining who to award a contract and with a view to improving on initial offers, provided that they do so in a fair and proportionate way and treat all bidders equally.

Relevant authorities must keep records of the procedure followed to select a provider (including details of the bespoke procedure), of how each bid performed against the award criteria and the rationale for selecting the successful bidder (see transparency).

Relevant authorities must consider the exclusions in Regulation 20 and apply as appropriate.  

Framework agreements

Relevant authorities may establish framework agreements under the PSR to arrange health care services in scope of the regime (or that are categorised as mixed procurements within the regime).

What is a framework agreement?

Framework agreements for the purposes of this regime are agreements in relation to health care services in scope of this regime between one or more relevant authorities and one or more providers. Framework agreements set out the terms and conditions based on which the provider will enter into one or more contracts with a relevant authority, during the period the framework agreement is in place.

The relevant authority (or relevant authorities) that may award contracts based on the framework agreement must be identified in the framework agreement (either by name or by describing the type of relevant authority), and contracts awarded based on a framework agreement must only be between the relevant authority (or relevant authorities) identified in the framework agreement and a provider that is party to the framework agreement.

The length of a framework agreement must not exceed four years, other than in exceptional cases where the relevant authority is satisfied that the subject-matter of the framework agreement justifies a longer term.

The terms and conditions of a framework agreement may be modified in line with the requirements for contract modification for this regime (see contract modifications).

Concluding a framework agreement

When concluding a framework agreement, relevant authorities must use the competitive process to select provider(s) to be party to the framework agreement.

During the term of a framework agreement, providers may be added to a framework agreement. Relevant authorities are advised to set out how and when this might be done in the terms and conditions of that framework agreement. Relevant authorities must use the approach for the competitive process to add providers to the framework agreement, and relevant authorities are advised to use the same award criteria as when setting up the original framework agreement.

When concluding a framework agreement, relevant authorities must set out the duration of the framework agreement and which relevant authorities can award contracts based on the framework agreement. Relevant authorities are expected to set out:

• the terms for awarding a contract based on the framework agreement
• how the framework agreement will operate
• how the call-off procedures will operate (see below)
• how new providers or relevant authorities can be added to the framework agreement at a later date (if applicable).

Relevant authorities must not conclude a framework agreement with a provider and may exclude a provider from the procurement process if the provider meets the exclusion criteria detailed in Regulation 20. Relevant authorities are advised to set out in the terms and conditions of their framework agreement that they may remove a provider from the framework agreement if that provider meets the exclusion criteria.

Awarding contracts based on a framework agreement

Only relevant authorities that are identified as being able to award contracts under the framework agreement may award contracts to providers that are party to that same framework agreement. Relevant authorities may decide that the award criteria for awarding contracts under a framework agreement are different from those for concluding the framework.

Relevant authorities must award a contract under a framework agreement in accordance with the terms and conditions of that framework agreement.

If awarding a contract based on a framework agreement, relevant authorities may do so in one of the following ways:

• without competition if the framework agreement only includes one provider (via a ‘direct award’)
• if the framework agreement includes more than one provider, choose whether to award the contract:
  • without a further competition (via ‘direct award’), or
  • by following the competitive process (via a ‘mini-competition’).

In all these scenarios, relevant authorities must make decisions in accordance with the framework agreement.

If awarding a contract based on a framework agreement without competition (via a ‘direct award’), relevant authorities must:

• publish a notice confirming the decision notice within 30 days of the contract being awarded (see transparency section and Annex B).

If awarding a contract based on a framework agreement following a competitive process (via a ‘mini-competition’), relevant authorities must:

• follow the process for the competitive process, substituting step 2 (the step advertising the opportunity to the market’ with ‘invite providers party to the framework to submit an offer’
• follow the terms and conditions of the framework agreement, including how competitions must run when awarding a contract based on that framework agreement (if this is set out)
• follow the relevant transparency requirements (see transparency section and Annex B)
• observe the standstill period as required for the competitive process (see standstill period).

When awarding a contract from a framework agreement, the term of the contract may exceed the length of the framework agreement.

Contracts awarded from a framework agreement are expected to not exceed the total value of the framework agreement.

Abandoning a provider selection process

Relevant authorities may decide to abandon the process of provider selection at any time before an award is made (and not award a contract or conclude a framework under that provider selection process), provided that this decision is transparent, fair, and proportionate.

After deciding to abandon a provider selection process, relevant authorities are expected to notify providers that were aware they were being considered for the award of a contract or framework agreement (e.g., in response to a tender under the competitive process). Relevant authorities must also submit for publication a notice of that decision on the Find a Tender Service (FTS) (see Annex B). This notice must be submitted within 30 days of the decision to abandon a provider selection process; or if the decision was made during the standstill period, then within 30 days after the end of the standstill period. Where the decision to abandon a provider selection process is made during the standstill period, relevant authorities must ensure that they follow the necessary steps set out in Regulation 12 (see the standstill period).

Relevant authorities must also keep a record of their reasoning for abandoning a provider selection process (see record keeping).

Repeating a step in a provider selection process

When following direct award process C, the most suitable provider process or the competitive process relevant authorities may choose to return to an earlier step in a decision process to rectify an issue in its application of that process. All providers that have previously been notified that they are being considered for the award of a contract, or to be a party to a framework agreement, must be informed in writing that the relevant authority is returning to an earlier stage in the provider selection process, including the stage and any changes to timeframes. Where the decision to return to an earlier step in a provider selection process is made during the standstill period, relevant authorities must ensure that they follow the necessary steps set out in Regulation 12. For the avoidance of doubt, if the relevant authority is repeating a step as a response to a representation received during the standstill period, they do not need to communicate this decision twice (see standstill period).

Relevant authorities should not use the option to return to an earlier step in a provider selection process as an opportunity to modify the selection parameters (i.e., to modify the key criteria or change the service specifications). If relevant authorities need to modify the selection parameters, then they should abandon the provider selection process (in accordance with the Regulations) and start a new one.

Key criteria

Overview

Five key criteria must be considered when making decisions about provider selection under direct award process C, the most suitable provider process, and the competitive process of this regime. Annex D to this guidance provides detail on what each criterion covers. In summary, these criteria are:

• Quality and innovation, that is the need to ensure good quality services and the need to support the potential for the development of new or significantly improved services or processes that will improve the delivery of health care or health outcomes.
• Value, that is the need to strive to achieve good value in terms of the balance of costs, overall benefits, and the financial implications of a proposed contracting arrangement.
• Integration, collaboration and service sustainability, that is the extent to which services can be provided in:

1. an integrated way (including with other health care services, health-related services or social care services)
2. a collaborative way (including with providers and with persons providing health-related services or social care services)
3. a sustainable way (which includes the stability of good quality health care services or service continuity of health care services),

in a way that improves health outcomes.

• Improving access, reducing health inequalities and facilitating choice, that is ensuring accessibility to services and treatments for all eligible patients, improving health inequalities and the ensuring that patients have choice in respect of their health care.
• Social value, that is whether what is proposed might improve economic, social and environmental well-being in the geographical area relevant to a proposed contracting arrangement.

Application of key criteria

Relevant authorities must consider each of the key criteria in the regime when making decisions under direct award process C, the most suitable provider process and the competitive process (including when concluding a framework agreement and when awarding a contract based on a framework agreement using the competitive process). Under these processes, relevant authorities must be able to justify their decisions when following a provider selection process in relation to the key criteria and keep a record of this. Further detail on recording decision-making and transparency can be found in the transparency section.

How relevant authorities assess providers against the key criteria, including what evidence they consider, may vary according to the service they want to procure. A relevant authority may wish to address specific priorities; these are expected to be described as part of the key criteria and can be considered when deciding the relative importance of the key criteria.

Relevant authorities must be aware that equalities duties in the Equality Act 2010, including the Public Sector Equality Duty, are relevant to all criteria and due regard to these requirements must be given when considering each criterion.

Balancing the key criteria

The relative importance of the key criteria is not predetermined by the Regulations or this guidance and there is no prescribed hierarchy or weighting for each criterion. Relevant authorities must decide the relative importance of the key criteria for each decision they make under this regime, based on the proposed contracting arrangements and what they are seeking to achieve from them/the services, including scenarios where a particular criterion is ‘pass/fail’, or where certain key criteria are of equal importance. All criteria must be considered, and none is expected to be discounted when following a provider selection process.

The regime does not specify how relevant authorities must balance the key criteria; however, relevant authorities are expected be aware of wider requirements or duties when considering procurement decisions. For example, NHS England, ICBs, NHS trusts and NHS foundation trusts are expected to adhere to NHS England’s net zero ambitions and its social value commitment, and the need to ensure value for money when arranging health care services (this list is not exhaustive). The flexibilities offered by the regime do not mean that relevant authorities are exempt from complying with their other obligations.

Relevant authorities are advised to consider particularly carefully the relative importance of the value criterion when making assessments under the most suitable provider process.

It is advised that for provider selection processes with higher contract values, greater focus is given to value for money and the quality and efficiency of the services to be provided, unless this means the service does not best meet the needs of the population it is serving.

When making assessments against the key criteria under direct award process C and the most suitable provider process, relevant authorities are expected to use information and evidence from a range of sources, as well as their knowledge and experience of working with providers. They can ask providers for further information to assist with this assessment if they wish. The explanation of each criterion in Annex D includes examples of relevant sources where appropriate.

When following the competitive process relevant authorities must only use the information contained in the bid to assess the bid. Relevant authorities may set out in their tender documents that wilful misrepresentation of a bid by a provider will result in exclusion from the provider selection process.

Relevant authorities must justify and record how they have given relative importance to each of the key criteria for the service they are arranging. Further detail on recording decision-making can be found in the transparency section.

Relevant authorities must ensure they meet other relevant statutory duties when deciding the relative importance of each of the criteria, including normal public law decision-making principles around reasonableness of decisions. Relevant authorities are also expected to consider other national and local policies and non-statutory guidance when deciding the relative importance of each of the criteria.

