Sector News
A Case of Private Sector versus Public Body Going Head to Head for Community Adult Care Provision – Part 2

Continuing our case study yesterday from Ammar Al-Tabbaa, procurement law specialist and partner at gunnercooke.

As discussed in Part 1 of this post, the Court was unwilling to enter into a debate as to whether the Trust’s attempts to provide an integrated approach to healthcare services in Kent would be undermined if a contract for community adult care were awarded to Virgin Care. It was able to sidestep the issue by finding that the argument that the Trust’s public service mission would be prejudiced was “in truth another way of saying that the new arrangements will not serve the interests of patients as well as would be the case if the Trust gets the contract”. In other words, this is precisely the sort of thing that one would expect the procuring CCGs to have assessed as part of the bid evaluation process, and they clearly came to a different conclusion as to what would be best for patients. The conclusion reached by the CCGs was not, on the face of it, so obviously irrational or unreasonable as to prompt the Court to seek to substitute its own view on the issue.

The case serves to highlight what will certainly be a more commonly encountered issue going forward, namely how one takes into account factors which are perhaps not directly related to the quality or price of the service being procured, but which are relevant nonetheless, especially if one takes a more strategic view.

It is worth pointing out that the CCGs ran this procurement as one for the award of so-called ‘Part B’ services under the Public Contracts Regulations 2006. The distinction between Part A and Part B services has now been abolished, and healthcare services now largely fall under the provisions of the Light Touch Regime (“LTR”) as set out in Chapter 3 Part 7 of the Public Contracts Regulations 2015 (“PCR15”). The current rules recognise that services which fall subject to the LTR – sometimes called ‘services to the person’ – give rise to particular issues, and often require a more tailored approach. Regulation 76(8) PCR15 states that when awarding contracts for LTR services, awarding authorities “may take into account any relevant considerations”, including (a) the need to ensure quality, continuity, accessibility, affordability, availability and comprehensiveness of the services, (b) the specific needs of different categories of users, including disadvantaged and vulnerable groups, and (c) the involvement and empowerment of users.

One potentially fruitful approach could therefore be to attempt to frame the award criteria in a way which mirrors the language of reg. 76(8). There is no accepted definition of what terms like ‘continuity’, ‘availability’ and ‘comprehensiveness’ mean, and in the absence of caselaw on the scope of these concepts it may well be possible to use them to introduce some broader strategic concerns into the evaluation process.

It is also important to note that reg. 76(8) is not exhaustive, and that the examples of award criteria listed there are merely illustrative. The provision expressly permits ‘any relevant consideration’ to be taken into account. A good example of an unlisted, but nonetheless relevant, criterion is security of supply. When procuring services from a market where choice of provider is already limited, or where losing bidders may be inclined to exit the market, it is important for the authority’s procurement decisions not to exacerbate the situation.

It may well be appropriate, taking a longer-term view, to effectively spread the available work between different providers, so as to ensure the existence of competition for those services when the time comes to relet them at the end of the contract. This may in practice mean that certain contracts are not awarded to the bidder with the best solution, since there is more at stake than the provision of the services which are the subject of the immediate contract. This situation is perhaps most frequently encountered where a contract is divided into lots, and where the authority (as permitted by the PCR15) restricts the number of lots for which each provider can bid and/or the maximum number of lots which any one bidder can win, so as to avoid becoming locked in to one particular provider going forwards.

There is, therefore, precedent for the notion that requiring award criteria to be linked to the subject matter of the contract (as mandated by reg. 67(2)) does not of itself preclude taking into account considerations of a more strategic or long-term nature. This approach would also have the advantage of being more difficult to challenge than using criteria which are easier for certain types of provider to fulfil than others, which was perhaps the most difficult aspect of the proposition that the CCGs were obliged to select the outcome that did most to promote the public sector bidder’s service mission.

Adopting a somewhat wider lens, one possible consequence of Brexit – assuming the UK chooses not to remain part of the single market – is that we would be able to revise at least certain aspects of PCR15. We would probably not do away with the procurement rules altogether, since the international trade agreements we would want to enter into, including the WTO’s Government Procurement Agreement (“GPA”), will require us to have a robust public procurement regime in place. However, in view of the narrower scope of application of the GPA relative to the EU Directives, it could well become an option, for example, to do away with the Light Touch Regime, which is not a requirement of the GPA. The regulation of healthcare procurement could therefore become one of those areas in which the UK acquires more of a free hand, with the possibility that the current requirement to put certain healthcare contracts which fall above the financial threshold out to tender could be removed.