Consultation outcome

Provider Selection Regime: supplementary consultation on the detail of proposals for regulations - government response

Updated 13 July 2023

Executive summary

The Provider Selection Regime (PSR) is a proposed new set of rules which would govern the arrangement of healthcare services in England. Our aim for the PSR is to move away from the expectation of tendering for healthcare services in all circumstances and towards collaboration across the health and care system. This is intended to remove unnecessary tendering, remove barriers to integrating care and promote the development of stable collaborations.

The PSR would give decision-makers in the NHS and local government the flexibility they need to arrange services that best promote the interests of patients, the taxpayer and the population. This overarching objective would be underpinned by decisions made on a broad base of criteria including:

• quality and innovation
• value
• integration, collaboration and service sustainability
• social value
• opportunities to increase access to healthcare, reduce health inequalities and disparities and promote patient choice

The PSR will provide a sensible, transparent and proportionate process for decision-makers to arrange healthcare services. This includes the option of competitive tendering which can continue to be used where it will add value and achieve the PSR’s overall objectives.

However, for many healthcare services, the nature of the service means that there is only one realistic provider for that healthcare service. The PSR explicitly recognises this - and makes it clear that such core services can be arranged without unnecessary competitive tendering. Additionally, the PSR is intended to make it straightforward to continue with existing arrangements for service provision where those arrangements are working well and there is no value for the patients, taxpayers and population in seeking an alternative provider.

The powers to establish the PSR are set out in section 79 and section 80 of the Health and Care Act 2022.

Introduction

NHS England previously set out proposals for the PSR. These proposals were formulated in response to extensive engagement and consultation since early 2019 and are supported by the Department of Health and Social Care (DHSC). You can read full details of the previous consultation on proposals for the PSR on the NHS England website.

This supplementary consultation by DHSC sought the views of the public and organisations on:

• the use of common procurement vocabulary (CPV) codes in regulations to define the scope of the PSR
• the procurement of services usually out of scope of the PSR alongside in scope services (mixed procurement)
• the thresholds for when a contract has varied or is changing considerably and the PSR should be used to select providers
• how the PSR should be applied when decision-making bodies voluntarily establish provider lists to offer patients choice, but where these lists are limited and there is no statutory right for patients to choose
• requirements on decision-makers to ensure transparency of decisions made under the PSR

This document highlights the main issues raised and how they have informed the regulations that will establish the PSR. It is not, however, an exhaustive commentary on every response received.

Alongside the consultation, we also asked further questions to help us understand the impact of our proposals for the PSR on providers and commissioners. A summary of the responses received to these questions and our response can be found in the annex (‘Responses to the further questions’).

Although not explicitly related to the consultation questions, during the consultation we heard concerns regarding oversight and scrutiny of decisions made under the PSR. A summary of these concerns, and our response, is set out in ‘Section 8: independent review of decisions made under the PSR’.

Alignment with the Procurement Bill

On 11 May 2022, the Procurement Bill was introduced to Parliament.

The Procurement Bill does not relate to healthcare services which would be arranged under the PSR. The PSR will cover the procurement of healthcare services which are delivered to patients and service users - and only when they are arranged by relevant healthcare authorities including NHS bodies and local authorities. The Procurement Bill would not apply to these but will cover other goods and services. This includes healthcare or health-adjacent services which are not delivered to patients but help support the infrastructure of the NHS and, as such, are outside of the scope of the PSR. It also includes all services when procured by authorities other than NHS bodies and local authorities. For more detail, read the summary guide to the provisions of the Procurement Bill.

We are continuing to engage with Cabinet Office officials as we develop plans for implementation so that there is clarity for all stakeholders on which regime will apply in any given circumstances.

Section 1: approach and methodology

This supplementary consultation opened on 21 February 2022 and closed on 28 March 2022. In total, 124 responses were received. The percentages referred to in this document relate to responses received via the online survey. We did, however, also receive letters directly from 2 organisations which we have considered in our consultation response.

Of these 124 responses, 68% were submitted on behalf of organisations. We heard from a range of decision-making bodies and providers including local authorities, clinical commissioning groups, NHS trusts and NHS foundation trusts, providers in the voluntary, community and social enterprise (VCSE) sector and other independent providers. We also received responses from bodies including the Local Government Association, Independent Health Providers Network, British Medical Association (BMA), NHS Providers and British Dental Association.

Thirty-two per cent of responses received were from individuals sharing their personal and professional views. We heard from a range of professionals including procurement specialists, commissioners, clinicians, legal and finance practitioners as well as members of the public.

Three webinars were also held during the consultation period during which attendees were invited to find out more information about the PSR and ask questions to DHSC policy officials. In total, these webinars were attended by over 600 representatives from across the NHS, local government and the independent healthcare sector. Questions asked by attendees often related to scope, application, timelines for commencement and oversight and scrutiny of the PSR and decisions made under it. These questions are addressed in this document.

Webinar attendees also raised questions regarding support for implementing the PSR. More information about how we propose to support decision-making bodies to implement the PSR can be found in our response to the further questions that accompanied this consultation in the annex (‘Responses to the further questions’).

We extend our thanks to all respondents for their time and effort in participating in the consultation.

Section 2: responses to our proposals for defining the scope of the PSR

The consultation document set out our proposals for the scope of the PSR. We sought views on the merits of including a list of CPV codes in the regulations to clarify the scope of services which can be procured under the PSR. We included a proposed list of CPV codes in the consultation document for comment.

To what extent do you agree or disagree that the inclusion of a list of CPV codes in the regulations for the Provider Selection Regime would help to clarify the scope of the regime and promote understanding of when the regime applies?

To what extent do you agree or disagree that the list of codes presented (in the consultation document) accurately represent our aims for defining the scope of healthcare services?

Overall, 62% of respondents agreed or strongly agreed with our proposal to include CPV codes in the regulations. 18% neither agreed nor disagreed.

Where respondents agreed, several stated that including CPV codes in regulations would help to clarify which services are and are not in scope of the PSR. For example, a local authority told us:

The PSR must provide commissioning organisations and the market with clear criteria to determine which services are within scope; to provide clarity about when the regime applies and help mitigate the risk of challenge. In this respect, the inclusion of CPV codes is useful.

An NHS foundation trust said that “the inclusion of CPV codes would assist with a clearer understanding of the types of contracts that the PSR can apply to.”

Respondents also commented that including CPV codes would help ensure consistency and commonality in how the PSR is applied across the country and between decision-making bodies. For example, an NHS trust said:

This level of detail is believed to be essential to promote transparency. A PSR without such a definition could be prone to interpretation and raise the risk of decisions being disputed.

A clinical commissioning group told us:

Inclusion of CPV codes will ensure consistency of application by all decision-making bodies.

However, even where respondents agreed in principle to the inclusion of CPV codes in the regulations, many stated that the codes proposed and their descriptions were too vague, with more clarity needed. For example, a local authority said:

…The stated codes require further refinement/granularity. Some of the categories are broad and may be interpreted differently by decision-making organisations, which could increase risk of challenge and inconsistent application.

A clinical commissioning group told us:

CPV codes are helpful but further clarification is needed/a comprehensive definition for each, as there appears to be a wide option over which codes to use.

Concerns around clarity and code descriptions being too broad were also cited as reasons why some respondents disagreed that CPV codes should be included in the regulations to clarify which services can be procured under the PSR. Overall, 20% of respondents disagreed or strongly disagreed with our proposal to include CPV codes in regulations.

Some of the respondents who disagreed with our proposal also commented that the hierarchical nature of CPV codes meant their inclusion in regulations would be of limited value. For example, a commissioning support unit said:

They would not add any clarity to the legal definition as some are very non-specific (for example, health services, miscellaneous health services, hospital services) and others are more targeted (Pulmonary specialist services, Orthodontic-surgery services). Our experience in procurement has been that where a specific CPV code is not available commissioners will default to a broadly drawn code (for example, health services) so there would be very little benefit/clarification to the use of CPV codes for PSR.

The applicability of internationally recognised CPV codes to the health service in England was another reason why some respondents disagreed with our proposal to include CPV codes in regulations. An independent provider told us that:

CPV codes are not a reflection of how NHS services are arranged at present, or may be arranged in the future.

An organisation representing healthcare interests said:

Unfortunately, CPV codes do not capture the full extent of how healthcare is provided in the UK.

Some respondents who disagreed with our proposal to include CPV codes in regulations cited specific examples of codes that were absent from our proposed list, including those relating to public health commissioning. For example, Social Enterprise UK (SEUK) told us:

There are several services that are not specifically covered by the current list of CPV codes including community services, substance misuse services, other allied professional and specialist health services. This could potentially lead to these types of services either automatically going to competitive tender at the end of the contract, as systems consider them outside of the scope of the PSR. Or causing unnecessary confusion both for providers and commissioners about which approach is possible for these services.