Further detail

Further details on how relevant authorities are expected to use the key criteria can be found in Annex D.

Transparency

Relevant authorities are required to evidence that they have properly exercised the responsibilities and flexibilities conferred on them by the regime, to ensure that there is proper scrutiny and accountability of decisions made about health care services. This section sets out the steps that relevant authorities must take to be transparent in their decision-making under this regime.

There are several elements to the transparency process under this regime – these apply differently according to which decision-making process is being applied. Annex B provides detailed information about the transparency requirements for all processes under the PSR.  Relevant authorities must follow the transparency process relevant to the approach being followed.

In all circumstances, relevant authorities must keep internal records of their decision-making processes and must publish notices confirming their decision to award a contract.

When following the most suitable provider process relevant authorities must also make their intentions clear in advance by issuing a notice.

When following direct award process C, the most suitable provider process and the competitive process (including when concluding a framework agreement and when awarding a contract based on a framework agreement using the competitive process) relevant authorities must also communicate their decision to award a contract publicly and observe a standstill period during which representations can be made. The standstill period must end before contracts can be awarded.

All transparency notices referred to in this section must be published using the UK
e-notification service, the Find a Tender Service (FTS). The information that must be included in the transparency notices is set out in Annex B and relevant authorities should refer to the separate guide to publishing these notices on FTS.

Relevant authorities can publish information on their decision-making in other places as well if they wish, such as Contracts Finder.

In addition to the transparency notices required under the various provider selection processes, relevant authorities must publish transparency notices when they are abandoning a provider selection process, when making an urgent award or contract modification or when undertaking certain non-urgent contract modifications. Annex B contains further information about the transparency requirements for each of these scenarios.

Keeping records of decision-making

Relevant authorities must make and keep clear records detailing their decision-making process and rationale. This must be done for all provider selection processes (direct award process A, B and C, the most suitable provider process, and the competitive process), when concluding a framework agreement, when awarding a contract based on a framework agreement without competition, and when awarding a contract based on a framework agreement following the competitive process. This includes where a provider selection process was abandoned or where the relevant authority decided to return to an earlier step in the process. Records must include:

• name of the provider to which the contract has been awarded or the name of any provider who is a party to a framework agreement and the address of their registered office or principal place of business
• the decision-making process followed to select a provider(s), including details of the procedure used when the competitive process is followed
• the reasons for these decisions
• details of the individual/individuals making the decision (this may be the name of a committee or job titles of individuals making the decision, as appropriate)
• any declared or potential conflicts of interest for individuals involved in decision-making and how these were managed
• where a procurement is abandoned, the date on which it is abandoned.

We expect that records are kept when contracting for mixed procurements, including how the procurement meets the requirements for mixed procurements under this regime.

When following direct award process C or the most suitable provider process, records must also include:

• a description of the way in which the key criteria (e.g., weighting, hierarchy, or more informal description of importance) were taken into account, and how the basic selection criteria were assessed when making decisions. We expect that this includes the relative importance of the key criteria that the relevant authority used to make a decision, the rationale for the relative importance of the key criteria, and the rationale for choosing the provider with reference to the key criteria.

When following the competitive process (including when concluding a framework agreement or when awarding a contract based on a framework agreement following the competitive process), records must also include:

• a description of the way in which the key criteria were taken into account, the basic selection criteria were assessed, and contract or framework award criteria were evaluated when making a decision. We expect that this includes the relative importance of the key criteria that the relevant authority used to make a decision, the rationale for the relative importance of the key criteria, and the rationale for choosing the provider with reference to the key criteria.

When concluding a framework agreement, we expect that records include the terms and conditions that will be laid down by the framework agreement, and include which relevant authorities are part of the framework agreement. When awarding a contract from a framework agreement, we expect that records include which framework agreement the contract is being awarded from.

Relevant authorities must be aware that they may need to disclose information on the rationale for their decision making under the Regulations if a representation is made (see standstill period). We expect relevant authorities to keep their records for a period of time that is in line with their organisation’s record keeping policies and any applicable legislation.

Relevant authorities are also expected to keep records of their decisions and decision-making processes when modifying a contract.

Keeping records of decision-making in urgent circumstances

When awarding or modifying a contract in an urgent circumstance, relevant authorities must make and keep clear records detailing their decision-making process and rationale. Records must include:

• justification for using the urgent circumstances exemption
• name of the provider(s) to which the contract has been awarded and the address of its registered office or principal place of business
• the approach taken to select a provider and the process followed (i.e., urgent circumstance)
• details of the individual/individuals making the decision
• any declared or potential conflicts of interest of individuals making the decision (not including individual names) and how these were managed.

We expect that records are kept when contracting for mixed procurements, including how the procurement meets the requirements for mixed procurements under this regime.

Annual summary

Relevant authorities must publish a summary of their application of the PSR annually online (e.g., via the relevant authority’s annual reports or annual governance statement). We expect the first annual summary to relate to contracts awarded using the PSR between 1 January 2024 – 31 March 2025, and we expect this to be published no later than six months following the end of 2024/2025 financial year. Following the first annual summary, all other annual summaries must be published no later than six months following the end of the financial year it relates to.

This must include, in the year to which the summary relates, the:

• number of contracts directly awarded under direct award processes A, B or C
• number of contracts awarded under the most suitable provider process
• number of contracts awarded under the competitive process
• number of framework agreements concluded
• number of contracts awarded based on a framework agreement
• number of urgent contracts awarded and urgent modifications (in line with the urgent awards or contract modifications section)
• number of new providers awarded contracts
• number of providers who ceased to hold any contracts with the relevant authority
• details of representations received, including:
  • the number of representations received in writing and during the standstill period in accordance with Regulation 12(3)
  • summary of the outcome of all representations received and of the nature and impact of those representations.

In addition, relevant authorities are expected to publish:

• total number of providers the relevant authority is currently contracted with
• details of any reviews by the Independent Patient Choice and Procurement Panel:
  • number of requests for consideration received by the Independent Patient Choice and Procurement Panel
  • number of requests accepted and rejected by the Independent Patient Choice and Procurement Panel for consideration
  • number of times where the Independent Patient Choice and Procurement Panel advised the relevant authority to re-run or go back to an earlier step in a provider selection process under the PSR, and the number of times the advice was followed.

Monitoring requirements

Relevant authorities must monitor their compliance with the Regulations. The results of the monitoring must be published online annually (and may be integrated into other annual reporting requirements) and include processes, decisions made under the PSR, contract modifications, and declaration and management of conflicts of interests. Relevant authorities may use internal auditors to fulfil these requirements.

If a compliance report finds instance(s) of non-compliance, relevant authorities must put in place actions to address this issue and to improve adherence with the regime.

Reviewing decisions during the standstill period

This section explains how certain decisions made under the regime can be reviewed during the standstill period before they are finalised, and how a contract is awarded under certain procedures.

What is the standstill period?

The standstill period must be observed once a notice of intention to make an award to a provider under direct award process C, the most suitable provider process, or the competitive process has been published. This includes concluding a framework agreement or awarding a contract based on a framework agreement following a mini-competition.

The standstill period follows a decision to select a provider and must end before the contract can be awarded. It gives time for any provider who might otherwise have been a provider of the services to which the contract relates to make representations; and for relevant authorities to consider those representations and respond as appropriate. See the section below on receiving representations for further details.

The standstill period must last for a minimum period of eight working days. The standstill period begins on the day after the notice of intention to award or conclude is published and, unless a written representation is made, ends at midnight of the eighth working day after the day the standstill period begins (see worked examples below). If any representations are received during this period, then the standstill period will remain open until the relevant authority provides any requested information, considers the representations, and makes a further decision.

Relevant authorities are expected to be aware of the process and timeline for the review of decisions under this regime and are expected to plan the arrangement of services accordingly. They are expected to ensure that the review of the decision-making process can be completed, and a new contract awarded, before the existing contract ends.

When does the standstill period end?

Care must be taken when calculating the end of the standstill period. The standstill period starts the day after the publication of an intention to award a contract. Representations must be received before midnight on the eighth working day after that day.

The standstill period will end at midnight on the eighth working day, if:

• no representations are received by midnight on the eighth working day, or
• representations do not meet the required conditions (set out below).

Where representations meeting the required conditions are received, the standstill period continues until the relevant authority:

• completes its review
• communicates its further decision (with reasons) to the provider who submitted the representations and to the provider to whom it intended at the beginning of the standstill period to award the contract to
• concludes it is ready to award the contract, or that it wishes to return to an earlier step in the process or abandon the process.

The end of the standstill period must be at least five working days after the relevant authority has communicated its decision to the provider. The minimum five working days’ notice allows for providers that remain unsatisfied about the response given by a relevant authority to their representations to seek the involvement of the Independent Patient Choice and Procurement Panel (see Independent Patient Choice and Procurement Panel below).

Where the relevant authority’s decision is to award the contract (rather than return to an earlier step in the process or abandon the process), the standstill period should end when the relevant authority concludes it is ready to award the contract and there has been at least five working days since the relevant authority communicated its further decision. Where within five working days of receiving the relevant authority’s further decision, the provider requests an independent review from the Independent Patient Choice and Procurement Panel, the standstill period should continue, other than in exceptional circumstances. See the Independent Patient Choice and Procurement Panel section for further details on its process and how to request a review.

In this situation, if the Independent Patient Choice and Procurement Panel accepts the request, the standstill period should not end until the relevant authority makes a further decision having considered the advice provided by the Independent Patient Choice and Procurement Panel. The relevant authority must again give at least five working days’ notice of its further decision before the standstill period can come to an end and the relevant authority proceeds to take forward its further decision. 

The standstill period must end before a contract is awarded and a confirmation of the decision is published (or before returning to an earlier step in the process or abandoning a process). The transition of services must only take place after the standstill period has ended and the contract has been awarded.

Receiving representations

Providers may make a representation to the relevant authority within the first eight working days following the start of the standstill period (ie eight working days starting with the first working day following the day after the intention to award notice has been published). Providers cannot submit a representation after that period, even if the standstill period has been extended in response to a representation from another provider.

