New information suggests that Direct Award C, one of the new direct award mechanisms created by the new NHS Provider Selection Regime, is being used predominantly to make short-term contract awards to existing providers. 


The new Direct Award C mechanism under the NHS Provider Selection Regime allows NHS and local authority Commissioners ("relevant authorities") to award a new contract to an existing provider, without competition, if:

  • The relevant authority is not required to follow Direct Award A or Direct Award B;  
  • The relevant authority proposes to replace an existing contract which is due to expire with a new contract upon the existing contract expiring; 
  • The considerable change threshold is not met; and
  • The relevant authority is of the view that the existing provider is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard.

Our guide on Direct Award C can be viewed here: Direct Award C can be viewed here

Duration of Contract Awards

Based on information available via the Find a Tender portal at the time of writing (March 2024) the majority of Direct Award C contract awards have been short term – either for up to 1 year (84% of awards), or up to 2 years (13%), up to 3 years (12%) and only 8% of awards for 4-year contracts of more. 

What might this indicate?

As noted in our blog post last week when we considered the relative use of the new PSR procedures (hereThe NHS Provider Selection Regime: Ten weeks in) these are the early days for the PSR and there is only a small data sample. As such, no firm conclusions should be drawn at this stage. 

However, a figure of 84% for contract awards of up to 1 year is notable. 

It suggests that for existing providers, there is a good chance that a Commissioner may extend existing arrangements if existing performance is “sufficient”. The need for the new contract not to represent a “considerable change” places a limit on the value of a new contract, which in turn lends itself to short term awards to fall beneath the 25% price increase threshold.  

This also means that whilst certain total contract values may appear to be relatively low (with the majority of contract awards using Direct Award C in the sub £500,000 category), this figure would be higher if those contracts were awarded for a more standard multi-year term. It would be overly simplistic to say that Direct Award C is only being used to extend low value contracts. 

It will be interesting to note in early 2025 whether these one-year extensions become the norm and what the impact on services will be. Could one-year awards incentivise providers to perform to a high standard so that they secure further awards, or might it lead to a level of uncertainty and lower investment, due to the short-term nature of the contract? 

Contributors: Patrick Parkin, Partner; Ben Blackburn, Legal Apprentice.