Just over a third (35%) of respondents agreed that the list of CPV codes included in the consultation document accurately represented our aims for defining the scope of healthcare services for the purpose of the PSR. 27% neither agreed nor disagreed.

Are there CPV codes that you think should be included in the list? Are there CPV codes that you think should be excluded from the list?

The majority of respondents who answered these questions mainly suggested codes should be added to our proposed list, rather than removed. However, some stakeholders identified that some relevant healthcare codes were missing from our list (see the list in ‘Response from DHSC’ below).

Several respondents suggested codes relating to the procurement of goods and equipment (for example, wheelchairs) and their repair and maintenance.

Other respondents commented that the proposed list of codes included in the consultation document was too focused on acute care, and that other services such as those provided in the community and/or relating to public health (for example, substance misuse services; health visiting; school nurses; sexual health services) were not clearly in scope of the PSR. Some stakeholders suggested that codes for family-planning services, rehabilitation and community health services (when properly caveated) would help clarify that public health services arranged by local authorities are in scope of the PSR. Others highlighted a lack of clarity around specific services such as patient transport, and that some services are not captured by a CPV code.

Response from DHSC

We welcome support from most respondents for our proposal to include CPV codes in the regulations to clarify which services are in scope of the PSR, and therefore intend to continue with this proposal. We also agree that this approach will aid consistency in how the PSR is applied.

We note, however, that although most respondents were supportive of including CPV codes in the regulations, many expressed concerns about our proposed list.

Several respondents suggested the addition of codes regarding equipment and goods and their repair and maintenance. The procurement of goods is outside the scope of the PSR - however, contracts for which the main subject matter is the delivery of a healthcare service to individuals (that is, patients and service users) may be arranged together with goods under specific criteria as per our proposals for mixed procurement (see ‘ Section 3: responses to our proposals for mixed procurement under the PSR).

We were also alerted to the omission of codes from our proposed list which would apply to services that are in scope of the PSR. These were:

• 85146000-4: services provided by blood banks
• 85146100-5: services provided by sperm banks
• 85146200-6: services provided by transplant organ banks
• 85148000-8: medical analysis services
• 85149000-5: pharmacy services
• 85150000-5: medical imaging services
• 85160000-8: optician services

These codes will therefore be included in regulations to define the scope of the PSR. The regulations will make clear that CPV code 85149000-5 (pharmacy services) will not extend to community pharmacies that are arranged under The National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013.

Some respondents also noted there are services without a specific code. The CPV is a classification system used and developed by the European Commission to increase transparency and efficiency in public procurement. Given its international nature, we acknowledge there will be some services procured for the health service in England that do not clearly align with a specific code. In this regard, we do not have the powers to create new codes and accept that we are unlikely to be able to cover all healthcare services that are in scope of the PSR in the list of CPV codes we include in regulations. We have therefore included higher level, more generic, CPV codes under which services that do not clearly align with a specific CPV code can be arranged.

Other respondents also gave examples of services that they believed were not covered by the list of CPV codes we presented, but which do align with a specific CPV code. These services included those provided in the community and/or related to public health functions such as sexual health and substance misuse services. Therefore, in addition to CPV codes in the consultation document and the codes listed above, we propose 3 additional codes will be included in regulations to clarify the scope of the PSR:

• 85323000-9: community health services
• 85312500-4: rehabilitation service
• 85312330-1: family planning services

As such, we will aim for regulations to make clear that these codes may be used only to procure services which are in scope of the regime (that is healthcare services delivered to individuals). Services in scope of the regime which can be attributed to these CPV codes include sexual and reproductive health services (family planning services), substance misuse services (rehabilitation services), child health visitor services (community health services), services provided by community and district nurses (community health services) and other in scope healthcare services when delivered in the community (community health services).

For clarity, a full list of the CPV codes we intend to use in regulations to define the scope of the PSR is given below. Further information to help decision-making bodies determine whether a service is in scope of the PSR will be set out in guidance, alongside examples of services that are in scope.

CPV code	Description
85100000-0	Health services
85110000-3	Hospital and related services
85111000-0	Hospital services
85111100-1	Surgical hospital services
85111200-2	Medical hospital services
85111300-3	Gynaecological hospital services
85111310-6	In vitro fertilisation services
85111320-9	Obstetrical hospital services
85111400-4	Rehabilitation hospital services
85111500-5	Psychiatric hospital services
85111600-6	Orthotic services
85111700-7	Oxygen therapy services
85111800-8	Pathology services
85111810-1	Blood analysis services
85111820-4	Bacteriological analysis services
85111900-9	Hospital dialysis services
85112200-9	Outpatient care services
85120000-6	Medical practice and related services
85121000-3	Medical practice services
85121100-4	General practitioner services
85121200-5	Medical specialist services
85121210-8	Gynaecologic or obstetric services
85121220-1	Nephrology or nervous system specialist services
85121230-4	Cardiology services or pulmonary specialist services
85121231-1	Cardiology services
85121232-8	Pulmonary specialist services
85121240-7	ENT or audiologist services
85121250-0	Gastroenterologist and geriatric services
85121251-7	Gastroenterologist services
85121252-4	Geriatric services
85121270-6	Psychiatrist or psychologist services
85121271-3	Home for the psychologically disturbed services
85121280-9	Ophthalmologist, dermatology or orthopaedics services
85121281-6	Ophthalmologist services
85121282-3	Dermatology services
85121283-0	Orthopaedic services
85121290-2	Paediatric or urologist services
85121291-9	Paediatric services
85121292-6	Urologist services
85121300-6	Surgical specialist services
85130000-9	Dental practice and related services
85131000-6	Dental practice services
85131100-7	Orthodontic services
85131110-0	Orthodontic surgery services
85140000-2	Miscellaneous health services
85141000-9	Services provided by medical personnel
85141100-0	Services provided by midwives
85141200-1	Services provided by nurses
85141210-4	Home medical treatment services
85141211-1	Dialysis home medical treatment services
85141220-7	Advisory services provided by nurses
85142000-6	Paramedical services
85142100-7	Physiotherapy services
85143000-3	Ambulance services
85144000-0	Residential health facilities services
85144100-1	Residential nursing care services
85145000-7	Services provided by medical laboratories
85146000-4	Services provided by blood banks
85146100-5	Services provided by sperm banks
85146200-6	Services provided by transplant organ banks
85148000-8	Medical analysis services
85149000-5	Pharmacy services (but not including community pharmacies that are arranged under The National Health Service (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013)
85150000-5	Medical imaging services
85160000-8	Optician services
85323000-9	Community health services (but only in respect of community health services which are delivered to individuals)
85312330-1	Family planning services (but only insofar as such services are provided to individuals to support sexual and reproductive health)
85312500-4	Rehabilitation services (but only insofar as such services are provided to individuals to tackle substance misuse or for the rehabilitation of the mental or physical health of individuals)

Section 3: responses to our proposals for mixed procurement under the PSR

We acknowledge that procurements will sometimes contain multiple elements, some of which are in scope of the PSR and others that fall within the scope of wider procurement regulations. The consultation document set out our proposals for mixed procurement under the PSR.

In the consultation, we asked respondents if there were other types of services (apart from social care) which, when arranged in a single contract with healthcare, may further promote the best interests of patients, the taxpayer and the population.

We also sought views on the merits of using CPV codes to clarify the scope of social care services which may be arranged with healthcare as part of a mixed procurement (noting that social care services may frequently be arranged alongside healthcare as part of a mixed procurement). Our proposed list of CPV codes for this purpose was included in the consultation document.

What other types of service (apart from social care) do you think may be arranged in a contract (for which the main subject matter is healthcare) which we should be aware of?

Many respondents gave examples of services where healthcare is arranged alongside other provision under a single contract.

Some of these examples related to contracts which contain both healthcare and social care elements such as accommodation-based services including homelessness and rough-sleeping services, domestic abuse support services and rehabilitation services.

Other respondents gave examples of social prescribing where debt and employment support and weight loss services are procured alongside healthcare services.

A considerable number of respondents gave examples of services to facilitate delivery of healthcare including patient transport services, courier services, IT and digital services and solutions including telecare and call handling, and goods.

Finally, some respondents gave examples of healthcare services which they felt were not covered by our definition of ‘healthcare services’ as defined by the CPV codes we presented in the consultation document (see ‘ Section 2: responses to our proposals for defining the scope of the PSR’) These included public health, community and some mental health services.

To what extent do you agree or disagree that the list of codes presented (in the consultation document) accurately represent the scope of social care services which may be arranged with healthcare services?

Are there CPV codes that you think should be included in the list? Are there CPV codes that you think should be excluded from the list?