The purpose of making a representation is to seek a review of the decision made, to determine whether a relevant authority has applied the regime correctly and made an appropriate provider selection decision.

Relevant authorities are only obliged to respond to representations that meet all the following conditions:

• the representation comes from a provider that might otherwise have been a provider of the services to which the contract relates
• the provider is aggrieved by the decision of the relevant authority
• the provider believes that the relevant authority has failed to apply the regime correctly and is able to set out reasonable grounds to support its belief
• the representation is submitted in writing (which includes electronically) to the relevant authority within eight working days of the start of the standstill period.

When awarding a contract based on a framework agreement, eg following a mini-competition, only providers that were party to the framework agreement and i) took part in the mini-competition but were unsuccessful, or ii) were excluded from the mini-competition, may make a representation to the relevant authority.

If they wish, relevant authorities may also respond to representations that do not meet the conditions above.

Relevant authorities must follow the relevant transparency requirements for the approach they take and must keep internal records of their decision-making (see transparency).

Considering representations

Relevant authorities should ensure that appropriate internal governance mechanisms are in place to deal with representations made against provider selection decisions. To this end, relevant authorities should, where possible, ensure that decisions are reviewed by individuals not involved in the original decision. Where this is not possible, relevant authorities should ensure that at least one individual not involved in the original decision is included in the review process.

If the relevant authority is considering representations on the same issue from multiple providers, it may consider these together if appropriate.

Where a representation is received within the eight working days, the relevant authority:

1. Must ensure that the provider is afforded an opportunity to explain or clarify its representation(s) if these are not clear.
2. Is expected to provide an indicative timeframe for when the representation might be considered by, and when the provider might reasonably expect a decision to be made.
3. Must provide any information requested by the provider that the relevant authority is required to keep under the regime (see record keeping) as soon as possible, except where this:

• would prejudice the legitimate commercial interests of any person, including the relevant authority
• might prejudice fair competition between providers
• would otherwise be contrary to the public interest.

4. Must review the evidence and information used to make the original decision, taking into account the representations made.
5. Must consider whether the representation has merit (e.g., it identifies that the process has not been correctly followed or brings to light information that has a bearing on the decision reached).

The provider that made the representations is expected to respond promptly and concisely to questions from the relevant authority about the points it has made, and if it cannot respond within a reasonable timeframe then it is expected to provide a justification.

We expect the relevant authority to allow sufficient time and opportunity for the provider that made the representations to respond to questions from the relevant authority. In the event that the provider fails to respond/communicate, then it is for the relevant authority to decide whether to complete its assessment of the representations and communicate their decision to the provider.

Outcome of representations

Where the relevant authority finds that a representation has merit (e.g., it identifies that the process has not been followed correctly or brings to light information that has a bearing on the decision reached), it must further consider whether this impacts on the intention to award a contract to the selected provider. It must then decide whether to:

• enter into a contract or conclude the framework agreement as intended
• go back to an earlier step in the selection process, either to the start of the process or to where a flaw was identified, rectify this, and repeat that step and subsequent steps (see repeating a step)
• abandon the provider selection process (see abandoning a process).

The relevant authority must communicate the decision described above promptly and in writing, to:

• the provider that made the representation
• the provider to which the relevant authority intended at the beginning of the standstill period to award the contract, or all providers with which the relevant authority intended at the beginning of the standstill period to conclude the framework agreement.

The standstill period can only end once the relevant authority has reviewed its decision, shared its conclusion (in writing) with the relevant providers, and concluded that it is ready to award the contract, or that it’s going to return to an earlier step in the process, or abandon the process.

The relevant authority must allow at least five working days following the day on which they sent their response to the provider, before the standstill period comes to an end. This time allows the provider to consider the response of the relevant authority, seek further clarifications, and to consider whether to request a further review by the Independent Patient Choice and Procurement Panel. This time also allows the relevant authority to reconsider their decision and make any subsequent decisions if necessary. The relevant authority must communicate any such further decision in writing to the provider (as outlined above).

If a panel review is requested and accepted, then the standstill period would usually continue until after the Independent Patient Choice and Procurement Panel has given its advice and relevant authority has made its further decision in light of that advice.

Independent Patient Choice and Procurement Panel

NHS England has established the Independent Patient Choice and Procurement Panel to provide independent expert advice to relevant authorities with respect to the review of PSR decisions during the standstill period, and separately to support reviewing decisions with respect to the application of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012 (as amended).

If a provider remains unsatisfied about the response given by a relevant authority to their representations, then that provider may seek the involvement of the panel. The panel may consider whether the relevant authority complied with the Regulations and may provide advice to the relevant authority. The relevant authority should then make a further decision about how to proceed.

The Chair and the Panellists

The panel Chair presides over the Independent Patient Choice and Procurement Panel. While there is a single Chair for the panel, the panel members reviewing representations in relation to the PSR are different to those reviewing patient choice complaints.

Panel members for the PSR element of the panel are independent experts who are made available by, or endorsed by, NHS England or the Secretary of State for Health and Social Care to provide advice relating to the relevant authority’s compliance with these Regulations. Panel members are selected on the basis of having the relevant expertise, qualifications, or experience relating to the commissioning or procurement of health care services that enables them to carry out a review efficiently and effectively.

Panel members must be able to offer an impartial and unbiased opinion, and they must not have any conflicts of interest in the provider selection process in question (see conflicts of interest section). This means that panel members must not have, directly or indirectly, a financial, economic, or other personal interest that might be perceived to compromise their impartiality and independence in the context of the provider selection process in question. Panel members must recuse themselves from providing advice on any provider selection processes where they have a conflict of interest or a perceived conflict of interest.

Further detail on how the Independent Patient Choice and Procurement Panel operates is set out on the Independent Patient Choice and Procurement Panel website.

The PSR Review Panel Process of the Independent Patient Choice and Procurement Panel

If a provider wishes to request the panel to consider their representation further, then they must submit their request through the panel’s website within five working days of receiving the relevant authority’s decision following the relevant authority’s review of their representation.

If the provider submits a request for advice from the panel, the relevant authority will be notified, and the relevant authority should:

• keep the standstill period open for the duration of the panel’s review
• make a further decision once it has considered the independent expert advice.

In exceptional circumstances, the relevant authority may conclude that it is necessary to enter into a new contract before the panel can complete its review and share its advice. In those circumstances, the relevant authority is expected to note the advice of the panel for the next time they use the PSR to arrange health care services.

Where multiple providers seek the involvement of the panel, in relation to the same provider selection process, the panel may choose to address the points raised by each provider individually or consider all of the points together. The standstill period should continue until the last advice is provided (unless in exceptional circumstances).

If the provider does not submit their request to the panel within the five working day period, or the panel does not accept the request for advice, then at any point after the end of that period, the relevant authority can bring the standstill period to an end and proceed to award the contract to their chosen provider.

The panel will set out acceptance criteria to assess whether a request should be reviewed, and prioritisation criteria to determine the priority/urgency of a particular case. The acceptance and prioritisation criteria will be published. 

Information requested by the panel from the relevant authority for the purposes of offering advice, and provided by the relevant authority, does not breach any obligation of confidence owed by the relevant authority. However, it may be subject to restrictions on disclosure imposed by other pieces of legislation.

Where the panel accepts a representation for review, it will endeavour to consider it and share advice, or a summary of its advice, with the provider and the relevant authority within 25 working days. However, this timeframe is indicative and contingent on the engagement and timely responses of the provider and the relevant authority throughout the review process.

The panel will also publish its advice, or a summary of its advice.

Urgent contract modifications during the standstill period

Where the relevant authority is awaiting the advice of the panel during the standstill period, the relevant authority may urgently modify the existing contract in accordance with Regulation 14(3), subject to all the below applying:

• there is an existing contract for the health care services to which the proposed contracting arrangement relates, and the relevant authority considers that the term of the existing contract is likely to expire before the end of the standstill period
• the relevant authority considers it necessary or expedient to modify the existing contract prior to the new contract taking effect in order to ensure continuity between the existing contract and proposed award of a new contract
• the relevant authority considers that it is not possible to satisfy the requirements of Regulations 6 to 13 before the term of the existing contract expires

The relevant authority may only extend the length of the existing contract and must not otherwise modify the contract. The relevant authority is expected to only extend the contract for as long as necessary to ensure continuity between the existing and the new contract.

Outcome of panel review

Once the relevant authority has considered the advice of the panel, it may make a further decision, to be its final decision, replacing the previous one, to either:

• enter into a contract or conclude the framework agreement as intended
• go back to the start of the selection process or to the step where a flaw was identified, and repeat that step and subsequent steps (see repeating a step in a provider selection process), or
• abandon the procurement (see abandoning a provider selection process).

The relevant authority must share this further decision promptly, in writing, and with reasons, with the provider who made a representation and the provider to which the relevant authority intended, at the beginning of the standstill period, to award the contract. The relevant authority must set out the outcome and a full and transparent justification for their decision, and it is expected that this will include whether they changed their original decision as a result of the advice of the panel. The relevant authority must wait at least five working days before concluding it is ready to award the contract and bring the standstill period to an end, or before it returns to an earlier step in the process, or before it abandons a process.

Modification of contracts and framework agreements during their term

Overview

There will be situations where contracts or framework agreements need to be modified to reflect/account for changes to services/circumstances during their term.

One aim of the regime is to avoid processes that only bring limited value to people who use the services. Therefore, this regime allows for certain modifications to be made to contracts or framework agreements during their term without reassessment of the existing provider.

Depending on circumstance, permitted modifications can be made without following a new provider selection process, but in some cases will require the publication of transparency notices.

Modifications, which make an existing contract or framework agreement materially different in character are not permitted under the regime and require a new provider selection process to be undertaken. Further information on permitted and not permitted modifications is given below.

Relevant authorities are expected to consider this section in conjunction with the modifications (variations) provisions of the relevant contract or sub-contract (for example, the General Conditions of the NHS Standard Contract).

