UK: Procurement Q&A

Last Updated: 25 February 2013
Article by Paul Barton and Emily Parris

The government has confirmed its policy commitment to telecare and telehealth services, first, through the NHS Mandate, published on 13 November 2012, and second, through Secretary of State for Health, Jeremy Hunt's announcement that telehealth services are to be rolled out to 100,000 people during 2013. A competitive tender process will begin in the New Year through which seven "pathfinder" NHS organisations and local authorities (including Clinical Commissioning Groups) will commission telehealth products and services at no upfront cost.  This is an important first step towards the 3 million lives target.  Against this background, Paul Barton and Emily Parris of Field Fisher Waterhouse answer questions on the regulatory framework for the procurement of telecare and telehealth products and services.

What are public procurement rules and who must comply?

The legal framework governing procurement of goods, services and works by the public sector is multi-layered.  It comprises European Directives, the national laws of EU Member States implementing those Directives, as well as principles from the EC Treaty and case law from the Court of Justice of the European Union.  In the UK, the Public Contracts Regulations 2006 implement the Public Sector Directive ((2004/18/EC) into UK Law. Central government, local authorities, bodies governed by public law, as well as associations formed by any of these must comply.  Registered Social Landlords including Housing Associations are considered to be bodies governed by public law and are therefore caught by the Regulations.  The new Clinical Commissioning Groups (CCGs), which will assume full commissioning responsibilities from April 2013, are also in scope.    All of these organisations must assess whether their particular procurement is subject to the Regulations.  This will depend on what is being procured, and whether the estimated contract value is above or below the specified financial thresholds that bring the Regulations into play. 

The NHS, CCGs and others procuring NHS-funded services must also have regard to government guidance targeted at that sector.  Procurement practice reforms across the health service are already underway aimed at achieving savings of Ł1.2 billion.   A new NHS Procurement Strategy is in the pipeline and in the interim the Department of Health has issued best practice guidance for NHS Trusts (NHS Procurement: Raising Our Game), as well as specific guidance aimed at CCGs, (Procurement guide for commissioners of NHS-funded services).

What if the Regulations are not applicable?

Even if a public sector body assesses that its procurement falls wholly or partly outside the Regulations, for example, because it is covered by one of the exclusions under the Regulations, or is below the relevant financial threshold, the procurement should still be conducted in accordance with principles established under the EC Treaty (as should regulated procurements).  These principles require public bodies to (i) conduct procurements in a transparent way by advertising so that the market is open to competition, (ii) treat bidders equally, so for example, allowing one bidder alone to amend its tender would infringe this principle, (iii) ensure that any requirements imposed on bidders are proportionate, and (iv) recognise products, services and equivalent standards of other EU Member States.

Is there an advantage to procuring telecare or telehealth products and services through an existing framework agreement?

A framework agreement is a ready-made, EU-compliant procedure through which public sector bodies may call off supplies, works and or/services on pre-agreed terms and conditions from participating suppliers.  When calling-off under a framework, the public sector body can choose either to select a supplier from among those on the framework by running a mini-competition or by applying the terms and conditions of the framework agreement without re-opening competition. 

The Government Procurement Service Framework Agreement for Assistive Technologies (RM784) was recently extended and will now run until August 2013.   With some 55 suppliers across six lots covering broadly, telecare, telehealth and telecoaching products and services as well as full managed services, it provides for further competitions, reverse auctions between participating suppliers, as well as call-offs direct from a catalogue provided it is possible to determine from the catalogue which supplier represents best value for money against the buyer's requirements.  

What if a public sector body judges that it is preferable to buy "off-framework"?

That depends on what is being procured and the estimated contract value.  Assuming the relevant financial threshold is met, public procurements of supplies, works and so called "Part A" services must comply with the full regime under the Regulations; whilst "Part B" services, which include health and social care services, are subject to lighter regulation.  In order to determine to which category a procurement belongs, it is important to look at what is being procured, rather than the use to which the relevant supplies, works or services are to be put.  This was made clear in a case called Jobsin Internet Service v Department of Health1.  In that case, the provision of a website for NHS recruitment was held to be a "Part A" computer service, rather than a "Part B" recruitment service.  So for example, if a housing association wishes to procure alarm installation and monitoring services for sheltered accommodation, the fact that the alarm system is for the purposes of a social care service is not relevant.    

For a mixed contract covering the procurement of supplies (for example, the alarm kit), works (installation of the kit) and other services (for example, monitoring, call centre and paramedic support), then it is essential to identify where the main value of the contract lies.  If the main value lies in the services and the services include Part A and Part B health and social care services, then it is necessary to identify whether the main value lies in the Part A or Part B services.


1. [2001] EWCA Civ 1241

First appeared in The Link (TSA) 1 February 2013

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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