There was a mixed response when we asked if the CPV codes accurately represented the scope of social care services that may be arranged alongside healthcare services. Overall, 42% of respondents agreed or strongly agreed, although 46% neither agreed nor disagreed. NHS and local government respondents were more likely to agree than other respondents.

Most respondents who answered the second question above suggested CPV codes that should be added to our proposed list rather than removed. Of those who answered, most respondents suggested codes that were not immediately related to social care but which they believed should be in scope of the PSR. These were often those CPV codes mentioned in response to the earlier question “Are there CPV codes that you think should be included in the list? Are there CPV codes that you think should be excluded from the list?” and included public health services, community health services, medical goods and equipment. Specific codes related to social care which respondents felt should be added to the proposed list included 85311200 and 85312120, which were removed from our list as their descriptions contained language considered to be offensive and which should be avoided. Again, the CPV is an international classification system, and we are unable to create additional codes or amend code descriptions.

As with the previous section of the consultation on scope, some respondents repeated concerns about the use of CPV codes, including their applicability to the health service in England.

Response from DHSC

Responses to these questions exemplified the range of services which decision-making bodies may arrange alongside healthcare services in a single contract.

Responses to the first 3 questions in the consultation concerning scope suggested some respondents felt our definition of ‘healthcare’ for defining the scope of the PSR did not include services such as community health, substance misuse and sexual and reproductive health. It was therefore unsurprising that in response to the question “What other types of service (apart from social care) do you think may be arranged in a contract (for which the main subject matter is healthcare) which we should be aware of?” several respondents gave these as examples of services that would be procured alongside healthcare services in a mixed procurement. We would like to make clear that these services would be in scope and therefore can be arranged under the PSR in a standalone manner. As set out in our response to the questions concerning scope, above, examples of services that are in scope of the PSR will be detailed in guidance.

We welcome the examples respondents gave of the many services that combine elements of healthcare and social care such as homeless and rough sleeping services, domestic abuse support services and rehabilitation services. We recognise that arranging the healthcare and social care elements of these services together supports the delivery of integrated care in a way that benefits patients and service users.

We also note the examples respondents gave of procurements that combine healthcare services with services that cannot be considered social care - for example, IT and digital services and solutions. We recognise that even when the main subject matter of the contract is the delivery of healthcare to individuals, the procurement of these services alongside healthcare can also provide significant benefits.

Therefore, our intention is that the regulations will make clear that the PSR can be used to procure in scope healthcare services alongside any goods and services that are out of scope. This would only apply when the main subject matter is healthcare. Further details on provisions for mixed procurement under the PSR will be set out in the regulations and statutory guidance.

Section 4: responses to our proposals for defining a ‘considerable change’

Responses to NHS England’s consultation on the PSR in 2021 were largely supportive of decision-making bodies being able to continue with existing arrangements in certain circumstances. These included where a service is not changing and the incumbent provider is deemed to be doing a good job, such that there is no overall value in seeking another provider.

We sought views on the merits of using a combination threshold which includes both a fixed change in contract value (over £500,000) and percentage change in contract value (25%) as a threshold for a ‘considerable change.’ Therefore, once both of these thresholds are reached, decision-making bodies cannot continue with the incumbent under decision-making circumstance 1c and must select a provider either by identifying the single most suitable provider (decision-making circumstance 2) or running a competitive tender exercise (decision-making circumstance 3).

The consultation document also set out a list of changes which we propose should not be deemed considerable, regardless of any resulting change in value, and irrespective of when they are made. We sought views on this list from respondents.

To what extent do you agree or disagree that a threshold for considerable change should require both a change of set amount (£) in contract value and a percentage change in contract value?

48% of respondents agreed or strongly agreed. 17% neither agreed nor disagreed.

Of those respondents who agreed, several commented that defining a ‘considerable change’ with reference to only one criterion could lead to the PSR being applied inconsistently or disproportionately.

For example, a local authority said:

An arbitrary financial amount is not proportionate to all services and all local authorities/purchasers - £500,000 could be any fraction of the contract value, so needs the percentage as well.

The BMA said:

Given the potentially significant variation in overall contract value and the need to ensure proper application of any future regime across all contracts, it is essential that a threshold for considerable change includes an overall percentage change of contract value alongside a change in total value.

An integrated care system said:

…not having a requirement for both the value and percentage changes to be met would cause a disproportionate level of bureaucracy and administration for changes to low value contracts.

Some respondents felt the criteria proposed for a ‘considerable change’ would ensure transparency. For example, a clinical commissioning group told us:

The threshold requiring both the value and percentage to be satisfied will ensure that considerable changes are clearly identifiable based on the size of contract, and will avoid the unnecessary capture of relatively small changes to large contracts. The clear identification of considerable change will ensure the appropriate governance is followed and transparent decisions are made by decision-making bodies.

Where respondents disagreed or strongly disagreed with our proposal, several explained the percentage change alone was sufficient for determining a ‘considerable change’. For example, an individual working in a local authority said:

Having a defined percentage is more helpful than having a set figure in order to capture significant changes to smaller contracts where the original value is significantly less than the £500,000 threshold, so would not meet all of the proposed conditions. A percentage is more flexible and more applicable to a wider range of scenarios.

An independent provider said:

We believe that using only percentage change in contract value by its nature is proportionate to the contract size/value. Contracts are all different sizes, lengths and values and so including a value amount change as well as percentage change would mean the rules could impact contracts of different sizes very differently. Percentage change only is a simple and consistent approach.

Other respondents suggested our proposals were too narrowly focused and qualitative factors such as service quality should be considered. For example, an independent provider said:

…tangible assurances from potential providers in terms of quality and operational ability to deliver services should be fundamental in any decision-making criteria in any threshold for considerable change.

The Independent Healthcare Providers Network told us:

A considerable change in a contract may occur if the service(s) specified in a contract change while the overall value does not. So, a threshold should have both a quantitative and a qualitative element.

To what extent do you agree or disagree that a change in contract value of over £500,000 is an appropriate threshold when considering what constitutes a considerable change?

35% of respondents agreed a change in contract value of over £500,000 was an appropriate threshold for a ‘considerable change.’ 21% neither agreed nor disagreed and the remainder (44%) disagreed or strongly disagreed.

Respondents who agreed or strongly agreed often felt the £500,000 threshold was appropriate when combined with a percentage change component. For example, a local authority said:

A change in contract value of over £500,000 would not represent a considerable change to a £50 million contract but would to a £1 million contract. As a standalone criteria, this would be problematic but this value seems reasonable when applied alongside the percentage change in contract value.

The BMA told us:

The BMA agrees that a total value change threshold is helpful. Though we believe that a percentage change formula will be more effective overall, especially for lower value contracts.

Many respondents who disagreed or strongly disagreed felt the £500,000 threshold was too low. For example, a clinical commissioning group said:

…this level is set too low and will capture many high value multi-year contracts where there will be no merit in going out to procurement. We strongly feel the £ threshold should not be used and the percentage threshold should be standalone. If this is not possible then please at least raise the £ value to £1 million.

A local authority told us: “We are of the view that this is too low, given that the whole life contract values in this category are typically very high.”

To what extent do you agree or disagree that a change in contract value of over 25% is an appropriate threshold when considering what constitutes a considerable change?

Overall, 42% of respondents agreed or strongly agreed that a change in contract value of over 25% was appropriate to be considered a ‘considerable change’. 35% disagreed or strongly disagreed and the remaining 24% neither agreed nor disagreed. Commissioners were more likely to agree or strongly agree (58% and 71% of respondents from local authorities and clinical commissioning groups respectively) than those from independent providers (9%).

Respondents who disagreed frequently commented that the percentage threshold was too low. For example, an NHS foundation trust said:

A percentage is helpful as it will show proportionate amount of change. 25% seems low, the trust would also find up to 50% acceptable, so that the majority is remaining.

An individual working for a local authority said:

Too small - should be 50% to prevent the triggering of frequent ‘re-tendering’ and increasing the amount of bureaucracy this legislation is aimed at reducing.

Others also believed 25% was different to the Public Contract Regulations 2015 (‘PCR 2015’). The Local Government Association commented that:

Existing PCR (reg 72) allows change up to 50%. We think a similar figure should be used here for consistency.

Do you have any views on how this formulation may be improved? What changes would you make and why?

Some respondents suggested a more flexible approach, for example that what is deemed a ‘considerable change’ should be dependent on the size of the contract.

For example, a VCSE provider said:

Should be increase of 25% or more for contracts <£2 million or increase of £500,000 or more for contracts >£2 million value. Setting the criteria as change of >£500,000 and >25% means that considerable changes to smaller contracts are out of scope.

A clinical commissioning group said:

Set a different formula for lower value contracts from higher value contracts, for example between £250,000 and under £1 million, the threshold could just be 25%. Under £250,000 its commissioner discretion. Over £1 million both 25% and £500,000 must apply.