The provisions in this section must only be used for modification of contracts during their term and not to circumvent the regulations when a contract ends and a new one needs to be awarded.

Permitted modifications

Under this regime, some modifications are permitted and so do not require a new selection process.

Modifications to contracts originally awarded under direct award process A or B

Where the original contract was awarded under direct award process A or B and the modification does not materially alter the character of the contract, then the modification is permitted.

If that modification is attributable to a decision of the relevant authority and the cumulative change in the lifetime value of the contract since it was entered into is £500,000 or more, the modification is still permitted, but the relevant authority must publish a transparency notice.

Modifications to contracts originally awarded under direct award process C, the most suitable provider process, or the competitive process, or to contracts that were originally awarded under the Public Contracts Regulations 2015

Where the original contract was awarded under direct award process C, the most suitable provider process, or the competitive process (including framework agreements), or where the contract was originally awarded under the Public Contracts Regulations 2015, then modifications are permitted in the following instances:

•  The modification is clearly and unambiguously provided for in the contract or framework agreement documents (i.e., the scope and nature of the potential change has been described in detail in the existing contract).
• The modification is solely a change in the identity of the provider due to succession into the position of provider following corporate changes (e.g., as the result of a corporate takeover, merger, acquisition or insolvency), and where the relevant authority is satisfied that the provider meets the basic selection criteria.
• The modification is made in response to external factors beyond the control of the relevant authority and the provider, including but not limited to changes in:
  • patient or service user volume
  • prices in accordance with a formula provided for in the contract documents (e.g., uplifts in prices published in the NHS Payment Scheme or index linking) which do not render the contract or framework agreement materially different in character.
• The modification is attributable to a decision of the relevant authority and does not materially alter the character of the contract or framework agreement, and the cumulative change in the lifetime value of the contract or framework agreement, compared to its value when it was entered into, is under £500,000 or under 25%.

If the relevant authority makes a permitted modification (to a contract that was originally awarded under direct award process C, the most suitable provider process, and the competitive process or where the contract was originally awarded under the Public Contracts Regulations 2015), it must publish a transparency notice where all the below apply:

• that modification is attributable to a decision of the relevant authority
• the cumulative change in the lifetime value of the contract or framework agreement is £500,000 or more.

To note contracts entered into before the commencement of the PSR must be modified in line with this section.

Modifications that are not permitted

Modifications that make the existing contract or framework agreement materially different in character are not permitted under this regime without undertaking a new provider selection process. Modifications are also not permitted where the original contract was awarded following direct award process C, the most suitable provider process, or the competitive process (including framework agreements), or where the original contract was awarded under the Public Contracts Regulations 2015 and where

• the decision to make the modification is attributable to the relevant authority and it represents (i) a cumulative change of 25% or more in the lifetime value of the original contract or framework agreement and (ii) £500,000 or more compared to the lifetime value of the original contract or framework agreement (when it was entered into).

In these cases, the relevant authority must follow the appropriate decision-making process to select a provider (or group of providers) for the substantially changed service.

Contract modifications in urgent situations

Contract modifications may need to be made urgently. In these circumstances relevant authorities must still be transparent about their decision-making. Details of what needs to be published in these situations and when can be found in the urgent awards or contract modifications sections.

Conflicts of interest

Overview

The routine declaration and management of conflicts of interest is a key aspect of good governance, and critical both in maintaining public confidence in decision-making and in protecting staff, councillors, and trustees from allegations that they have acted inappropriately.

Relevant authorities must take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising during the application of the PSR. Relevant authorities must ensure that their governance arrangements for making provider selection decisions can manage conflicts that arise. They may wish to give board committees or non-executive directors (or other senior persons independent of the decision-making process) a role in managing and resolving conflicts of interest relating to provider selection decisions.

The way conflicts of interest are managed needs to be sympathetic to the vision of collaboration and joint working set out in the NHS Long Term Plan and to the policy intent of the 2022 Act in relation to bringing NHS organisations and local authorities together to collaborate in making decisions about care provision. Therefore, we expect relevant authorities to follow and have regard to that vision and policy, when managing conflicts of interest around provider selection decisions.

Conflicts of interest are defined in Regulation 21(2)(a) as:

“the concept of conflicts of interest includes any situation where an individual has, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement process”.

Any such individual is required to recuse themselves from the decision-making process of the procurement process.

We advise this section is read in conjunction with other relevant regulations and statutory guidance, as applicable to relevant authorities.

Principles of management

We expect the management of conflicts of interest to be based on the following principles:

1. All decisions made under this regime must be clearly and objectively directed towards meeting the statutory functions and duties of relevant authorities or, for local authorities only, directed towards the delivery of a service which the local authority has power to provide. Individuals involved in decisions relating to these functions are expected to act clearly in service of those functions and duties, rather than furthering [their own] direct or indirect financial, economic, or other personal, professional, or organisational interests.
2. Where the relevant authority is an ICB, it should be noted that ICBs have been created with the intention of giving statutory NHS provider, local authority, and primary medical services (general practice) nominees a role in decision-making. These individuals will be expected to act in accordance with the first principle, and while the Regulations allow for the fact that an ICB member may also be an employee, director, partner or otherwise holding a position with one of these organisations, the possibility of actual and perceived conflicts of interest arising will remain. In addition, any member who is an employee, director, partner or otherwise holding a position within a provider taking part in a procurement process must recuse themselves from the decision-making process. For all PSR decisions, ICBs must carefully consider whether an individual’s role in another organisation may result in actual or perceived conflicts of interest and if so whether that outweighs the value of the knowledge they bring to the process.
3. The personal and professional interests of all individuals involved in decisions about provider selection need to be declared, recorded, and managed appropriately, following the relevant authority’s established conflicts of interest arrangements. This includes being clear and specific about the nature of any interest and of any conflict that may arise with regard to a particular decision, and how any conflicts are managed for each decision. To fulfil the transparency requirements under this regime, relevant authorities must keep internal records of individuals’ conflicts of interest and how these were managed (see transparency).
4. Any conflicts of interests and how they were managed must be published alongside the confirmation of the decision to select a provider (see transparency). When the decision is made by a committee/group, it is advised that the interests of the committee/group as a whole are declared and not the names of individuals in the committee/group to whom they relate. When the decision is made by an individual, it is advised that conflicts of interest are declared against the individual’s job title rather than their name.
5. Actions to mitigate conflicts of interest when making procurement decisions are expected to be proportionate and to seek to preserve the spirit of collective decision-making wherever possible. Mitigating actions are expected to account for a range of factors, including the impact that the perception of an unsound decision might have, and the risks and benefits of having a particular individual involved in making the decision. Mitigations may include:

• excluding a conflicted person from both the discussion and the decision-making
• excluding the conflicted individual and securing technical or local expertise from an alternative, unconflicted source
• arranging decision-making structures so a range of views and perspectives are represented, rather than potentially conflicted individuals being in the majority
• convening a committee without the conflicted individual present, e.g., when dealing with particularly difficult or complex decisions where members may not be able to agree, or to prevent an unsound decision being taken and/or the appearance of bias.

6. We expect relevant authorities to clearly distinguish between those individuals who are involved in formal decision-making and those whose input informs decisions but who are not involved in decision-making itself (such as through shaping the relevant authority’s understanding of how best to meet patients’ needs and deliver care for its population). The way conflicts of interest are managed is expected to reflect this distinction. For example, where independent providers (including those in the VCSE sector) hold contracts for services, it would be appropriate and reasonable for the relevant authority to involve them in discussions, such as about pathway design and service delivery, particularly at place level. However, this would be clearly distinct from any considerations around contracting and commissioning, from which they would be excluded.
7. Where decisions are being taken under the competitive process, any individual who is associated with an organisation that has a vested interest in the procurement must recuse themselves from decision-making during that provider selection process. This includes ICB members who are also employees, directors, partners, or otherwise holding a position within a provider when that provider is intending to take part in the procurement process.
8. The way conflicts of interest are declared and managed is expected to contribute to a culture of transparency about how decisions are made.

Urgent awards or contract modifications

There are limited occasions where relevant authorities may need to act urgently and award or modify contracts to address immediate risks to patient or public safety.

These circumstances include where:

• a new service needs to be arranged rapidly in an unforeseen emergency or local, regional or national crisis, e.g., to deal with a pandemic
• urgent quality/safety concerns pose risks to patients or the public and necessitate rapid changes
• an existing provider is suddenly unable to provide services under an existing contract (for example, a provider becomes insolvent or experiences a sudden lack of critical workforce) and a new provider needs to be found.

In urgent situations, relevant authorities may make the following decisions without following the steps required under this regime:

• re-award contracts held by the existing provider(s)
• award contract(s) for new services
• award contract(s) for considerably changed services
• make contract modifications (without limitation).

An urgent award or modification must only be made by a relevant authority when all the below apply:

• the award or modification must be made urgently
• the reason for the urgency was not foreseeable by and is not attributable to the relevant authority
• delaying the award of the contract to conduct a full application of the regime would be likely to pose a risk to patient or public safety.

Relevant authorities must not use the urgent award or contract modification provisions in this regime if the urgency is attributable to the relevant authority not leaving sufficient time to make procurement decisions and run a provider selection process– poor planning is not an acceptable reason to use these provisions.

In these urgent circumstances, relevant authorities:

1. Are expected to limit the contract term or contract modification term to that which is strictly necessary. This is advised to be long enough to address the urgent situation and to conduct a full application of the PSR for that service at the earliest feasible opportunity. We anticipate that contracts awarded under Regulation 14 will have a duration of no longer than 12 months. If the duration is to be longer, relevant authorities must justify and record this decision.
2. Must keep records of their decision-making, including a justification for using an urgent award (see transparency section and Annex B).
3. Must be transparent about their decision through issuing an urgent award notice (see transparency section and Annex B).

Relevant authorities may also make specific urgent modifications to extend the length of an existing contract during the standstill period if advice is being sought from the Independent Patient Choice and Procurement Panel, in accordance with Regulation 14(3).

