Section 75 Regulations Revisited

Competition and markets

The Government has published the new version of the Section 75 Regulations governing commissioning of NHS services.  It appears that the changes to Regulations 5 and 10 have indicated to Monitor that they must take a slightly broader view than was previously implied.

Award of a new contract without a competition

5.—(1) A relevant body may award a new contract for the provision of health care services for the purposes of the NHS to a single provider without advertising an intention to seek offers from providers in relation to that contract where the relevant body is satisfied that the services to which the contract relates are capable of being provided only by that provider.

(2) For the purposes of paragraph (1), a relevant body is not to be treated as having awarded a new contract—

(a) where the rights and liabilities under a contract have been transferred to the relevant body from the Secretary of State, a Strategic Health Authority or a Primary Care Trust; or

(b) where there is a change in the terms and conditions of a contract as a result of—

(i) a change in the terms and conditions drafted by the Board under regulation 17 of the

2012 Regulations (terms and conditions to be drafted by the Board for inclusion in

commissioning contracts), or

(ii) new terms and conditions drafted by the Board under that regulation.

Under the new reg. 5 it will still be up to the commissioner to prove they opted for an award to a single provider consistently with objectives in reg 2; although the highly restrictive words in the old 5(2) have been removed. It does not look as if they could argue that they did so because of wider considerations such as not putting stress on a local hospital. And it makes no difference at all to the application of EU procurement law.

One has to presume that the intention is still for more competition and for tendering to be the default unless you can show a case for not doing that is strong enough to ensure there is no risk of challenge.

In the accompanying spin it says that “Monitor’s guidance on the regulations will make clear that we are continuing the same approach as now under the Principles and Rules for Cooperation and Competition” but that is not in the regulations or in the explanatory notes.

The new reg. 3 adds a need to document additionally how the duty of commissioners around integration has been addressed which may or may not add something.

Anti-competitive behaviour

10.—(1) When commissioning health care services for the purposes of the NHS, a relevant body must not engage in anti-competitive behaviour(a), unless to do so is in the interests of people who use health care services for the purposes of the NHS which may include—

(a) by the services being provided in an integrated way (including with other health care

services, health-related services, or social care services); or

(b) by co-operation between the persons who provide the services in order to improve the quality of the services.

(2) An arrangement for the provision of health care services for the purposes of the NHS must not include any term or condition restricting competition which is not necessary for the attainment of—

(a) intended outcomes which are beneficial for people who use such services; or

(b) the objective referred to in regulation 2.

The new reg. 10 appears to suggest that if a commissioner can show what they did was anti-competitive but necessary to further integration or cooperation then that would be acceptable (you could argue this is not a change as that would have been argued anyway). It will be up to Monitor to decide if there is a challenge (or if they think they should intervene) – who knows what tests they might dream up. The definition of anti-competitive behaviour is still in the Act itself which would prevail.

The Royal College  of General Practitioners asked for clarification around 6 specific situations and the answers to those will tell us far more.

The changes shift things a bit but everything still depends on the attitude of Monitor and the NHS Commissioning Board and the Clinical Commissioning Groups. The CCGs may still see tendering as the easiest way to make sure they stay out of trouble, even though they might shape the procurement so as to favour a current provider. The amount of work they have to do to be sure they do not need to tender may be more than just doing it!!!

What we need is Regulations designed to ensure commissioners do not have to fear a challenge from NCB from Monitor or under domestic or EU procurement law, and these don’t do that. It is not possible whilst we have Part 3 of the Act.

Amend in haste, repent at leisure – NHS section 75 saga continues  by Caroline Molloy