Other respondents suggested increasing flexibility for decision-making bodies by setting out in guidance what constitutes a ‘considerable change’ as an alternative to regulations. For example, an organisation representing healthcare interests said:

…it would be preferable for decision-makers to be guided by the statutory guidance on the PSR, which should set out the detail about how to decide what constitutes a considerable change with additional safeguards as necessary.

A clinical commissioning group said:

It would therefore be helpful, in genuinely exceptional circumstances, for provision to be made for decision-makers to be able to determine changes above the threshold were not significant with appropriately defined rationale.

A significant number of responses to the above questions referred to earlier answers including the belief that 25% is different to the PCR 2015, which currently govern the arrangement of healthcare services in England, and the suggestion that broader factors (such as service quality and scope) are considered when defining a ‘considerable change.’

Response from DHSC

We welcome respondents’ overall support (48% agreed or strongly agreed) for our proposal that a ‘considerable change’ should be defined as jointly a change of a set amount (£) in contract value and a percentage change in contract value. This means that change would only be identified as considerable when both of these criteria are met.

We also acknowledge respondents’ other suggestions for what constitutes a ‘considerable change’ such as changes in service quality. Good contract management should mean service quality should be continually monitored. Where quality falls short of the standard expected, we expect contracts should be reviewed using contract management procedures and provisions. We would also like to make clear a contract change would be deemed considerable if it materially alters the nature of the contract. It is our expectation that when a contract is changed to deliver different services, this would be a material alteration and therefore would be deemed a ‘considerable change.’

Respondents were generally less supportive of our threshold of £500,000 (44% disagreed or strongly disagreed), often citing concerns this amount was too low and would mean minor changes to large contracts would necessitate a provider to be selected using the PSR. However, written responses suggest that this may be driven by a lack of clarity and understanding that this value would only amount to a considerable change when it is also a change in more than 25% of the contract’s lifetime value. We would like to make clear that in order for a contract to be ‘changing considerably’, both criteria would need to be met. If, for example, the cumulative change in a contract’s lifetime value was £500,000 or more, but this did not equate to 25% or more of the contract’s original lifetime value (as would be the case for many large contracts), this would not be deemed a ‘considerable change’ under our proposals. From reading the free text responses to the question “to what extent do you agree or disagree that a change in contract value of over £500,000 is an appropriate threshold when considering what constitutes a considerable change?”, we note that respondents were generally supportive of the £500,000 threshold when also used in conjunction with a percentage change to determine when a contract is ‘changing considerably.’ We therefore intend to continue with our threshold of £500,000.

We received a mixed response to the following question, where we asked if respondents agreed our threshold of 25% was appropriate (42% agreed or strongly agreed, although 35% disagreed or strongly disagreed). Respondents who disagreed or strongly disagreed largely suggested 25% was too low and that a contract change of up to 50% should be permissible before this criterion is met.

Some respondents also believed a threshold of 50% would be consistent with the PCR 2015 which currently governs the arrangement of healthcare services in England, and which the PSR would replace in governing the arrangement of those services. The 50% threshold in the PCR 2015 applies to contract variations rather than a ‘considerable change’, as under the PCR 2015, contracts must always be re-tendered at the end of the contract term. It should also be noted that the 50% threshold only applies where other conditions are met. Under our proposals the PSR will allow decision-making bodies greater flexibility to continue existing arrangements with the incumbent provider at the end of the contract term without going to tender. As such, we want a threshold to prompt a consideration of new providers to ensure decision-making bodies remain open to developments in the market. We therefore intend to continue with our threshold of 25%.

In response to the question “Do you have any views on how this formulation may be improved? What changes would you make and why?”, some respondents suggested thresholds should be determined by contract size or value on a sliding scale, with flexibility for decision-making bodies to justify why some changes are not ‘considerable’ despite meeting the criteria. In using both a change in a set amount of contract value and a change in percentage of contract value to determine a ‘considerable change’, our aim is to avoid capturing relatively small changes to large contracts while still capturing considerable changes to small contracts. In our view, this approach risks the PSR being applied inconsistently between decision-making bodies with the potential to erode common understanding of the provisions of the PSR and lead to unwarranted discrepancies in how services are arranged across England.

Section 5: responses to our proposals for contract variations and the PSR

Contracts will likely vary throughout their lifetime. It is normal that certain minor variations in a contract would not necessitate a decision being remade. However, it may be that at some point the contract has varied so significantly from when the original award was made that the PSR will need to be applied to ensure the incumbent provider remains the right provider to deliver the service that has varied considerably. This would ensure that the service arrangements are still in the best interests of patients, the taxpayer and the population.

The consultation document set out a list of contract variations that we proposed should not warrant reapplication of the PSR (such as using decision-making circumstance 2 (award to the most suitable provider without competitive tender) or decision-making circumstance 3 (competitive tender) to select a provider). We sought views on our proposed list.

To what extent do you agree or disagree that the list of variations (included in the consultation document) should not warrant the reapplication of the Provider Selection Regime (such as selecting a provider through decision-making circumstance 2 or decision-making circumstance 3)?

62% of respondents agreed or strongly agreed that the list of variations should not warrant reapplication of the PSR. 21% neither agreed nor disagreed.

Where respondents agreed or strongly agreed, some said reapplying the PSR in these circumstances would increase the burden on decision-making bodies. For example, an integrated care system told us:

To reapply the Provider Selection Regime in these circumstances would create a disproportionate amount of effort on behalf of the decision-making body which is likely to result in much higher admin/running costs without a corresponding increase in value for money.

Some respondents who agreed in principle with our proposal stated greater transparency was, however, needed. For example, an independent provider said:

We would principally support this but feel there needs to be further transparency with publication or notice by the commissioning body on the basis of the procurement decision.

Other respondents reiterated their concerns about the 25% and £500,000 thresholds (see ‘Section 4: responses to our proposals for defining a ‘considerable change’’), but agreed in principle. For example, an organisation representing healthcare interests said:

We agree with the principles of contract variations not warranting reapplication of the Provider Selection Regime as outlined, but again - with regard to the last two points - we feel that the proposed amount (over £500,000) and the proposed percentage change (over 25% of contract value) might disadvantage SMEs [small and medium sized enterprises] and service providers seeking to enter the market and/or offer value-add or innovative services to drive positive patient outcomes and cost-control measures. On the other hand, for certain services - in particular, wheelchair services and community equipment services - with high-value, multi-year contracts, we believe the amounts and thresholds might be too low.

Some respondents suggested additions to the proposed list to provide greater clarity or additional safeguards. For example, an NHS foundation trust said:

…we also propose that nationally mandated cost increases to NHS providers such as NHS pension contributions, pay increases and National Insurance are excluded as per tariff changes. It would also be helpful to set out external causes that would not be appropriate/be appropriate in the implementation guidance as it is currently too subjective. The guidance could also include a percentage change in patient volume that would not trigger a revisiting of the PSR despite meeting the percentage and value threshold.

An organisation representing healthcare interests said:

However, even in instances where the provider selection regime is not re-applied, we would expect the right checks and balances to be in place to sustain and continually improve quality. DHSC and NHSE/I may also wish to consider under what circumstances a provider (or any other interested party) could reasonably challenge a decision to use a contract variation and issue clear guidance for system leaders.

16% disagreed or strongly disagreed with our proposed list, with many citing concerns about the 25% and £500,000 thresholds. For example, a clinical commissioning group said:

The sole rationale for the ‘disagree’ response is based on the proposal to have a set financial value (£500,000) which if exceeded, would result in the re-application of the regime. It is felt imposing a set financial value (£) would not be proportionate to a contract value due the varying nature of contract values for services which are within scope of the Regime. Barring this exception, we are supportive of all other proposals which would allow contract variations to be undertaken without the need to re-apply the Provider Selection Regime.

An individual working in a local authority said:

…removal of the £500,000 threshold and an increase in the proposed 25% change in value would make this more meaningful and applicable.

A few respondents expressed concern about the other variations listed, particularly identity change. For example, SEUK told us:

There are circumstances in a takeover or merger where the purpose and social value of an organisation taking over may differ materially from the original provider (even if its ability to deliver the service is not affected directly). Under these circumstances this should be considered by the decision-making body as a contract variation that could necessitate re-application of the regime.

The BMA said:

…the inclusion of corporate takeovers in the list of variations that do not warrant reapplication of the PSR overlooks the impact such changes can have on service provision and public confidence in NHS services. This is particularly acute where ISPs (Independent Service Providers) take over significant NHS contracts.

To what extent do you agree or disagree that a threshold for considerable change for the purpose of contract variations should be subject to both a change of set amount (£) in contract value - or - a percentage change in contract value?

48% of respondents agreed or strongly agreed. 23% neither agreed nor disagreed.