Termination of contracts

Relevant authorities must ensure that each contract awarded contains provisions enabling its termination by the relevant authority if:

• the contract has been subject to modifications that are not permitted under the regime (see contract modifications) without following a new provider selection process
• the provider, at the time of the contract award, should have been excluded from the procurement process in line with the exclusion criteria set out in Regulation 20.

The provisions allowing the termination of a contract may address how such terminations would take place, e.g., by setting out a notice for terminations and by addressing any consequential matters that may arise from that termination. If the contract does not contain specific provisions allowing the relevant authority to terminate on the grounds specified above, there is an implied term of any contract awarded under the PSR that the relevant authority may do so by giving reasonable notice.

Annex A: Common procurement vocabulary (CPV) codes

The CPV codes adopted by the PSR were defined by Regulation (EC) No 2195/2002 of the European Parliament and of the Council, as amended from time to time.

Health care services in scope of the regime must fall within one or more of the adopted CPV codes.

The list below of CPV codes corresponds to services covered by the regime. This list must be used by relevant authorities to support decisions around scope. Relevant authorities must use the most specific CPV code they can, rather than an overarching one. For example, where relevant authorities are commissioning cycles for in vitro fertilisation, relevant authorities must use the CPV code for ‘in vitro fertilisation’ rather than one for ‘gynaecologic or obstetric services’. However, as the list of CPV codes does not cover all types of health care services, relevant authorities may in some situations use the overarching parent code for ‘health services’ when a more detailed CPV code is not available. If a more detailed CPV code is available, but not included in the list below, then the service is out of scope.

Annex B: Transparency

Transparency Requirements

Table 1: Transparency notices that require publication under PSR processes

Transparency notices needed for the award of contracts under the provider selection processes

Transparency notices needed for processed in relation to framework agreements

Transparency requirements for direct award processes A and B, and for contracts based on a framework agreement without competition

Where relevant authorities are making decisions under direct award process A or direct award process B, and when awarding a contract based on a framework agreement without competition, the following requirements must be observed.

Notice of award (direct award processes A and B, and contracts based on a framework agreement without competition)

The relevant authority must publish a notice of the award within 30 days of the contract award. The notice of award is expected to be published using the Find a Tender Service (FTS) website, as a contract award notice.

The content must include:

• statement that an award has been made following direct award process A or B, or that the award is based on a framework agreement without competition
• contract title and reference
• name of the provider to which the contract is to be awarded and the address of its registered office or principal place of business
• description of the services to which the contract relates to, including the most relevant CPV code
• the lifetime value of the contract or, where this is not known, the amounts payable to the provider under the contract
• dates between which the services are to be provided
• details of the individual(s) making the award decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

We expect the notice to also include whether:

• this is a new or existing service
• this is a new or existing provider.

To note, when following direct award processes A or B, or when awarding a contract based on a framework agreement without competition (in accordance with the terms of that framework agreement), there is no requirement to make intentions clear in advance or to have a standstill period.

If the relevant authority cannot or does not wish to award a contract, the relevant authority must follow the Transparency requirements for abandoning a provider selection process.

Transparency requirements for direct award process C

Where relevant authorities are making decisions under direct award process C the following requirements must be observed.

Intention to award (direct award process C)

If there is an existing provider of the health care services to which the proposed contracting arrangements relate and its existing contract is coming to an end, and the relevant authority is of the view that the existing provider is satisfying the original contract and will likely be able to satisfy the proposed contract to a sufficient standard and the proposed contract is not changing considerably from the existing contract, then the relevant authority must then publish a notice setting out its intention to award a contract. This is expected to be published using FTS as a contract award notice and must include:

• statement that this is an intention to award the contract for an existing service to an existing provider following direct award process C
• contract title and reference
• name of the provider to which the contract is intended to be awarded and the address of its registered office or principal place of business
• description of the services intended to be provided, including the most relevant CPV code
• approximate lifetime contract value
• details of the individual(s) making the award decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• statement explaining the relevant authority’s reasons for selecting the existing provider with reference to the key criteria
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

We expect the notice to also include the dates between which the services are intended to be provided, if known.

The publication of the intention to award marks the start of the standstill period.

Notice following award (direct award process C)

Once the standstill period has ended the relevant authorities can award the contract. The relevant authority must publish a confirmation of the award within 30 days of the contract award. The confirmation of the award is expected to be published using FTS as a corrigendum to the contract award notice (that was published prior to the standstill period as an intention to award) and must include:

• statement that an award has been made using direct award process C
• contract title and reference
• name of the provider to which the contract has been awarded and the address of its registered office or principal place of business
• description of the services to which the contract relates, including the most relevant CPV code
• lifetime value of the contract or, where this is not known, the amounts payable to the provider under the contract
• confirmation of dates between which the services are to be provided
• details of the individual(s) making the award decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

If, following the standstill period, the relevant authority cannot or does not wish to award a contract, it must follow the transparency requirements for abandoning a provider selection process.

Transparency requirements for the most suitable provider process

Where relevant authorities are making decisions under the most suitable provider process, the following requirements must be observed.

Intention to follow the most suitable provider process

After the relevant authority has decided to follow the approach for the most suitable provider process, it must publish its intention to follow this approach. The intention to use this approach is expected to be published using FTS as a prior information notice, and must include:

• statement that the relevant authority is intending to follow the most suitable provider process
• contract title and reference
• description of the services intended to be provided, including the most relevant CPV code
• details of individual(s) making the award decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate).

The prior information notice for the most suitable provider process is not expected to include details of which provider(s) are under consideration as suitable providers.

The relevant authority must not proceed to assess providers until at least 14 days after the day on which the notice of intention is submitted for publication, so that providers are aware of the approach the relevant authority is taking to choose a provider.

Intention to award to the chosen provider under the most suitable provider process

After the relevant authority has selected a provider, it must publish its intention to award a contract. The intention to award the contract is expected to be published using FTS as a contract award notice, and must include:

• statement that this is an intention to award a contract to a provider following the most suitable provider process
• contract title and reference
• name of the provider to which the contract is intended to be awarded and the address of its registered office or principal place of business
• description of the services intended to be provided, including the most relevant CPV code
• approximate lifetime contract value
• details of the individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• statement explaining the relevant authority’s reasons for selecting the chosen provider with reference to the key criteria
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

We expect the notice to also include:

• whether this is a new or existing service
• whether this is a new or existing provider
• dates between which the services are intended to be provided, if known.

The publication of the intention to award marks the start of the standstill period.

Notice following award (the most suitable provider process)

Once the standstill period has ended, the relevant authority can award the contract. The relevant authority must publish a confirmation of the award within 30 days of the contract award. The notice of the award is expected to be published using FTS as a corrigendum to the contract award notice (that was published prior to the standstill period as an intention to award), and must include:

• statement that an award has been made following the most suitable provider process
• contract title and reference
• name of the provider to which the contract has been awarded and the address of its registered office or principal place of business
• description of the services to which the contract relates, including the most relevant CPV code
• lifetime value of the contract or, where this is not known, the amounts payable to the provider under the contract
• confirmation of dates between which the services are to be provided
• details of the individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

If following the standstill period, the relevant authority cannot or does not wish to award a contract, it must follow the transparency requirements for abandoning a provider selection process.

Transparency requirements for the competitive process

Where relevant authorities are making decisions under the competitive process, the following requirements must be observed. These requirements must also be observed when establishing a framework agreement.

Inviting Offers (the Competitive Process and when establishing a framework agreement)

When the relevant authority has decided to follow the competitive process (including the establishment of a framework agreement), it must publish a notice that will initiate the competitive tender.

It may also publish a prior information notice (PIN) in advance of the notice of a competitive tender opportunity. If publishing a PIN, relevant authorities are advised to include details of the service required, the proposed contract length and any proposed provision for extension or early termination, and any other matters (known or anticipated) that are likely to be of interest to prospective providers.

The invitation to offer bids in a competitive tender is expected to be published using FTS as a contract notice. The contract notice, or the documents provided in the content of the notice (e.g., tendering documents), must include:

• contract or framework agreement title and reference
• description of services required to be provided, including the most relevant CPV code
• intended or estimated dates between which the services must be provided and the duration of the contract (including potential extensions beyond the initial term) or of the term of the framework agreement
• approximate lifetime value of the contract or framework agreement
• contract or framework award criteria
• where the notice relates to establishing a framework agreement, the relevant authorities that will be able to use the agreement
• instructions on how to submit offers (bids), which must be by electronic means
• explanation of how offers (bids) will be assessed, including whether the assessment will be in stages.

Inviting offers (when awarding a contract based on a framework agreement following the competitive process)

When awarding a contract based on a framework agreement following the competitive process, the relevant authority must invite all providers that are part of the framework agreement to submit an offer (bid). This invitation does not have to be published.

The invitation must include:

• description of the services to which the contract relates, including the most relevant CPV code
• contract award criteria
• intended or estimated dates between which the services must be provided and the duration of the contract (including potential extensions beyond the initial term)
• approximate lifetime contract value.

Intention to award (the competitive process, when establishing a framework agreement, and when awarding a contract based on a framework agreement following the competitive process)

After the relevant authority has identified the successful provider(s) (including when establishing a framework agreement or awarding a contract based on a framework agreement), it must publish its intention to award a contract to the successful provider. The intention to award is expected to be published using FTS as a contract award notice, and must include:

• statement that this is an intention to award a contract to a provider or conclude a framework agreement under the competitive process
• contract or framework agreement title and reference
• name of the provider to which the contract is intended to be awarded or with which a framework agreement is to be concluded, and the address of its registered office or principal place of business
• description of the services intended to be provided, including the most relevant CPV code
• where the notice relates to establishing a framework agreement, the duration of the agreement and the relevant authorities that will be party to the framework agreement
• approximate lifetime value of the contract or framework agreement
• details of the individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• statement explaining the relevant authority’s reasons for selecting the chosen provider with reference to the key criteria
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed
• an indication of whether a framework agreement was used.

