The Provider Selection Regime (“PSR”) – what will it mean when procuring health care services?

On 19 October 2023, The Health Care Services (Provider Selection Regime) Regulations 2023 (the “PSR Regulations”) were laid before Parliament. Subject to parliamentary process, the intention is that the PSR Regulations will come into force on 1 January 2024.

Our involvement to date

Working alongside the NHS England policy team and NHS England legal team, Hempsons has advised on the development of the PSR over the past two years. This work has included advising on the PSR Regulations themselves (inputting into the drafting of the Regulations, the drafting of which was led by DHSC), and the development of the statutory guidance and the toolkits developed by NHS England to support the introduction of the PSR. Hempsons is therefore well placed to advise on the implications of this new regime for securing the provision of health care services.

What does the PSR mean in practice?

In short, a more flexible decision-making process when procuring relevant health care services. The consequence of that flexibility; the need for greater transparency.

Once PSR Regulations come into force, the procurement of health care services, when procured by relevant authorities under the PSR, will be removed from the scope of the Public Contracts Regulations 2015 (the PCR). The National Health Service (Procurement, Patient Choice and Competition) (No 2) Regulations 2013 (the PPCCR) will be replaced.

When and to whom will the PSR apply?

The PSR will apply when relevant authorities (NHS England, Integrated Care Boards, NHS trusts and foundation trusts, as well as local authorities and combined authorities) when procuring relevant health care services (“Health care” means all forms of health care provided for individuals, whether relating to physical or mental health”, which fall within one or more of the CPV codes specified in schedule 1 of the Regulations).

There will be no minimum financial threshold for the application of the PSR Regulations.

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

Procurement principles

All decision making must take account of the procurement principles. When procuring relevant health care services, a relevant authority must act with a view to:

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

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

New decision making processes

There will be a number of potential decision-making processes available:

• Direct Award processes
  • Direct Award Process A
  • Direct Award Process B
  • Direct Award Process C
• Most Suitable Provider Process
• Competitive Process

Some processes must be complied with in certain circumstances. Others are for a relevant authority to determine based on the facts of a particular requirement. Four of the five do not require a competitive process, however.

Scrutiny

For direct award process C, most suitable provider and competitive processes, a standstill period will need to be run before a contract can be entered into. If aggrieved providers challenge during this standstill period, the relevant authority will (if certain requirements are met) need to review their original decision. If a provider remains unhappy following that review, the provider can challenge to a PSR review panel. The relevant authority will then need to make a new decision, taking account the review panel’s advice.

The ultimate remedy for an aggrieved provider is to challenge via judicial review, which will also be available for Direct Award Process A and Direct Award Process B.

Transparency

In line with other procurement law developments, there is a need for greater transparency by relevant authorities. This comes as a consequence of the greater flexibility the PSR affords relevant authorities.

Modifications

As with the PCR, there are limits on the extent to which contracts can be modified during their term.  The requirements are set out in Regulation 13.

Other procedural requirements are set out in the Regulations.

Guidance and toolkits

Sitting alongside the Regulations is the Statutory Guidance published by NHS England. Relevant authorities must have regard to the guidance.

To support relevant authorities, NHS England has also published a number of toolkits, including flowcharts, process maps, and a guide to completing the various notices that will be required.

What the PSR means for you?

The PSR will be a brave new world for relevant authorities procuring relevant health care services.  How this new regime operates in practice will need to be seen, but there should be more flexibility, albeit with greater transparency.

Hempsons is well placed to advise on the opportunities the PSR affords having advised on its development for the past two years. If you have any questions or would like to discuss how the new scheme will affect you, please contact our procurement team.