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Procurement Act briefing and NHS Provider Selection Regime

By November 10, 2023No Comments

By Royal Assent, the Procurement Bill is now the Procurement Act 2023 having finally passed through Parliament last week. However, there is still much secondary legislation that must be introduced. It is expected that the Act will come into force in Autumn 2024 following a six-month implementation period. Notably, the new Act is seen as a huge boost to SMEs for whom the regulations expand access in public procurement.

The key points are as follows:

  • There is a requirement for contracting authorities to consider the barriers facing SMEs to allow a more even business environment. Moreover, the requirement states that said authorities must assess how these SME-specific barriers can be overcome.
  • By allowing evidence of required insurance cover at the point of contract award rather than during bidding, SMEs can avoid unnecessary upfront costs, which acknowledges the pressures and constraints faced by SMEs and efforts taken to reduce them.
  • The Act pledges to slash red tape inherited through EU regulations and will instead drive innovation by ensuring easier engagement with the public sector for suppliers of all sizes.
  • Flexibility of price negotiation and the focus on value rather than cost alone will advance a more diverse, innovative supplier base, which is set to benefit SMEs the most.
  • There are much tighter restrictions based on social value, allowing for the exclusion of suppliers based on past performance, modern slavery, or professional misconduct grounds.
  • A new National Security Unit for Procurement has been established which promises to bolster the security of supply chains.
  • The Act introduces a new duty for Ministers to proactively consider suppliers for potential debarment investigations.
  • A much more agile process for procurement in emergency situations, such as future pandemics, has been developed for the transparent and rapid purchasing of vital goods.
  • This includes increased powers to directly award contracts in certain circumstances, including at the direction of a Minister of the Crown if considered necessary to “protect human, animal or plant life or health, or protect public order or safety”.
  • There is a new requirement to publish KPIs; a contracting authority must set and publish at least three KPIs. This is deemed void if the authority considers that the supplier’s performance could not appropriately be assessed by reference to KPIs.

You can read the Act itself here, while a useful legal briefing can be read here.


NHS Provider Selection Regime

If the Provider Selection Regime Regulations become law, it is set to lead to a big procurement shake up for NHS and public health services.

The aim of the new regulations 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.

Subject to parliamentary scrutiny and agreement, the Department of Health and Social Care intends for the Provider Selection Regime (PSR) to come into force on 1 January 2024.

The PSR will be a set of new rules for procuring health care services in England by organisations termed relevant authorities. Relevant authorities are:

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

The PSR will not apply to the procurement of goods or non-health care services (unless as part of a mixed procurement), irrespective of whether these are procured by relevant authorities.

The PSR will be introduced by regulations made under the Health and Care Act 2022. In keeping with the intent of the Act, the PSR has been designed to:

  • introduce a flexible and proportionate process for deciding who should provide health care services
  • provide a framework that allows collaboration to flourish across systems
  • ensure that all decisions are made in the best interest of patients and service users.

Provider selection processes

When the PSR regulations come into force, the PSR will introduce three provider selection processes that relevant authorities can follow to award contracts for health care services. These are the:

  • Direct award processes (A, B, and C). These involve awarding contracts to providers when there is limited or no reason to seek to change from the existing provider; or to assess providers against one another, because:
    • the existing provider is the only provider that can deliver the health care services (direct award process A)
    • patients have a choice of providers and the number of providers is not restricted by the relevant authority (direct award process B)
    • the existing provider is satisfying its existing contract, will likely satisfy the new contract to a sufficient standard, and the proposed contracting arrangements are not changing considerably (direct award process C).
  • Most suitable provider process. This involves awarding a contract to providers without running a competitive process, because the relevant authority can identify the most suitable provider.
  • Competitive process. This involves running a competitive process to award a contract.

Relevant authorities will need to comply with defined processes in each case to evidence their decision-making, including record keeping and the publication of transparency notices.

Timings and support for implementation

The PSR is set out in the Health Care Services (Provider Selection Regime) Regulations 2023, which the Department of Health and Social Care introduced into Parliament on 19 October 2023.

NHS England has published its draft statutory guidance to support implementation of the PSR regulations, setting out what relevant authorities must do to comply with them. The draft statutory guidance will sit alongside the PSR regulations supporting relevant authorities to understand and apply the PSR. Relevant authorities must have regard to the statutory guidance once the regulations are in force.

A draft toolkit has also been developed to support relevant authorities with the application of the PSR.

NHS England is also hosting a series of webinars that individuals can register for.

Transitional arrangements

Subject to parliamentary scrutiny and agreement, PSR legislation will remove the procurement of health care services by relevant authorities from the scope of the Public Contracts Regulations 2015 and will revoke the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013 on 1 January 2024.

Until the PSR is in force, relevant authorities should continue to follow the current rules (the Public Contracts Regulations 2015 and the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013) for the procurements of health care services.

Where relevant authorities have started a procurement exercise before 1 January 2024 under the current rules, then these will not be affected by the PSR and can conclude under the current rules.

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

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

If you have any queries about the PSR, please email