We expect the notice to also include:

• whether this is a new or existing service
• whether this is a new or existing provider
• dates between which the services are intended be provided, if known.

Communication to unsuccessful providers

After having identified the winning bid, relevant authorities must communicate their decision in writing to unsuccessful providers before publishing the intention to award notice. Relevant authorities must provide unsuccessful providers with written information on why their bid was unsuccessful. This must include:

• contract or framework agreement title and reference
• contract or framework award criteria against which bids were evaluated
• reasons why the successful provider was successful (this may include the score of the successful provider)
• reasons why the unsuccessful provider was unsuccessful (this may include the score of the unsuccessful provider)
• start and end dates for the period during which written representations may be made.

We advise that an address to which written complaints should be sent is also provided in the communication (which may be an email address).

Relevant authorities may also choose to give feedback to unsuccessful providers on what they did well and what they could have done to improve their bid.

The publication of the intention to award notice marks the start of the standstill period. When awarding a contract based on a framework agreement, e.g., following a mini-competition, only providers that were party to the framework agreement and i) took part in the mini-competition but were unsuccessful, or ii) were excluded from the mini-competition, may make a representation to the relevant authority.

Notice of award following a competition (the competitive process, when establishing a framework agreement, and when awarding a contract based on a framework agreement following the competitive process)

Once the standstill period has ended, the relevant authority can award the contract (including those awarded based on a framework agreement) or conclude the framework agreement. The relevant authority must publish a notice confirming the award within 30 days of the contract award. The confirmation of the decision to award is expected to be published using FTS as a corrigendum to the contract award notice (that was published prior to the start of the standstill period as an intention to award), and must include:

• statement that the award follows a competition under the competitive process
• contract or framework agreement title and reference
• name of the provider to which the contract has been awarded or with which a framework agreement has been concluded and the address of its registered office or principal place of business
• description of the services to which the contract relates, including the most relevant CPV code
• where a notice relates to the award of a contract, the lifetime value of the contract or, where this is not known, the amounts payable to the provider under the contract
• where the notice relates to establishing a framework agreement, the duration of the framework agreement, the relevant authorities that will be able to use the agreement and the lifetime value of the framework agreement
• where the notice relates to the award of a contract, confirmation of dates between which the services are to be provided
• details of individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

If following the standstill period, the relevant authority cannot or does not wish to award a contract, the relevant authority must follow the transparency requirements for abandoning a provider selection process (below).

Transparency requirements for abandoning a provider selection process

Where relevant authorities are abandoning a provider selection process, the following transparency requirements apply.

Relevant authorities must publish a confirmation of the decision to abandon the provider selection process and not to award a contract. The confirmation of the decision not to award the contract is expected to be published using FTS as a corrigendum to the last notice published within 30 days of the decision; for example, after the relevant authority publishes its intended approach notice when following the most suitable provider process, or when it cannot or does not wish to award a contract, following representations made during the standstill period. 

Transparency requirements for contract or framework agreement modifications

Where relevant authorities are making a contract modification permitted under this regime that requires transparency, the requirements below must be observed.

Confirmation of modification

The relevant authority must publish a confirmation of the modification within 30 days of the contract modification. The confirmation of modification is expected to be published using FTS as a modification notice, and must include:

• contract or framework agreement title and reference
• description of the services to which the contract or framework agreement relates, including the most relevant CPV code
• effective date of the modification
• brief description of the modification
• any change in lifetime value of the contract or framework agreement (expressed also as a proportion of the cumulative lifetime value of the contract)
• any change in length of the contract or framework agreement
• details of the individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed.

Transparency requirements for urgent circumstances

In some circumstances, relevant authorities may need to act rapidly to address immediate risks to safety and quality of care; see exemptions in urgent circumstances section.

In these urgent circumstances relevant authorities must still be transparent about their decision-making and follow the requirements below.

Confirmation of contract award in urgent circumstances

The relevant authority must publish a confirmation of the decision to award a contract in urgent circumstances within 30 days of the contract award. The confirmation of award is expected to be published using FTS as a contract award notice, and must include:

• statement that in the view of the relevant authority the award was urgent
• contract title and reference
• name of the provider to which the contract has been awarded and the address of its registered office or principal place of business
• description of the services to which the contract relates, including the most relevant CPV code
• lifetime value of the contract, or where this is not known, the amounts payable to the provider under the contract
• dates between which the services will be provided
• justification for length of contract if greater than 12 months
• details of the individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed
• justification for the urgent award (i.e., why Regulation 14 was applied).

Confirmation of modification in urgent circumstances

In urgent circumstances, relevant authorities must publish a confirmation of their decision to make a modification to a contract within 30 days of the contract modification being made (unless the modification is a permitted modification without transparency; see contract modifications). The confirmation of modification is expected to be published using FTS as a modification notice, and must include:

• a statement that in the view of the relevant authority the modification was urgent
• contract title and reference
• description of the services to which the contract relates, including the most relevant CPV code
• effective date of the modification
• nature of the modification, including any change in contract value or length of contract
• details of the individual(s) making the decision (this may be the name of a committee or job titles of individuals making the decision, where appropriate)
• any declared or potential conflicts of interest (COIs) of individuals making the decision (not including individual names) and how these were managed
• justification for why the modification was urgent (i.e., why Regulation 14 was applied).

Annex C: Supplementary information for commissioners and providers of primary care services

Scope of the regime in relation to primary care services

This annex is aimed at relevant authorities arranging primary care services under the PSR and provides additional information about how the PSR is expected to be applied when selecting providers for the delivery of primary care services. It is advised that this annex is read alongside NHS England’s dedicated policy and guidance manuals, which support commissioners in the legal, safe, and effective discharge of their primary care responsibilities.

Since 1 July 2022 all integrated care boards (ICBs) have assumed delegated responsibility for the commissioning of primary medical services, and as of 1 April 2023, NHS England delegated commissioning responsibility to all ICBs for all pharmaceutical, primary eye care services (general ophthalmic), and dental services.

Primary care services collectively refer to primary medical care, community pharmacy, primary dental care, and primary eye care services. The procurement of most primary care services is in scope of the PSR.

Primary care services have often been commissioned on the basis of contracts, which do not have a fixed end date, and so run until terminated. These contracts are therefore not routinely rearranged by relevant authorities.

However, there will be situations where relevant authorities must select a new provider for a service; for example, when responding to planned or unplanned contract terminations, when time-limited contracts (such as Alternative Provider Medical Service or Personal Dental Services contracts) expire, or when new services are arranged (such as new GP surgeries within a new estate/development). In these situations, commissioners must follow the appropriate provider selection process.

As a general rule:

• New primary care services that involve a relevant authority selecting a provider, and where the number of providers available to patients is restricted by the relevant authority, must be arranged by applying the most suitable provider process or the competitive process.
• New primary care services that do not involve a relevant authority selecting a provider, and where the number of providers available to patients is not restricted by the relevant authority, must be arranged under direct award process B.
• Continuation of existing services where the relevant authority does not select the provider(s), and instead any provider that meets the minimum requirement(s) is offered a contract and is placed on a list of providers for patients to choose from, must be awarded under direct award process B.
• Continuation of existing services where the contract of the current provider is coming to an end, the number of providers available to patients is limited by the relevant authority, the relevant authority wishes to continue with the existing provider and decides that the existing provider is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard (taking into account the key criteria and applying the basic selection criteria), and the proposed contract is not changing considerably, may be awarded under direct award process C.
• Modifications to existing contracts may be made in line with this statutory guidance (see contract modifications).

Primary medical care services

This section provides examples of how the regime may be applied when selecting providers for primary medical care services across five scenarios:

1. Continuation of existing contracts
2. Modification of existing contracts
3. Planned provider exit
4. Unplanned changes to existing contracts
5. New and integrated services

1. Continuation of existing contracts

2. Modification of existing contracts

3. Planned provider exit

4. Sudden and/or unplanned changes to existing contracts

5. New and integrated services

Primary dental care services

This section provides examples of how the regime may be applied to primary dental care service contracts across two scenarios:

1. Continuation of existing contracts
2. Sudden and/or unplanned changes to existing contracts

To note, community dental services are not classified as part of primary dental services under the 2006 Act. While primary dental services are commissioned under section 99 of the 2006 Act, community dental services are commissioned under section 3B(1)(a) of the 2006 Act and are ‘dental services of a prescribed description’. However, community dental services are in scope of the regime, because the regime applies to ‘all forms of health care provided for individuals’.

1. Continuation of existing contracts

2. Sudden and/or unplanned changes to existing contracts

Pharmaceutical services

The National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013 set out the contracting arrangements specific to community pharmaceutical services and as such these do not come under the regime.

However, other health services provided by pharmacies are in scope, including:

• services commissioned directly from pharmacies under the NHS Standard Contract, such as an anticoagulant service
• local enhanced services, such as emergency vaccination programmes
• local pharmaceutical services where pharmaceutical services are commissioned outside the scope of the Community Pharmacy Contractual Framework.

When the commissioning of new services falls within the scope of the regime (such as the examples above), and the number of providers is restricted by the relevant authority, then the most suitable provider process or the competitive process may be used to establish these.

To continue with existing arrangements (i.e., to award a new contract to the existing provider where the current contract is coming to an end), direct award process C may be an option, provided that the services are not changing considerably and the relevant authority is satisfied that the existing provider is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard.

Primary eye care services

The type and provision of primary eye care services is set out in the General Ophthalmic Services Contracts Regulations 2008. The procurement of primary eye care services is in scope of the regime. Three types of primary eye care services may be commissioned:

• mandatory services
• additional services
• enhanced services.

Mandatory services

Mandatory services, which include NHS sight testing and the provision of NHS optical vouchers, must be commissioned by the NHS in all areas of England, under the National General Ophthalmic Mandatory Services Contract. Any provider that meets the required criteria may provide these services, meaning that the relevant authority does not limit the providers available to patients.

Therefore, contracts must be awarded under direct award process B, on condition that patients have a choice of providers and the number of providers from which patients have a choice is not limited by the relevant authority.

