First test of new rules on competition finds against the NHS

In its first review, the panel told NENC it used the wrong process to award a contract to an incumbent supplier of an online attention deficit and hyperactivity disorder service.

In March, NENC announced it was reawarding the ADHD contract to the incumbent supplier, Psychiatry UK, for one year. It employed one of three new direct award processes introduced for commissioners under the new Provider Selection Regime.

The PSR is intended to give commissioners more flexibility when buying health services and was specifically introduced to reduce the amount of competitive tendering NHS commissioners needed to undertake.

The PSR allows commissioners to directly award contracts to suppliers, or choose what they deem to be the most appropriate supplier, rather than issuing a competitive tender. 

NENC followed the PSR’s direct award process C, one of the five procurement routes set out in the regulations, which is aimed at recommissioning a service from a supplier deemed to have satisfied an existing contract and considered able to continue delivering the service to a sufficient standard.

But The Owl Centre, a rival provider of services for people with autism and ADHD, complained this approach breached the PSR regulations, as it did not reflect the “competitiveness within the market” and would diminish the scope for patient choice.

The ICB reviewed its decision and decided it had followed the rules correctly. The Owl Centre referred the matter to the IPCPP.

The panel decided that patients have a legal right to choose which provider they receive ADHD care from. Therefore it concluded the commissioner should have used direct award process B, the required route for commissioning services where patient choice applies.

“The PSR Regulations do not provide commissioners with any discretion to choose an alternative provider selection process where patients have the right to choose their provider,” the review concluded.

The ICB had acknowledged to the panel that the service was one for which patients have a right to choose their provider. However, the board said it wanted to recommission the service for a year to ensure continuity of delivery in North Cumbria while it used the time to review its commissioning arrangements for ADHD services across the whole ICB. Its intention was then to commission services from 2025-26 onwards using direct award process B.

However, the panel has advised the commissioner the only course of action that would be compliant with the PSR would be to abandon the process and, should it still wish to commission the service, re-do it using process B.

The IPCPP was set up to review commissioning decisions made under the PSR. Its findings are advisory. It is up to the commissioner to decide how they act following a review, though it points out that “a provider that is unhappy with the commissioner’s final decision, following the panel’s advice, could choose to seek a judicial review of that decision”.

The panel said in its report of the NENC review that the PSR are new regulations and commissioners “face the prospect of having provider selection decisions reviewed by the panel at a time when their staff are still coming to grips with the regime”.

It said it will therefore be reviewing its procedures in the next three to six months “to capture, and reflect in its procedures, any learning points from the initial cases reviewed by the panel”.

NENC ICB told HSJ it was “happy to accept the panel’s decision and will therefore award the contract to the current provider under direct award process B”. There will be no impact on service continuity or patients as a result of the change in direct award process.

It said it had always intended to use process B to award any further contracts. “We had already informed The Owl Centre of our intention to engage with the market and this has not changed. We will be making further contact with The Owl Centre to discuss their interest in providing services over the coming days.”

Charlotte Forsyth, chief commercial officer at The Owl Centre told HSJ it is “delighted with the panel’s response,” adding: “We hope that the panel’s decision provides much need[ed] clarity to ICBs under the new PSR regulations.”