The Health Care Services (Provider Selection Regime) Regulations 2023 (the “PSR”) came into force on 1 January and represent a fundamental change to the way that certain healthcare services will be procured by “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 B. 

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: when to use Direct Award Process B

A relevant authority must use Direct Award Process B under the PSR to award a new where:

• the proposed contracting arrangements relate to health care services in respect of which a patient is offered a choice of provider;
• the number of providers is not restricted by the relevant authority;
• the relevant authority will offer contracts to all providers to whom an award can be made because they meet all requirements in relation to the provision of the health care services to patients; and
• the relevant authority has arrangements in place to enable providers to express an interest in providing the health care services. 

Services arranged using Direct Award process B may include, but are not limited to:

• where relevant authorities are required to offer choice to patients under regulation 39 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012 and therefore cannot restrict the number of providers;
• new primary care services that do not involve a relevant authority selecting a provider, and where the number of providers available to patients is not restricted by the relevant authority;
• continuation of existing services where the relevant authority does not select the provider(s), and instead any provider that meets the minimum requirement(s) is offered a contract and is placed on a list of providers for patients to choose from;
• elective services led by a consultant or mental health care professional where patients have a legal right to Choice (as set out in Part 8 of the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012);
• other elective services where patients do not have a legal right to Choice, but for which relevant authorities voluntarily offer patients a choice of providers and where the number of providers is not restricted by the relevant authority through provider selection (e.g. mandatory eye health services, audiology, podiatry services, NHS continuing health care services, public health services such as over-forty health checks)

Direct award process B must not be used:

• to conclude a framework agreement or to award a contract based on a framework agreement; or
• if relevant authorities are seeking to voluntarily establish other pools of providers from which patients can choose (i.e., for services where there is no legal right to choice) and they intend to select a limited number of providers to be available, they must use the most suitable provider process or the competitive process to make this selection.

If the number of providers is not restricted or cannot be restricted (where the patient has the legal right to choose the provider), there are qualification criteria that providers must meet before a provider can be offered a contract. Those criteria (which must be applied by ICBs and NHS England) sit outside the PSR decision-making processes and are set out in the National Health Service Commissioning Board and Clinical Commissioning Groups (Responsibilities and Standing Rules) Regulations 2012 (as amended) and are further explained in NHS England’s Choice guidance.

Entering into a contract under Direct Award Process B:

When awarding a contract using direct award process B, relevant authorities must ensure that:

• arrangements are in place to enable providers to express an interest in providing the required services; and
• all providers that meet the requirements in relation to the provision of the health care services are offered contracts.

Relevant authorities must consider the exclusions in Regulation 20 and apply as appropriate.

A relevant authority should first ensure that a recommendation to award the 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 B 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 would be expected to confirm whether the award is to a new or existing provider and whether it is in respect of a new or 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 B will be most relevant to those services that patients have a legal right to choice. Examples include elective referrals made by GPs, optometrists and dentists (with exceptions for cancer care, mental healthcare and maternity services).  
• It is notable that there is now express wording to state that the size of supplier lists for those services must not be limited if providers satisfy the authority's requirements for a service.This is a helpful clarification that will be welcomed in particular by independent providers when engaging with NHS commissioners. 

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 Elizabeth Marke and Patrick Parkin.