Additional services

Additional services (mobile NHS sight testing) must be commissioned in all areas of England, under the National General Ophthalmic Additional Services Contract. Any provider that applies and meets the required criteria may provide these services, meaning that the relevant authority does not limit the providers available to patients.

Therefore, contracts must be awarded under direct award process B, on condition that patients have a choice of providers and the number of providers from which patients have a choice is not restricted by the relevant authority.

Enhanced services

Enhanced services are extended ophthalmic services, including (but not limited to):

• minor eye conditions services
• urgent eye care services
• referral refinement
• stable glaucoma monitoring
• post cataract care.

Relevant authorities may choose to commission these services, under the NHS Standard Contract, to meet local needs, fit with local eye care development plans and reduce pressure on secondary care ophthalmology services. Contracts for enhanced ophthalmic services are generally awarded to selected providers as required to meet system requirements, rather than to all potential providers. Therefore, contracts cannot be awarded under direct award process B.

Therefore, if the relevant authority is choosing a particular provider or a group of providers only, then a provider selection must take place.

If a contract for enhanced services needs to be awarded and the relevant authority limits the providers available to patients, then they may:

• award the contract to an existing provider using direct award process C, provided the existing contract is coming to an end, the proposed contract is not changing considerably from the existing contract, the relevant authority is satisfied that the provider is satisfying the contract and will likely satisfy the proposed contract to a sufficient standard.

If the proposed contract is changing considerably from the existing contract or the relevant authority wants to seek new providers, then they may apply the most suitable provider process or the competitive process.

Annex D: Key criteria

Further detail on the key criteria is set out below.

All the key criteria must be considered, when following direct award process C, the most suitable provider process, or the competitive process, and how they are considered must be recorded. We expect that none of the key criteria are discounted. The regime does not specify how relevant authorities must balance the key criteria; however, relevant authorities are expected to be aware of wider requirements or duties when considering procurement decisions, such as NHS England’s net zero ambitions or its social value commitment, and the need to ensure value for money when arranging health care services. The flexibilities offered by the regime do not mean that relevant authorities do not have to comply with those obligations.

Relevant authorities are expected to consider the weightings and their consequences when considering the service to be delivered, and before beginning a provider selection process.

Criterion 1: Quality and innovation

Quality

Relevant authorities must give due consideration to the quality of services to be provided (by a provider).

Relevant authorities are advised to consider relevant local and national information on the quality of the service provided, where available.

Relevant authorities are advised to consider the extent to which the desired outcomes in terms of quality will be maintained or improved because of the provider/arrangements being considered. 

Where a new and/or innovative service is being considered and no data on quality is available, relevant authorities are advised to weigh the potential value of the innovation/new service against the risk that the service does not deliver the anticipated quality and understand how performance will be assessed, risks managed, and the service evaluated.

We advise that the selection process for any new/innovative service provider includes an assessment of how the service will provide information/data on the quality-of-service provision and monitor safety of operations (given it will not be able to rely on existing methods/indicators).

Relevant authorities are advised to consider the provider’s willingness/ability to identify, monitor and mitigate risks on an ongoing basis, engage with clinical governance processes, and involve service users in service planning and oversight.

Innovation

Relevant authorities must ensure they assess the extent to which an arrangement with a provider may generate and maximise improvements in the promotion and adoption of proven innovations in care delivery.

When assessing innovation, relevant authorities are advised to give due consideration to any particular innovative approaches offered by providers that may help deliver better health outcomes.

Relevant authorities are expected to consider how their decisions may improve or limit the longer-term ability of the NHS to continue to innovate and meet health needs. They are expected to take into account whether an arrangement with a provider may stifle the development and adoption of innovations, and how their decisions may affect the ability of the provider market to support access to, or the development of, new or innovative services for patients in future.

Relevant authorities are expected to:

• consider how their decisions may improve or exacerbate inequalities in access to, experience of, or outcomes from, health care services
• operate with the view of securing quality improvement of services in connection with the prevention, diagnosis and treatment of illness
• consider when entering into an agreement with a provider the impact on reducing inequalities in the accessibility of health care services, and the quality of outcomes achieved for all eligible persons following the provision of health care services.

Relevant authorities are advised to consider how providers are able and willing to engage with and undertake health research, and are advised to make arrangements that promote and support clinical research and use of research evidence on matters relevant to the health service.

Criterion 2: Value

Relevant authorities must give due consideration to the need to ensure good value in terms of costs, overall benefits and financial implications of an arrangement. When assessing the value of a service/arrangement with a provider, relevant authorities are expected to consider:

• The benefits of the arrangement with a provider. Benefits may be evaluated in relation to the other criteria in the regime and may relate to patients (in terms of patient outcomes or experience), the population (in terms of improved health and wellbeing) and to taxpayers (by reducing the cost burden of ill-health over the whole life of the arrangement within the resources available).
• The costs (or likely costs) of the arrangement, including but not limited to the efficiency of the service, the cost over the length of contract, value for money, the historical market valuation of certain services and any benchmarking of costs against other similar services.
• Any relevant local/national financial goals.

When judging value, relevant authorities are expected to consider both the costs and the benefits of an arrangement with a provider over the expected contractual term, including fluctuations in external trends and the potential variation of the value of the service over the length of the contract.

Relevant authorities are advised to consider whether a particular arrangement with a provider may positively or negatively impact the costs/benefits of other related services, or other commissioning priorities.

Relevant authorities are advised to consider the costs for the provider of changing existing arrangements or establishing new ones, alongside the anticipated cost of the contract itself when assessing value. For example, arranging a service with a new provider may offer a financial saving to the relevant authority over a relatively long contract duration, but if the anticipated cost of switching to a new provider, including any start-up funding required, outweighs the savings the new provider offers, then consideration needs to be given as to whether such an arrangement is still in the best interests of taxpayers.

Relevant authorities may:

• use published data (such as the Spend Comparison Service) to benchmark costs
• ask providers for the information needed to establish the value they offer (e.g., a cost breakdown)
• use the competitive process to establish the value available providers offer (see the competitive process).

Criterion 3: Integration, collaboration and service sustainability

Integration and collaboration

Relevant authorities must consider the extent to which the services can be provided in an integrated and collaborative way – including with other health care services, health-related services or social care services, and their providers.

Relevant authorities are advised to ensure that their decisions are consistent with local and national plans around integrating care and joining up services for patients.

When assessing this criteria, relevant authorities are expected to consider the extent to which the provider under consideration will be able to integrate with other related services in a way that improves care (recognising that integrating services does not necessarily mean all those services have to be delivered by the same provider).

Relevant authorities are expected to consider whether a decision may either improve or adversely impact the care pathways and patient journeys of other related services, as well as the service being considered, and seek to avoid unnecessary disruption or fragmentation of services where possible.

Relevant authorities are expected to consider whether integration may:

• improve the quality of those services (including the outcomes from their provision)
• reduce inequalities between persons with respect to their ability to access those services
• reduce inequalities between persons with respect to the outcomes from the provision of those services.

Relevant authorities are advised to also consider the extent to which a provider is willing and able to be involved in existing integrated care plans and joint working approaches locally. For example, if a provider can clearly demonstrate that the services it provides will sufficiently integrate into the existing infrastructure and patient pathway, but the cost of that provider providing those services is slightly higher than as provided by others, an argument may be made for still pursuing delivery by that provider due to the overarching benefits it offers.  

When considering the potential benefits of joined-up working, relevant authorities are advised to consider any existing relationships between the providers under consideration and connected organisations, and whether these are likely to improve sufficiently to lead to tangible benefits for patients and service users.

Relevant authorities are expected to consider:

• whether the flow of patient data will be improved or impeded by the decision
• whether the respective working practices, culture, infrastructure and systems of the providers involved across linked services are likely to enable better integration
• the location of services proposed by providers and whether this may impact on the providers’ ability to integrate.

Service sustainability

Relevant authorities must consider whether and how the decisions they make about which providers should provide services might impact on the stability and sustainability of the NHS locally.

When assessing service sustainability, relevant authorities are expected to consider several factors, including but not limited to the:

1. financial impact on other services
2. impacts on continuity of other related services
3. potential impact on quality of other related and/or dependent services (including those arranged by other bodies)
4. stability and sustainability of other providers in the short, medium, and long term
5. impact on the ability of the wider market to provide required services in the future.

Relevant authorities are expected to consider whether and how the decisions they make about which providers should provide services might have a sustained and material impact on the local health care workforce, including but not limited to:

1. the retention of a skilled local workforce
2. the ongoing availability of relevant training opportunities for the local workforce (e.g., apprenticeship, training structure, clinical placements)
3. the impact on well-established teams
4. whether the models of employment used by providers are consistent with current NHS workforce policy priorities.

Relevant authorities are expected to avoid destabilising providers through their decision-making. If the proposals are likely to have a negative impact on the stability, viability, or quality of other good quality services immediately or over time, relevant authorities are advised to consider whether this is justified by the wider benefits of the proposal.

Criterion 4: Improving access, reducing health inequalities, and facilitating choice

Improving access

Relevant authorities must consider the extent to which a particular arrangement with a provider furthers the rights and pledges set out in the NHS Constitution when thinking about arrangements, in relation to patient and public rights, including the right to:

• access NHS services and not be refused access on unreasonable grounds
• expect the NHS to assess the health requirements of the local community and to arrange and put in place the services to meet those needs as considered necessary, and in the case of public health services arranged by local authorities to take steps to improve the health of the local community
• not be unlawfully discriminated against in the provision of NHS services, including on grounds of gender, race, disability, age, sexual orientation, religion, belief, gender reassignment, pregnancy and maternity or marital or civil partnership status.

Relevant authorities are expected to consider the extent to which the arrangements with a provider may support local population health needs, and ensure services are as easy to access as possible for all patient groups.

Relevant authorities are advised to consider how providers may best be able to:

1. meet needs of local groups who experience poorer than average access
2. improve the access to services, and experience and patient outcomes, for deprived and vulnerable groups and groups with protected characteristics
3. relate to and understand the populations they are seeking to serve
4. expand access to services via their delivery models
5. address digital exclusion
6. provide services at locations accessible for patients.

