The Health Care Services (Provider Selection Regime) Regulations 2023 came into force on 1 January and represent a fundamental change to the way that certain healthcare services will be procured by the “relevant authorities” (such as ICBs, NHS England, Trusts and Foundation Trusts). 

In this bulletin, we look at one of the new award mechanisms – Direct Award A. 

For guidance setting out how to decide which PSR award processes are available, please see our PSR flowchart on choosing the right award process here. 

Overview: Direct Award Process A

A relevant authority must use Direct Award Process A under the Health Care Services (Provider Selection Regime) Regulations 2023 (the “PSR”) to award a new contract where:

• there is an existing provider of the health care services to which the proposed contracting arrangements relate; and
• the relevant authority is satisfied that the health care services to which the proposed contracting arrangements relate can only be provided by the existing provider (or group of providers) due to the nature of the health care services (even when there are alternative providers in the market, as long as these are not considered to be realistic alternatives for the relevant authority’s specific requirements, direct award process A must be used).

Such services may include, but are not limited to:

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

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

Entering into a contract under Direct Award Process A:

A relevant authority should first ensure that a recommendation to award a contract is approved internally through all of the relevant authority’s governance processes.

There is no requirement to make intentions clear in advance or to have a standstill period.

Where a relevant authority awards a contract under Direct Award Process A it is required to submit a confirmation of award notice via the Find a Tender Service website within 30 days of the contract being awarded which must contain the information set out in Schedule 2 of the PSR. The Statutory Guidance also states the notice should confirm that the award is to an existing provider and in respect of an existing service.

Relevant authorities must make and keep clear records detailing their decision-making process and rationale including in relation to management of conflicts of interest in line with Regulation 21 PSR and the relevant authority’s wider conflict of interest policy. 
Our view:

• Direct Award A appears to be an attractive tool to allow for the direct award new contracts to incumbent providers. 
• However, in practice, the threshold that must be met to use this award mechanism in a legally compliant way is very high. If a relevant authority cannot demonstrate that there is “no realistic alternative” provider in the market, then this option should not be used. 
• For Relevant authorities - there is a need to demonstrate that, in choosing to use Direct Award A, that their understanding of the market is comprehensive and accurate. A clear record should be kept as to how the authority has reached the decision that there is no alternative provider. 
• For service providers - we recommend that that the publication of contract award notices is closely monitored in the markets that you are active in. If you identify instances when Direct Award A is used. If there are occasions when it is used for the award of a contract and you believe that your service is a realistic alternative, then you should act as soon as possible if you wish to make representations to the relevant authority.  

More information:

If you have any questions, please contact our Patrick.Parkin@burges-salmon.com, Richard.Binns@burges-salmon.com or your usual Burges Salmon contact. 

Article written by Lizzy Marke and Patrick Parkin.