Where respondents agreed, some also expressed a need for flexibility. For example, a clinical commissioning group said:

A mixture of percentage and value is the right approach but maybe not a blanket percentage and value for all size contracts. It would therefore be helpful, in genuinely exceptional circumstances, for provision to be made for decision-makers to be able to determine changes above the threshold were not significant with appropriately defined rationale.

28% of respondents disagreed or strongly disagreed, most often stating a fixed change in the financial value (£) of a contract was inappropriate. For example, an individual in a local authority said:

Having a set amount is unhelpful. A percentage provides greater flexibility and applicability.

To what extent do you agree or disagree that a change in contract value of over £500,000 is an appropriate threshold when considering what constitutes a considerable variation for this purpose?

Overall, 28% of respondents agreed or strongly agreed a change in contract value of over £500,000 is an appropriate threshold for a ‘considerable variation’. 45% disagreed or strongly disagreed. 25% neither agreed nor disagreed.

As in previous answers, respondents who disagreed or strongly disagreed often felt the £500,000 was too low. For example, a clinical commissioning group said:

£500,000 is too low for some high value multi-year contracts and will lead to unnecessary and wasteful re-procurement exercise - a percentage threshold ensures proportionality.

An NHS foundation trust said:

The trust would prefer a value of up to £1 million in addition to a percentage change. £500,000 may be reasonable for smaller contracts but are unlikely to be helpful when considering cumulative change for high contract values (such as contracts that cover multiple services or a large population).

To what extent do you agree or disagree that a change in contract value of over 25% is an appropriate threshold when considering what constitutes a considerable variation?

45% of respondents agreed or strongly agreed, in comparison to 35% who disagreed or strongly disagreed. The remaining 20% of respondents neither agreed nor disagreed.

Of those who disagreed or strongly disagreed, many felt 25% was either too high or too low. For example, the BMA said:

25% may be too high of a threshold to encompass all significant changes to contract values. A threshold of 15% to 20% would be more appropriate and ensure that all considerable changes to contracts are captured, while maintaining flexibility within the Provider Selection Regime.

A VCSE provider said:

We would welcome consideration of a higher threshold. In the context of significant unmet need and new and emerging needs, (for example, due to COVID), it may be that existing health services require significant increases in funding to effectively meet population health needs and address health inequalities.

As previously raised in responses to questions concerning the 25% threshold, respondents also suggested 25% should be increased to 50% believing this would align with current procurement rules (the PCR 2015). For example, the Local Government Association said:

Existing PCR (reg 72) allows change up to 50%. We think a similar figure should be used here for consistency.

An NHS foundation trust told us:

The trust would welcome a higher percentage to allow for levelling up and national strategy driven changes to be implemented at scale. PCR 2015 allows up to 50%.

Do you have any views on how this formulation may be improved?

Responses to this question reiterated concerns and suggestions around the £500,000 and 25% thresholds. Some respondents raised other suggestions, for example around flexibility for decision-making bodies or different thresholds based on contract value. For example, an individual working in a clinical commissioning group said:

Please consider it as a framework, and there may be local decision-making that means it is a key change at 20% and should be managed differently, or 30% and stay inside the regime.

A commissioning support unit told us:

If an absolute contract value threshold is required, then there should be a sliding scale that reflects overall lifetime contract value… in order to avoid wasteful procurements it would also be useful to have a contract value threshold which excludes very low value contracts from the scope of these provisions.

Response from DHSC

We welcome support from most respondents (62%) for our proposed list of contract variations which would not necessitate the reselection of a provider using the PSR. We therefore intend to continue with our proposals, acknowledging requests for clear guidance to offer more clarity and examples where application of the PSR would not be required. This information will be included in statutory guidance.

As in previous questions, it became apparent when reviewing the answers to questions in this section that there was a lack of clarity in regard to the percentage (25%) and fixed amount (£500,000) thresholds (both of which must be met for a contract to have varied to the point at which a selection under the PSR should be undertaken). Respondents often stressed that for a contract to be deemed as having varied considerably (therefore necessitating a provider to be chosen under the PSR), the cumulative change in the lifetime value of the contract should exceed both the fixed threshold (£500,000) and 25% or more of the original lifetime value. We would like to make clear this is consistent with our proposal and therefore this is what we will take forward.

Our consultation document set out that if either of the following conditions apply in relation to the cumulative change in the lifetime value of the contract, the contract would not be deemed to have varied considerably and reapplication of the PSR would not be warranted. These are:

• if the cumulative change is less than 25% of the original lifetime value
• if the cumulative change remains below £500,000

Only one of these conditons needs to apply, not both. This means, for example:

• where the cumulative change is £600,000, and this is 22% of the contract’s original lifetime value, the overall value criterion has been exceeded, but the percentage criterion has not. Therefore the threshold has not been met and reapplication of the PSR to select a provider is not required
• where the cumulative change is £300,000, and this is 30% of the contract’s original lifetime value, the percentage criterion has been exceeded, but the overall value criterion has not. Therefore the threshold has not been met and reapplication of the PSR to select a provider is not required
• where the cumulative change is £1 million and this is 50% of the contract’s original lifetime value, both criteria have been exceeded. Therefore, the threshold has been crossed and reapplication is required

In response to the question “To what extent do you agree or disagree that a change in contract value of over 25% is an appropriate threshold when considering what constitutes a considerable variation?” we note that while overall respondents were supportive of our 25% threshold, some expressed concerns, including that this is different to the PCR 2015 which currently govern the arrangement of healthcare services in England, and which the PSR would replace as governing the arrangement of those services. As noted in our response in ‘Section 4: responses to our proposals for defining a ‘considerable change’’, we believe that 25% is appropriate. The 50% threshold in the PCR 2015 only applies when other conditions are met. Furthermore, unlike the PCR 2015, under our proposals the PSR will allow decision-making bodies greater flexibility to continue existing arrangements with the incumbent provider at the end of the contract term without going to tender. We therefore believe that the 25% threshold is warranted to ensure decision-making bodies remain open to developments in the market.

In response to the question on how this formulation may be improved, we note some respondents again expressed the desire for greater flexibility and discretion for decision-making bodies. As outlined previously, we believe that this approach risks the PSR being applied inconsistently between decision-making bodies with the potential to erode common understanding of the provisions of the PSR and lead to unwarranted discrepancies in how services are arranged across England.

Section 6: responses to our proposals for using the PSR when establishing lists of providers to offer patient choice

The previous consultation on proposals for the PSR by NHS England found broad consensus for the importance of preserving and strengthening patient choice. Patients will continue to have the legal right to a choice of the provider for the first consultant or mental healthcare professional led outpatient appointment. Consistent with current patient choice rules, decision-making bodies will continue to not be able to limit the number of providers that patients can choose from where patients have a legal right to choice. Under NHS England proposals, regulations on patient choice will be strengthened by introducing a set of standard provider qualification criteria. Where a provider meets these stated criteria and wishes to be an option for patients, they must be offered the NHS standard contract by the decision-making body.

The consultation document set out our proposals for how the PSR should apply when decision-making bodies decide to voluntarily offer patients a choice when patients do not have a legal right to choose a provider. In these circumstances, how the PSR may be applied is dependent on whether the decision-making body seeks to limit the number of providers from which patients can chose. If the number of providers which patients can choose from is limited by the decision-maker (such as when the statutory right to patient choice does not apply), then the decision-maker may have to use the PSR to select between providers.

If establishing lists of providers for non-legal right to choice services for patients to exercise choice, do you think that decision-making bodies would intend to limit these lists to a set number of potential providers?

46% of respondents answered ‘Yes’ to this question. This figure is much higher for NHS commissioners (60% of clinical commissioning groups and 80% of commissioning support units). Overall, 42% of respondents were unsure.

Respondents who said decision-making bodies would limit these lists cited the benefits of doing so in terms of resource required to manage contracts. For example, a commissioning support unit said:

To minimise transactional/admin costs and to ensure that oversight of quality issues etc is a manageable task.

A clinical commissioning group told us:

Managing a large group of providers who are all doing a small amount of activity is less efficient than managing 2 or 3 with greater volumes and provides the NHS decision-maker with more leverage in the commercial arrangements. It still offers choice but without making contract management too onerous across multiple AQP type suppliers in different disciplines.

Respondents also referenced limiting lists to maintain service quality. For example, a commissioning support unit said:

In certain circumstances it may also lead to improved quality to ensure that a smaller number of providers are able to share a larger market share rather than have unlimited choice which may erode market share to an extent that makes high quality services unviable.

If establishing or altering lists of providers for non-legal right to choice services with a limited number of providers, do you agree or disagree that decision-making bodies should select providers using decision-making circumstances 2 or 3 of the Provider Selection Regime?

52% of respondents agreed or strongly agreed. 38% neither agreed nor disagreed.