Reducing health inequalities and disparities

Tackling inequalities in outcomes, experience and access is one of the four aims of integrated care systems (ICSs). The legal duty in relation to health inequalities requires ICBs to have due regard to the need to reduce inequalities between persons in access to health services, and the outcomes achieved. The outcomes achieved include patient experience.

Relevant authorities are expected to consider the ways in which the arrangement with a provider will impact on health inequalities, and in arranging services seek to reduce health inequalities and disparities. For example, some population cohorts may require additional support to exercise choice and this support is expected to be proactively offered and provided.

Facilitating choice

When assessing potential providers against this criterion, relevant authorities must consider the extent to which the arrangements with a provider may impact on patient choice of provider and on patients’ choices about their treatment and personalisation of care. Relevant authorities must not limit choice where patients have a legal right to choose the provider of their first outpatient appointment from any clinically appropriate provider in England that is contracted to work with the NHS.

Different types of choices are available to patients:

• legal right to choice of provider of elective services led by a consultant or mental health care professional
• choice of provider for other non-consultant led elective services where commissioners have decided to offer choice of provider, e.g., where commissioners have established a list of providers that patients can choose from
• choices about treatment and the personalisation of care.

Relevant authorities are expected to:

• consider the extent to which a particular decision may expand or reduce the choice of providers available to patients
• consider that some population cohorts may require additional support to exercise choice
• offer and provide any additional support, as required, proactively.

For services where there is no legal right to choice and there is risk that the relevant authority’s plans may limit the services and treatments that patients can choose from, the relevant authority is expected to consider whether this risk is sufficiently offset by the wider benefits of its proposal, and whether other forms of choice may be included in the arrangement (e.g., choice of treatment).

Relevant authorities are advised to consider the range of options a provider can offer for the services, treatments and modes of access they provide, and how well these match the needs and wishes of the population (including the needs of different subgroups or populations).

Relevant authorities are advised to consider whether services may be improved by giving patients a choice of provider (where this is not already a legal requirement), e.g., by establishing a list of providers that patients can choose from.

Criterion 5: Social value

• Relevant authorities must seek to ensure that the decisions they make about which providers should provide services are aimed at maximising ‘social value’ by contributing to improvements in social, economic, and environmental conditions aligned to local priorities.
• Relevant authorities are advised to be aware of other requirements and duties not set out in legislation. For example, NHS England, ICBs, NHS trusts and NHS foundation trusts are expected to adhere to NHS England’s net zero emissions requirements, the application of net zero and NHS social value, and Carbon Reduction Plan requirements in the procurement of NHS goods and services.

In assessing social value, relevant authorities are expected to think about how the arrangements with providers under consideration impact on:

1. environmental issues and sustainable development, including addressing climate change, making and meeting commitments around reducing emissions, air pollution and consumption and waste, through promoting circular economy principles as well as enhancing the natural and built environment as applicable
2. inclusive and ‘good’ employment that increases equality of opportunity in the workplace and supports a diverse workforce, designs in equity, provides fair terms and conditions and supports staff wellbeing, physical and mental health, supports opportunities for local people and/or population groups experiencing health or other inequalities and eliminates modern slavery
3. local inclusive and sustainable economies that decrease economic inequality and poverty, including through employment as an economic and health intervention and payment of a living wage
4. community cohesion and the wider health and wellbeing of the population, including by helping communities to manage and recover from the impact of
   COVID-19
5. social determinants of health (e.g., employment, income, housing, local environment, food, transport, community, safety).

Relevant authorities are advised to consider the extent to which providers have acted to increase social value within their own activities, and how social value improvements can lead to other improvements in health outcomes.

Relevant authorities are advised to consider social value in relation to the other criteria in this regime. For example:

• a better integrated service that leads to fewer patient journeys may also enable environmental gains to be made
• a service that leads to improved air quality may contribute to improved health outcomes over time and hence projected savings.

Relevant authorities are advised to consider how a provider’s policies and practices align with:

• moving towards net zero and delivering social value in the procurement of goods and services
• increasing the impact of organisations providing health services as anchor institutions and partners in place
• supporting broader social, environmental, and economic development
• eliminating modern slavery in the supply chain and the extent to which providers have conducted due diligence on their own supply chains, identifying any risks of labour standards abuse and putting in place mitigation to reduce these risks.

Relevant authorities are expected not to make arrangements with providers that stifle the potential for development and adoption of sustainability within the services or result in a local provider market that may not be able to support the development of new or sustainable services for patients in the future.

Annex E: Contract management

General

The decision-making process set out in this regime is part of a wider set of activities that, together, help ensure that NHS services are arranged in the best interests of people who use them.

Once decisions have been made about which providers should provide services under this regime, the contract or subcontract awarded and associated contract management arrangements must reflect the desired outcomes. These are expected to take into consideration any relevant local and national policies on contract management.

Relevant authorities are expected to have appropriate mechanisms in place to periodically assess whether the anticipated benefits to patients, taxpayers and the population are being realised, and to vary or end contracts/subcontracts, in accordance with the processes set out in them, where the benefits no longer are being realised.

Relevant authorities are advised to ensure contracts and subcontracts have a duration appropriate to the service in question, and when appropriate that contracts and subcontracts include clear review provisions and options to terminate (as the NHS Standard Contract and subcontract templates do).

We advise that contracts and subcontracts, where possible, set expectations about the possibility that they may need specific modifications during their term and about the potential for extension when the initial term ends (as, for example, are provided in the NHS Standard Contract and subcontract templates).

Subcontracting

Many services are purchased by provider organisations by means of a subcontract. Where an NHS provider (NHS trust or foundation trust) is planning to subcontract to another provider for the provision of a service that is in scope of the regime, then this regime must be followed in order to select an appropriate subcontractor (as well as the provisions of that NHS provider’s own contract).

If a non-NHS provider has been awarded a contract under this regime, and then sets out to subcontract any elements of that service, that subcontracting will not be governed by this regime. This makes it particularly important that the relevant authority that awarded the initial contract holds the non-NHS provider accountable via its contract for any subcontracting it undertakes and exercises its right to approve subcontracts and subcontractors (see, for example, the general conditions of the NHS Standard Contract).

Relevant authorities may consider it necessary to specify any limits and/or conditions to subcontracting (e.g., services that may not be subcontracted under any circumstances) in the contract.

Where subcontracting has taken place, the ongoing contract management of both the lead contractor by the relevant authority and of the subcontractors by the lead contractor is important, to ensure that the service in place is achieving the desired outcome.

Good information sharing between the original relevant authority and main contractor about the arrangements with other providers will be an important means of assurance for both the relevant authority and the main contractor.

Annex F: Transitional arrangements

General

As of 1 January 2024, the PSR replaced the National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 (the PPCCR), and removed the procurement of health care services, when procured by relevant authorities under the PSR, from the scope of the Public Contracts Regulations 2015 (the PCR). The PSR is now the sole set of rules governing decisions about health care service procurement undertaken by relevant authorities.

When health care services in scope of the regime are arranged on or after 1 January 2024, then the PSR must be followed. This is the case for all new contracts awarded (including those awarded based on a framework agreement, either newly established or already existing), for all new framework agreements that are established and for all contract modifications that take place.

The PSR does not have any retrospective effect on contracts or frameworks agreements that were entered into prior to the 1 January 2024. However, from 1 January 2024 onwards any changes to these contracts or framework agreements (those awarded or established before the 1 January 2024) where the services are in scope of the regime, must be carried out in accordance with the contract modifications section of the PSR.

Incomplete procurements under the previous rules

There may be instances where procurements underway following the PCR processes did not conclude fully by the time the PSR came into force. Any contract award procedure started before 1 January 2024 will not be affected by the PSR. This means that contract awards, including when awarding a contract based on a framework agreement, initiated before 1 January 2024 can conclude under PCR rules. Similarly, if the establishment of a framework agreement started before 1 January 2024, then this can be concluded under PCR rules.

A contract award process is considered to have started under the PCR if any of the following began before 1 January 2024:

• a contract notice has been submitted to the UK e-notification service for publication in accordance with Regulation 51(1) of the Public Contracts Regulations 2015
• the relevant authority has contacted any provider to:
  • seek expressions of interest or offers in respect of a proposed contract, or
  • respond to an unsolicited expression of interest or offer received from that provider in relation to a proposed contract.

In the case of awarding a contract based on a framework agreement or other technique or instrument for electronic or aggregated procurement concluded in accordance with the PCR, a contract award procedure is considered to have started before 1 January 2024 if, before that date, any steps have been taken with a view to making an award.

When establishing a framework agreement, a procurement process is considered to have started if before 1 January 2024 the relevant authority has published any form of advertisement seeking offers or expressions of interest in a proposed framework agreement; or to respond to an unsolicited expression of interest or offer received from that provider in relation to a proposed contract.

When using a dynamic purchasing system (DPS) or similar, which is not a framework agreement (whether or not the system is operated in accordance with Regulation 34 of the PCR), where the period of validity has not expired and the system has not otherwise been terminated, then this is not affected by the PSR.

However, once the contract is awarded, subsequent decisions, such as modifications, relating to that contract must be made by following the relevant part of the PSR.

Transitional arrangements for framework agreements and dynamic purchasing systems

The Regulations set out that all new contracts from 1 January 2024 must be awarded under PSR rules if the award process did not start before 1 January 2024 (as described above). This means that if relevant authorities are looking to award contracts based on existing framework agreements and DPS from 1 January 2024, then they must use the PSR. However, the awarding of contracts from a framework agreement or DPS must be in line with the terms and conditions of the framework/DPS agreement, which may restrict which approach can be used.

From 1 January 2024, if a relevant authority wishes to modify contracts awarded under a DPS or a framework agreement that was established under PCR regulations, the modification must still be made following the PSR process detailed in the contract modifications section.

Publication reference: PRN00852