The key document in question is here.
In a nutshell, it has thrust private sector ‘competitive tendering’ in the procurement of NHS services into the limelight.
The legislature, as recommended by the executive, has an obligation to provide law that is clear and predictable, and the judiciary can only rely on the Acts on the statute books and any supporting discussions of what parliament might have intended. It is at the heart of parliamentary sovereignty that parliament can do what it wishes. There is, unfortunately, a large number of issues concerning this statutory instrument 2013 No. 257 concerning procurement in England. These embrace a plethora of commercial and legal, not just political, considerations, which do need to be discussed as a matter of some urgency in the public interest. Such discussion will be to the benefit of all involved parties.
The judiciary must have a clear understanding of how this law was arrived at, for it to interpret the ‘intention of parliament’ when any disputes arise as they indeed will. To help it, it has the Bill and Act itself, as well records in Hansard. The case and statute law, both domestic and EU law, have a recent history in effecting English NHS health policy, but only in as much the NHS has encroached upon ‘undertakings’ and ‘economic activity’ in EU law. The Health and Social Care Act (2012) has changed the legal climate substantially; indeed, the ambit of competition is thrown very wide indeed, as reflected in Regulation 10.
Section 75 of the Health and Social Care Act has firmly enmeshed the Act in competition legislation, parallel to but distinct from previous legislation such as the Public Contracts Regulations (2006). However, the adoption of key concepts and themes from the European law, voluntarily by the English legislature as proposed in the statutory instrument, makes it rather unclear as to the actual ‘direction of travel’. It is as if Parliament has wished to enmesh the NHS in European competition and procurement law, without any democratic scrutiny. The aforementioned statutory instrument is particularly vague on the precise functions of Monitor in the distinct phases of award and execution of procurement, does not map out how Monitor is to function on behalf of key stakeholders in the NHS along with other regulatory processes (such as judicial review or the health ombudsman), and how precisely this English legal framework will operate alongside other approaches (such as the UNCITRAL Model law, European regimens, and World Trade Organisation).
Critically, it seems quite mysterious how overall this particular method was chosen (formal tendering, as opposed to less structured methods of competitive tendering such as requests for proposals and quotations, or single-source procurement), when the discussions in the lower and upper Houses of Parliament did not heavily lean in this direction in the first place. (Such methods are extensively discussed in ‘Regulating Public Procurement: National and International Perspectives’ (2000) Sue Arrowsmith, John Linarelli and Don Wallace Jr. Kluwer Law International). This obligatory competitive tendering mechanism for the majority of tenders is a robust method of making sure as many contracts are awarded to the private sector as possible. There would be nothing to prevent parliament from legislating for a minimum of NHS services to stay in the NHS, as that would not offend any law in Europe; it does not distort the market, but for public policy reasons could easily be argued to have a legitimate reason. For example, if a key provider, e.g. of blood products, went bust, this could be the detriment of the entire service, and protection for such a service can easily be justified under statute.
Some specific points which are particularly noteworthy are raised in the Appendix.
APPENDIX
Regulation 3
3 (2)(b): “treat providers equally and in a non-discriminatory way, including by not treating aprovider, or type of provider, more favourably than any other provider, in particular onthe basis of ownership.”
It is quite unclear what this is driving at, and whether equality of providers is indeed a primary aim of the procurement process. For example, UNCITRAL model law on procurement of goods, construction and services lists this as an objective in the preamble to the law, but the Guide to Enactment suggests perhaps it is a subsidiary role. Cases such as Fabricom case (Fabricom SA v Belgium (Judgment Joined Cases C-21/03, C-34/03, 3 March 2005) are particularly helpful here.
3(b) What does “best value” in this sector indeed mean? Typical considerations such as “value for money”, as well as social, technological, environmental and various other non-price considerations, need to be discussed at some point. Again, this is essential if the law and guidance for the NHS procurement is to have adequate clarity. The point is not so much playing party-politics about grinding this legislation to a halt with an intellectual ping-pong, but it is helpful, if this clause is to be included in this statutory instrument, to understand what is in parliament’s mind for later disputes to be resolved. Presumably Monitor have begun to think about this as they hope to issue specific guidance on this?
3(4)(c) “allowing patients a choice of provider of the services” – as drafted it is unclear whether the true beneficiaries of the choice of providers are the patients themselves or CCGs (the relevant bodies); the relationship between actual patient choice and vicarious choices made by the CCGs is not addressed in this statutory instrument.
Regulation 4
Transparency for contract opportunities. This is indeed helpful to provide a rough check on how contracts are being awarded, but it has to be conceded that the public will be largely none-the-wiser as they will perform functions under the NHS logo (unless parliament requires the full identity of providers to be disclosed at the point-of-use for any particular patient.)
Regulation 6
This regulation, as drafted, is only confined to conflicts between purchasers and suppliers in the NHS, but a purpose of clauses such as this in other jurisdictions has been to address wider conflicts-of-interest, such as political donations. Although it may not be desirable to extend the ambit of discussion here too widely, some consideration should be made to how this might relate to other existant laws concerning bribery currently in force in England, for example?
Regulation 7
“Framework agreements”, which are not in fact ‘necessary’ will require in due course much greater detail if they are to be included. They certainly require, pursuant to Stroud, some scrutiny. How many suppliers will be involved in such agreements, as this relates to a complex interplay between operational efficiency, security of supply and the scope of competition? The question has to be why they have been imported from EU procurement law voluntarily, when there is actually no obligation to. It would be helpful if parliament could provide some indication of the processes and purpose of any shortlisting in the operation of these framework agreements, particularly in relation to relevant national policy considerations and disclosure of relevant criteria?
Regulations 13-17: Monitor (Investigations, declarations, directions and undertakings)
Ideally the outcome should be clear rule-based decision-making systems that limits the discretion of procuring entities. Monitor will have to have to explain this in due course, but no mention even is made of the types of issues which Monitor might have to face (e.g. fraudulent information in the bidding or execution phases, mechanisms of correcting any errors, late tenders.)