Where respondents agreed or strongly agreed, several said this proposal would ensure a transparent and consistent approach. For example, an individual in a clinical commissioning group responded:

Needs to be a fair, transparent and proportionate process to stimulate the market and make provision for new market entrants.

A clinical commissioning group told us:

This seems to be the most flexible and transparent approach. There needs to be some form of process and these seem to be suitable.

11% disagreed or strongly disagreed. Some believed only decision-making circumstance 3 should be used, whereas others believed all 3 circumstances should be used. For example, an NHS England regional office said:

It is felt that if restricting the number of providers this should be by decision circumstance 3 as the only fair and transparent way to rank providers.

An NHS foundation trust said:

We think all three decision-making circumstances should be applicable to establishing and maintaining the lists of non-legal right to choice services.

Response from DHSC

We note most respondents (52%) agreed with our proposals regarding the PSR and patient choice. We therefore propose that where decision-making bodies decide to offer patients a choice of a limited number of providers of services for which patients do not have a legal right to choice, they must use decision-making circumstances 2 or 3 to select the provider(s) from which patients can choose. This will ensure decision-making processes are transparent and proportionate, and decisions are made in the best interests of patients, the taxpayer and the population.

However, where decision-making bodies do not intend to limit the number of providers from which patients can choose, the decision-making body must offer a contract to any provider that meets the standard qualification criteria without a provider selection process.

Section 7: responses to our proposals for transparency requirements when arranging services under the PSR

In the previous consultation by NHS England, there was broad consensus among respondents that the proposed regime should be made transparent on the basis that was set out in that consultation. The aim of these transparency arrangements is to ensure that the outcomes of decisions are made public and that sufficient scrutiny is applied to ensure the PSR is followed in good faith.

In this consultation, we sought views on further proposals for the intention to award notice and more detailed proposals for decision-making bodies to publish annual summaries outlining their application of the PSR.

To what extent do you agree or disagree that the notice which states the decision-making bodies intention to award a contract to a provider should also include:

a) a statement explaining the balancing of key criteria which they used to make a decision?

b) a statement explaining the decision-making body’s rationale for choosing the successful provider?

The majority of respondents were supportive of these proposals:

• 87% agreed or strongly agreed with statement a (8% disagreed)
• 86% agreed with statement b (7% disagreed)

Many respondents supported transparency as a principle and as a way of reducing the likelihood of legal challenges. For example:

Letter from the Independent Healthcare Providers Network:

IHPN strongly supports strict requirements for transparency under the new PSR, noting that the presence of provider organisations on integrated care boards heightens the risk of conflicts of interest unduly affecting contract awards thereby undermining public confidence in the regime.

Letter from SEUK:

We agree that there should be strong direction and guidance on transparency and welcome the transparency steps that have been produced. However this should be pushed further… It will be important for decision-making bodies to share information in real time, recording the decision-making process and rationale should be open to the public, so they can understand how and why decisions are being made.

A VCSE provider:

Both provisions would help to encourage transparency in decision-making processes and enable providers of services to better understand commissioner priorities and considerations in awarding contracts.

A clinical commissioning group:

This will evidence transparency and an established methodology for decision-making, reducing the risk of challenge.

A small number of respondents raised concerns around the administrative burden of publishing this information and its potentially sensitive nature. For example:

An integrated care system:

Whilst it is important to be transparent around decision-making, the amount of administrative effort required to include this much detail in contract award notices will be very costly and may not be fully understood by the intended audience.

An individual working in a local authority:

This is the type of bureaucracy that the legislation was surely aimed at reducing. This would invite speculative judicial review and slow the contract award process.

A local authority:

However, consideration will need to be given to the level of detail included and the sharing of commercially sensitive information.

Is there other information that you think would be helpful to publish in this notice?

Respondents suggested that alongside the information set out previously, it would be helpful to include in this notice details of how to challenge or appeal the decision. For example, an NHS foundation trust said:

It would be helpful if decision-makers were required to publish how to engage with them through the process as well as how to raise complaints/escalate concerns to provider options prior to/other than judicial review.

Other respondents suggested it could be helpful to publish information on other providers that were considered by the decision-maker, as well as on market testing and negotiations. For example, an independent provider said:

The notice should also include the key criteria, percentages allocated to each (that is the balancing), rationale, other providers considered (and information taken into account including as to price and quality), rationale of the inclusion or exclusion of each provider considered, any pre-contract negotiations.

To what extent do you agree or disagree with our proposals around annual summaries?

Overall, 68% agreed or strongly agreed with the proposals for annual summaries, although this varied between respondents. 73% of clinical commissioning groups, 60% of commissioning support units, 100% of VCSE providers and 85% of other independent providers agreed or strongly agreed, compared to 35% of local authorities. 11% of all respondents neither agreed nor disagreed.

Most respondents stated our proposals for annual summaries would promote accountability and transparency. For example:

The BMA:

We agree that the proposals for annual summaries are appropriate and will help ensure transparency.

A clinical commissioning group:

This ensures transparency and provides confidence that decision-making bodies have been through a proper process to apply the regime.

A VCSE provider:

Again, this would encourage transparency in decision-making processes, enable providers to better understand trends in the use of the new regime, and better plan for future procurement opportunities.

An NHS foundation trust:

The publication of this data would support the principle of transparency and accountability - which we would welcome.

Where respondents disagreed, many commented that our proposals would be an unnecessary duplication of effort. For example:

Local Government Association:

These summaries are an unnecessary duplication of effort given the information will be published anyway in a standard form.

A clinical commissioning group:

Healthcare contract notices are to be published in the public domain through the Find a Tender Service (FTS) which will set out the circumstance for which a contract is awarded; and decision-making bodies will need to publish/make available their contract register, therefore asking for annual summaries will add limited value to information which will be readily available in the public domain.

Is there any additional information you would suggest for inclusion in these summaries?

Responses to this question included suggestions to provide more detail on individual contracts. For example:

A VCSE provider:

We would like the annual summaries to include a consolidated view of the award notices so that it is containing a statement explaining the balancing of key criteria which they used to make a decision and statement explaining the decision-making body’s rationale for choosing the successful provider.

An organisation representing healthcare interests:

The number of contracts awarded in each circumstance (1a, 1b, 1c, 2, 3) each year, the value of each contract, contract length, a standard form of reporting for each body to allow regional comparison.

A commissioning support unit:

It would also be helpful to provide information about the contracts, such as contract title, category and values; just listing numbers will not provide useful insight into the type and scope of contracts being let under each decision circumstance.

An organisation representing healthcare interests:

It might be helpful for the summaries to include a little more detail, such as:

• the number of contracts re-awarded under each of decision-making circumstances 1a, 1b and 1c in that year and the estimated annual value of each contract and overall duration, other than primary care contracts under 1b
• the number of contracts let through each of decision-making circumstances 2 and 3 and the value and duration of each contract
• the total number of providers contracted with; the number of new providers contracted with; the number of providers holding fewer contracts than the year before, and the number of providers who no longer hold any contract
• the numbers and scale of representations received and the outcome of those representations

It would also be helpful, however, if each decision-making body (ICB in most cases) publishes data in a standardised format so that it is possible to compare different commissioners - for example, decision-making bodies that have had fewer challenges than others etc

Response from DHSC

We welcome respondents’ support for our proposals regarding the intention to award notice and note most respondents welcome a requirement to publish a) the balancing of key criteria (87%) and b) the decision-making body’s rationale for selecting a provider (86%). Some respondents expressed a concern that our proposals could lead to a requirement to publish information that is commercially sensitive. We would like to make clear that in complying with our proposals, our expectation is that decision-making bodies will not publish confidential or commercially sensitive information. Some respondents also suggested intention to award notices should make clear how representations can be made to the decision-making body in addition to the date by which they must be made.

We acknowledge concerns about the administrative burden of our proposals for the intention to award notice and accept that decision-makers should not be constrained in how to effectively present a rationale which accurately reflects their approach to decision-making. Therefore, to provide greater flexibility, the proposal we will take forward is the intention to award notice will include a statement explaining the decision-making body’s rationale for choosing the selected provider with reference to the relevant key criteria.

Respondents also expressed concerns around the administrative burden of our proposals for annual summaries, although most (68%) agreed or strongly agreed to those set out in the consultation document. Some respondents believed our proposals to be too burdensome. Others wanted these summaries to include additional information - for example, information relating to individual contracts.

We intend for annual summaries to provide high-level data on contracting and allow better understanding of commissioning activity and trends. To this end, our proposals seek to achieve a balance between production of high-level information and the administrative burden on decision-making bodies. Our proposals will ensure the collation of high-level information in a way that is least burdensome, also acknowledging the notices required to be published under the PSR will contain more detail on individual arrangements. We also note many respondents referenced the significant benefits of annual summaries for increasing public transparency, accountability and confidence in decisions made using the PSR. We therefore intend to continue with our proposals for annual summaries as set out in the consultation document.

