On 12 September 2024, the Independent Patient Choice and Procurement Panel (“IPCPP”) published a review of a proposed contract award by Staffordshire and Stoke-on-Trent Integrated Care Board (the “ICB”) for its All Age Continuing Care (“AACC”) Service.
This is the first time that the IPCPP has considered the use of the Most Suitable Provider (MSP) process since the PSR came into force on 1 January 2024. This update will be of interest to:
- Any Commissioners that are considering the use of the MSP Process, or
- Any providers that are engaged in (or wish to be engaged in) the delivery of health care services to the NHS.
For more background, see our short Guide to the Most Suitable Provider Process.
Facts
The ICB had selected Midlands Partnership NHS Foundation Trust (the “Trust”) as provider for their AACC service, using the MSP process. The ICB had received nine submissions, but only the Trust’s submission passed all basic criteria. All of the Trust’s responses to the key criteria were of sufficient standard to be assessed as ‘meets requirements.’
Xyla, part of Acacium Group, was an unsuccessful bidder and asked the IPCPP to review the process and the extent to which the procedure had complied with the PSR. IPCPP reviewed three main issues and considered that there were breaches that had a material effect on the ICB’s contract award selection.
To remedy the breaches, IPCPP made a recommendation that the ICB should abandon the procurement process.
Key Issues
Did the NHS Provider Selection Regime actually apply in this case?
First, the IPCPP questioned whether the PSR was actually the right procurement regime to be applied to the AACC service. The AACC services included elements that were not healthcare services delivered directly to a patient, but there was no evidence that the ICB had conducted an assessment of whether the procurement should fall within the PSR or the Public Contracts Regulations 2015 (as amended) (“PCR”) which places an entirely different set of obligations on the ICB.
It is of course common for a service specification to contain a variety of elements, some of which will involve healthcare services delivered directly to a patient and others that are not (and which therefore fall outside the scope of the PSR). In this case, it is necessary to consider (with evidence) what the main subject-matter of the contract is (the in-scope health care services or the out-of-scope services).
The main subject matter of the contract is determined by reference to whatever is the higher value between:
- The estimated lifetime value of the healthcare services; and
- The estimated lifetime value of the other goods and services.
If the in-scope health care services are the main subject matter, then the contract may be procured under the PSR only if the relevant authority is of the view that the other goods and services could not reasonably be supplied under a separate contract. The relevant authority may, when considering this, take into account whether procuring two separate contracts would have a material adverse effect on the services.
Ultimately, IPCPP considered that a finding on this issue was not necessary given its other findings in its review. Whilst it had “doubts” that the PSR was the correct regime, it proceeded on the basis that the PSR did apply (presumably to provide useful guidance for the future benefit of Commissioners and providers alike).
However, this is a timely reminder for all ICBs and relevant authorities that are considering the use of the PSR to conduct a full assessment of the correct regime that applies and to document the reasons that it is appropriate to use the PSR rather than the Public Contracts Regulations.
Use of Most Suitable Provider Process
As well as procuring the services in accordance with the basic selection criteria and the key criteria (as set out here) the ICB is also obliged under Regulation 4 to procure services:
- Securing the needs of the people who use the services;
- Improvising the quality of the services; and
- Improving efficiency in the provision of the services, and
- Transparently, fairly and proportionately.
Xyla had argued that the use of the MSP was less likely to deliver value for money than if the competitive process had been used by the ICB instead, given that the contract had a value as high as £15m. The IPCPP disagreed with this view and found that there was no breach of Regulation 4 simply arising as a result of the decision to use the MSP. In practice, this meant that the £15m value alone did not dictate that the competitive process should be used rather than the MSP.
The ICB’s ability to identify the most suitable provider
However, the ICB failed to comply with its obligation to take into account likely providers and all relevant information available (Regulation 6).
IPCPP found a lack of evidence in the ICB’s documentary record showing its knowledge of likely providers or how this knowledge was considered when deciding to use the MSP process.
Instead, IPCPP found that the ICB’s decision to use the MSP process was driven by a desire for a quicker process, particularly as the MSP process was the only provider selection process it could complete within its desired timeframe for selecting a provider. Its desire to move quickly also led to it deciding against any pre-market engagement to update or maintain its knowledge of the provider landscape before the provider selection process.
Conduct of the MSP Process
The IPCPP also found that the ICB did not act fairly, transparently or proportionately in its selection process.
It found the ICB to have misunderstood the MSP requirements and used the MSP process to confirm its strong pre-existing preference for the Trust rather than as a genuinely open decision-making process. The ICB also excluded many potential providers by unnecessarily requiring CQC registration as a condition of the contract award, which was inconsistent with its existing arrangements, where the incumbent provider of continuing care gateway services was not CQC registered.
The ICB admitted that the requirement for CQC registration was an error and did not consider the impact of imposing this requirement. The CQC registration was not required for procuring the AACC service provider because the service did not involve direct treatment and care delivery to patients or service users, and instead focused on clinical assessments and care coordination, which did not necessitate CQC registration.
The IPCPP also found the ICB to have run a competitive exercise under the auspices of the MSP process, which was less rigorous than if the ICB conducted a competitive exercise through the PSR’s separate Competitive Process, disadvantaging other providers. Additionally, IPCPP found that the ICB’s methodology of asking more questions on some key criteria than on others to determine relative importance was neither fair nor transparently communicated to potential providers. The ICB also acted unfairly by relying on external information about MPFT in grading its initial answers as ‘meets requirements’ and then allowing MPFT to resubmit its answers, while not giving Xyla the same opportunity.
Furthermore, IPCPP found that the PSR regulations do not prohibit providing feedback to participants in an MSP process, and the obligation on relevant authorities to act transparently generally means that feedback should be provided when requested. Consequently, IPCPP found that the ICB failed to act transparently when refusing to provide feedback on Xyla’s submission, thus breaching its obligations under the PSR regulations.
What practical guidance does this case provide?
This is a useful case review that touches on a number of different areas. Whilst certain points may turn on the specific facts, this case review clarifies that:
- Commissioners should take time to carefully consider which procurement law regime applies to the relevant contract – either the NHS Provider Selection Regime or the Public Contracts Regulations. Records must be maintained to evidence the basis upon which the decision has been made.
- Scrutiny can and will be applied to the use of the MSP process and the extent to which a Commissioner has gathered evidence about the providers in the market to enable it to make an informed decision about who is best placed to provide a service.
- A Commissioner is not required to use the competitive process simply in order to meet its obligation to deliver value for money and to improve the efficiency of the services, and it is also possible to do so through the use of the MSP, even if the contract value is as high as £15m.
- A Commissioner’s obligation to act transparently means that it should provide feedback to bidders that have taken part in a competitive process in the same way as they would have done in a competitive process.
If you would like to discuss any of the above please contact a member of our Healthcare team.
Article written by Nick Lee and Patrick Parkin.