Section 8: independent review of decisions made under the PSR

Our consultation questions did not specifically relate to independent scrutiny of decisions made under the PSR, including recourse for providers seeking to challenge decision-making bodies. These proposals were included in NHS England’s previous consultation on the PSR. However, during this supplementary consultation, respondents have voiced some concerns on this topic. This section summarises the responses we received in this regard and sets out our approach moving forward.

Although nearly all respondents welcomed our proposals around transparency, there was concern that these alone would be insufficient to ensure good governance. There was also repeated concern that the decision-making body itself would be required to review and adjudicate on its decision when challenged by a provider, without the involvement of an independent body. For example:

Independent Healthcare Providers Network said:

…while we support transparency as a key part of ensuring good governance in the operation of the PSR, it cannot be the only real mechanism to hold decision-making bodies to account. As it stands, a concerned stakeholder (including potentially independent providers) may only make representations about a decision to the decision-making body itself which then goes on to investigate and adjudicate on its own decision. This cannot be right…

SEUK said:

There is a lack of information about the process that would take place if an agreement is not reached when a challenge is made to the decision-making group. The only option appears to be judicial review.

The process still lacks objectivity and we would advise that the involvement of an independent party/representation into the proceedings at an early stage would reduce the need for recourse to costly and time consuming judicial review.

An independent provider said:

Under the new regime, ICBs will be tasked with investigating their own procurement decisions and determining if they have acted appropriately. We do not think this is effective and appropriate governance of ICB decision-making.

NHS Providers said:

We have concerns around the proposals for decision-making bodies to monitor their compliance with the regime via their annual audit processes and address any non-compliance issues. The fact that the only additional route for challenge is judicial review is, in our view, problematic. This is a high bar, which is expensive and can only be used to question the lawfulness of a decision.

Response from DHSC

In its previous consultation on the PSR, NHS England stated that proposals for oversight and scrutiny represented a ‘step change’ from the current position where providers can bring a challenge through the courts under the PCR 2015. This is because previous engagement showed the prospect of legal action acts as a barrier to collaborative working and can lead to commissioners making risk-averse behaviours, such as the unnecessary tendering of contracts, rather than making decisions in the best interests of the patients, taxpayers and population. We agree with NHS England that an adversarial system which relies on litigation to resolve disputes can act as a barrier to the effective arrangement of services which prioritises the interests of patients, taxpayers and populations.

The current proposals for scrutiny and accountability arrangements under the PSR have been developed to be consistent with wider accountability systems in the NHS. The decision-making bodies under the PSR are statutory bodies bound by statutory duties to act in the interests of patients, the public and taxpayers. The wider premise behind the current reforms is that decision-making should be based on the principles of collaboration, transparency and subsidiarity.

The additional transparency requirements proposed in section 7, above, will further ensure that decisions made under the PSR are open and transparent, and the current proposals for scrutiny provide an avenue for engagement and discussion with providers, and for local resolution of disagreements which should in most cases obviate the need for further escalation. Ultimately, of course, there will still be the option open to a provider that deems the decision-making body to have acted unlawfully to challenge a decision through judicial review.

We recognise that, in addition to the measures set out above, there is potential merit in introducing a greater degree of independence into the review of decisions made under the PSR. This would ensure that the flexibility in the PSR regulations to innovate and establish joined-up healthcare is underpinned by rigorous and open-minded decision-making when seeking and considering new opportunities for healthcare provision.

As such, DHSC and NHS England intend to establish a panel which is chaired by an independent person who can look at and advise on both issues relating to patient choice regulations (that will be made under new patient choice provisions inserted by the Health and Care Act 2022) and the PSR regulations.

This will help ensure that:

• patients’ right to choice are respected and enabled
• procurement processes are transparent, fair and proportionate, enabling all providers to compete for contracts
• providers are not unfairly excluded from offering services to patients and service users

DHSC and NHS England will continue to work together to further develop the details of this proposal ahead of bringing the PSR into force and will work with representatives from across the health and care system to ensure that the panel is well-equipped to review decisions made under the PSR.

Annex: responses to the further questions

Introduction

Alongside the consultation, we also asked further questions to help us understand the impact of our proposals for the PSR on providers and decision-making bodies. These questions covered:

• the ability of organisations to transition to the new arrangements including any anticipated barriers to implementation and the support required from NHS England and DHSC
• short-term costs associated with transitioning to the PSR
• ongoing (long-term) costs and savings associated with using the PSR

Although not an exhaustive commentary on every response received, this annex highlights the main issues raised and how they have informed our plans to support implementation.

Approach and methodology

These further questions were hosted alongside the main consultation questions from 21 February 2022 to 28 March 2022. Decision-making bodies and providers were invited to respond after responding to the main consultation questions. In total, 85 responses to these questions were received via the online survey. The percentages referred to in this document relate to responses received via the online survey only. We did, however, also receive a letter directly from one organisation which we have considered in this response.

Of the 85 responses submitted, 76% were submitted on behalf of organisations. We heard from a range of decision-making bodies and providers including local authorities, clinical commissioning groups, NHS trusts and NHS foundation trusts, providers in the voluntary, community and social enterprise (VCSE) sector and other independent providers.

24% of responses were submitted from individuals sharing their professional views. We heard from a range of professionals including procurement specialists, commissioners, clinicians and business development, legal and finance practitioners.

Three webinars were also held during the consultation period during which attendees were invited to find out more information about the PSR and ask questions to DHSC policy officials. In total, these webinars were attended by over 600 representatives from across the NHS, local government and the independent healthcare sector. Questions asked by attendees often related to scope, application, timelines for commencement, and oversight and scrutiny of the PSR and decisions made under it. These questions are addressed in our response to the main consultation questions.

Webinar attendees also raised questions regarding support for implementing the PSR. These questions are addressed in this annex.

We extend our thanks to all respondents for their time and effort in answering these further questions.

Responses to our questions on establishing the PSR

DHSC and NHS England aim to support the establishment and implementation of the PSR through engagement and the development of learning materials. To that end, we sought to understand how decision-making bodies and providers can best be supported to implement the PSR and realise its intended benefits.

How many people in your organisation do you anticipate will need to be aware of the new Provider Selection Regime?

What functions do these people have (for example, procurement specialists, commissioners, senior leaders)?

65% of respondents anticipated that more than 50 people in their organisation will need to be aware of the PSR. This figure was highest among decision-making bodies (80% for local authorities, 75% for clinical commissioning groups).

Respondents mentioned a wide variety of functions including commissioners, procurement specialists, contract managers, legal, finance, senior leaders, directors and executives, governance, strategy and business development, and operations.

To what extent do you agree or disagree with this statement: my organisation will be able to successfully transition from the current arrangements to the new Provider Selection Regime? Please explain your answer.

Overall, 67% of respondents agreed or strongly agreed with this statement. 27% neither agreed nor disagreed.

Where respondents agreed, several said they had already begun preparation for implementing the PSR, or had the experience and infrastructure necessary for a successful transition. For example, an individual working in a clinical commissioning group said:

As part of the transition process from CCG to ICB, work has been ongoing since the publication of the initial consultation to prepare systems, policies and procedures for the change in regime if it is approved.

A VCSE provider said:

We have the size, scale and expertise as an organisation to be able to successfully transition from the current arrangements to the new Provider Selection Regime.

Respondents who agreed or strongly agreed with the statement often stressed the need for support to support implementation, including clear guidance and appropriate timescales. For example, a commissioning support unit told us:

Clear regulation and guidance will be imperative, as will communication to decision-making bodies that there is a new regime that they will need to follow.

A local authority said:

With clear guidance, training and appropriate timelines and funding from central government, there are no insurmountable barriers as currently drafted.

A very small number of respondents (4%) disagreed or strongly disagreed with the statement. Two respondents said it was difficult to answer this question without knowing the timescale for implementing the PSR. Two other respondents from local government cited the challenges involved in managing 2 procurement regimes. For example, a local authority said:

Without clear governance it will not be achievable. This is also extremely unhelpful to have 2 sets of rules - PSR and the replacement PCR2015 - all occurring at the same time. Combine one set of rules.

A local authority also told us:

This is a substantial change for local authorities as they are now going to have to manage 2 separate regimes, PCRs and the associated changes of those, and the PSR for some areas of services, especially those funded or part funded by health.

If applicable, please outline any main challenges you anticipate for implementing the Provider Selection Regime in your organisation.

Some respondents referenced the administrative burden of making decisions under the PSR, for example the requirement for decision-making bodies to collect and hold new data. For example, a clinical commissioning group told us:

Additionally, we will need to introduce and keep updated a formal record of market providers, information which is not currently held.

A commissioning support unit said:

The PSR requires decision-making bodies to hold a huge amount of measurable and comparable contract data, which may not currently exist.

Other respondents anticipated that a lack of clarity regarding specifics of the PSR, and the timeline for its implementation, would represent significant challenges. This is in addition to the need to train staff on the new arrangements. For example:

A local authority said:

The main challenges we anticipate include:

• there is a risk that commissioners start to change behaviours now prior to the changes being legislated
• there is a lack of detail with regards to the practical application of the regime
• uncertainty around the timescales for implementation and how this aligns with wider regulatory reform
• uncertainly around existing public health contracts and whether any variations should be carried out under the new PSR or the regulatory framework under which it was procured”

A commissioning support unit said:

Lack of clarity on implementation timeframes, clarity of regulations and guidance, mindset of some that ‘procurement’ is not going to be required anymore, training decision-making bodies, level of administration that recording the decision circumstances will entail, crossover between existing PCR procurement and new PSR decisions.

A clinical commissioning group said:

The principle challenges are in ensuring that everyone who needs to know is trained in the application of the regime, in updating our governance processes to support the application of the regime and in ensuring that all individuals and committees are following the correct processes.

NHS England is currently planning to provide certain tools to support the immediate implementation of the Provider Selection Regime. How useful would each of the following be to your organisation?

a) Webinars (including online Q&As)

b) Template documents for decision-making bodies to use when making and recording decisions under the Provider Selection Regime

c) Process flow diagrams

Nearly all respondents believed all of these products would help ‘a great amount’ or ‘a fair amount’ (95% for webinars, 93% for template documents and 98% for process flow diagrams).

Are there any other ways that DHSC and NHS England could support your organisation with the successful operation of the Provider Selection Regime in the medium/long-term future?

Respondents often suggested access to dedicated support for questions and clarification. Several also suggested case studies, worked examples and opportunities to share learning and best practice. For example, an NHS foundation trust said:

A technical helpline may be useful in cases where guidance and tools aren’t clear on very specific details, and this would usually help policy-makers to identify where details may not have received enough coverage or points for future development of the PSR.

A commissioning support unit said:

Online and up to date FAQs, support team to answer questions, regularly issued updates to guidance as and when clarity emerges.

An individual in a local authority said:

Real life case studies, including mixed procurement across local authority and NHS commissioning bodies would be useful, but these need to be detailed including how the authorities worked together to achieve the outcome. Case studies of how this approach hasn’t been able to be used, or examples of where it is inappropriate (and what other regimes have been used instead) would also be useful.

Response from DHSC

We welcome the view from most respondents (67%) that their organisation will be able to successfully transition from current arrangements to the PSR. We also accept that at the time of asking, there was a lack of clarity regarding the specifics of the PSR and the timeline for commencement, and acknowledge therefore that 27% of respondents said they neither agreed nor disagreed that their organisation would be able to successfully transition to the PSR. Very few respondents (4%) disagreed or strongly disagreed that their organisation could successfully transition to the proposed new arrangements.

The schedule for the PSR is subject to the successful passage of the PSR regulations through the UK Parliament. Decision-makers across the health and care system should note that the current rules on procurement for healthcare services will remain in force until the time that the PSR is brought into law. As such, any actions taken before that time should not pre-empt Parliament in its statutory duty to scrutinise the regulations.

Our response to the main consultation questions also seeks to provide further clarity on our plans for the regulations that will establish the PSR. We hope this will help decision-making bodies and providers in their plans and preparations for implementation.

We note that respondents rightly highlighted the importance of clear guidance and the provision of training and tools to support successful implementation of the PSR. We also welcome respondents’ widespread support for NHS England’s planned implementation products. DHSC and NHS England are committed to supporting all decision-making bodies and providers in unleashing the benefits of the PSR. Statutory guidance will be published alongside the regulations and NHS England will publish a suite of toolkit products (such as process maps and templates) to support implementation and will hold a series of webinars on the PSR.

Responses to our questions on costs and savings from the PSR

DHSC and NHS England are committed to supporting the system to prepare for implementing the PSR and to realise its intended benefits. We therefore sought respondents’ views on what familiarisation costs may be associated with establishing the PSR, and the costs and savings associated with its use relative to current procurement rules.

Do you agree or disagree that your organisation would incur short-term costs (£) from the familiarisation of and transitioning to the Provider Selection Regime?

62% of respondents agreed that their organisation would incur short-term costs. This figure was higher for some decision-making bodies (70% for local authorities and 80% for commissioning support units), compared with NHS providers (40% for NHS trusts and 14% for NHS foundation trusts). Overall, 12% of respondents disagreed that their organisations would incur short-term costs in transitioning to the PSR. 27% of respondents did not know.

How do you anticipate these short-term costs would arise?

To what extent could these costs be accommodated in your organisation’s budget?

Most respondents believed initial short-term costs would arise largely from the need for staff training and familiarisation, and updates to internal governance and processes. For example, a local authority said:

Costs are likely to be incurred in staff time; with capacity needing to be allocated to training and familiarisation of staff; and amendments to internal Contract Procedure Regulations to take account of the PSR.

A clinical commissioning group responded:

Staff time in training and learning how to apply the requirements of the new regime, plus the introduction of new procedures and policy documents.

NHS Providers said:

…trusts and their partners will incur short-term costs in training staff on the new regime, and potentially in seeking legal advice as they establish new means of planning and co-ordinating services in systems. Some providers are anticipating an increase in data requests from system colleagues while they establish new ways of working. We should expect some delay and disruption to decision-making as system colleagues establish new statutory entities and move to a very different way of working.

Respondents expressed mixed views in response to the extent these costs could be accommodated in their organisation’s budget. Some suggested these costs could be met ‘easily’ while others suggested scope for accommodating these costs within existing budgets was ‘limited.’

Several respondents asked that the costs for local authorities be reviewed under the New Burdens Doctrine.

Do you anticipate that your organisation will incur any increased operational or running costs when arranging services under the Provider Selection Regime compared with the existing operational costs when arranging services under the current procurement rules?

Overall, 28% of respondents agreed that they would incur increased operational running costs from the PSR. However, 41% did not know, suggesting this would become clearer once the details of the PSR are finalised. For example, NHS Providers said:

We aren’t currently in a position to answer this, but our hope is that transactional costs decrease for all providers under the new provider selection regime. It will be important to ensure that is the case for those sectors more frequently subject to repeated re-tendering under the current approach, such as mental health and community services.

25% of respondents from local authorities believed their organisation would incur increased operating costs. 41% did not know.

Where respondents believed their organisation would incur increased operational or running costs, this was largely attributed to increased demands on staff time and resource. For example, an integrated care system talked about “the additional administrative burden of publishing considerably more notices than currently”.

A commissioning support unit told us:

The PSR will involve a lot more administration for decision-making bodies, particularly the evidence required for decision circumstances 1 and 2 (both in terms of capturing contract management data and evidencing the actual contracting decision).

Respondents that disagreed, however, believed the PSR would lead to greater efficiency. For example, an NHS foundation trust said: “It should be more efficient for us.”

Do you anticipate that your organisation will realise any operational savings when arranging services under the Provider Selection Regime compared with arranging services under the current procurement rules?

15% of respondents anticipated that their organisation will realise operational savings. However, 44% did not know, with many stating this is dependent on implementation and the final details of the PSR. For example, an independent provider said:

We feel it is too soon to make a very accurate assessment of the potential savings associated with the changes as there may be implementation or on-going costs that are not clear at the current time.

NHS Providers said:

At this stage, we are unsure if savings from the regime can be realised. One community provider raised concerns over the potential need for a huge increase in data by commissioners to justify their decision-making. However, they also highlighted how the PSR would save their organisation time and resources by not being required to fill in tenders.

Some respondents suggested some of the decision-making circumstances could lead to savings, or release staff time. For example, a local authority told us:

The application of decision-making circumstance 1 may lead to some operational savings in the medium term (with respect to staff time); however, we first need to understand the scope of the new regime to determine which of the local authority’s current services/contracts will fall within it.

Decision-making circumstance 2 is likely to still require a level of market testing, benchmarking, and quality assurance against agreed criteria. In some circumstances, this process may require an equivalent commitment of resources to a competitive procurement process to ensure due diligence.

Response from DHSC

We accept that there will be some familiarisation costs for decision-making bodies and providers in transitioning to new procurement arrangements. As set out in the preceding response to questions on implementation, DHSC and NHS England are committed to supporting the system to transition successfully to using the PSR and will make dedicated resources available.

We note that respondents were often unable to say if the PSR would lead to any increased operational costs or savings at this stage and given the level of detail available. 41% did not know if there would be increased operational costs and 44% did not know if there would be savings for their organisation. We are committed to assessing the impact of our proposals and will therefore publish a full impact assessment as well as complete an assessment under the New Burdens Doctrine in due course.