NHS WORCESTERSHIRE HEALTHCARE PROCUREMENT STRATEGY (2010-2014) April 2010 Page 1 of 72
Table of Contents Page Executive Summary 3 Section A - Introduction 7 Section B - Overview of NHS Worcestershire and the area it serves 12 Section C - Current Commissioning Landscape 14 Section D Current Provider Landscape 17 Section E Market Management 19 Section F Consultation, Overview and Scrutiny 22 Section G Procurement Rules and Principles 26 Section H Procurement Strategy 30 Section I Co-operation and Competition Panel 53 Section J Review of Procurement Strategy 55 Annexes Annex A Annex B Annex C Annex D Annex E Annex F Annex G Top 40 Providers to NHS Worcestershire by value NHS Worcestershire 10 guiding principles for Market Management EU Procurement Procedures Principles and Rules for Co-operation and Competition Competition & Promotion Dispute Resolution process Service Review Template Procurement Plan Template Equality Impact Assessment Report Page 2 of 72
Executive Summary 1. NHS Worcestershire ( NHSW ) is the branding of the Commissioning and Public Health functions of Worcestershire Primary Care Trust. NHSW aspires to become World Class in its commissioning of Healthcare Services as this will enable it to serve its population by achieving its vision to deliver high quality, patient centered, efficient healthcare to local people when needed, as close as possible to home. 2. In order to become a World Class Commissioner NHSW will need to Effectively manage the provider market and commission services from a variety of providers. Ensure strong clinical insight and engagement. Use good quality contracts to assure the delivery of high quality and safe services. Produce and make available to the public good quality information to support decision making. Involve a diverse range of patients and stakeholders in decisions about health services. Make the public aware of their right to make choices in relation to their own health. Have good quality procurement processes in place. Promote continuous improvement in quality outcomes from clinical and provider innovation. Ensure a fair and equitable procurement process is applied to all Commissioning. 3. Our commissioning team commissions a series of services directly. We have Lead Commissioners in place for: Acute and Specialised Services Primary Care. Practice Based Commissioning Community Services These teams are supported by professionals in Performance Management, Clinical Development, Finance, Information Management, Public Health and Procurement Page 3 of 72
4. We also have well established arrangements with Worcestershire County Council for the joint commissioning of services. Joint commissioning arrangements are in place for:- Adult mental health and Well-being Children and Young People 5. There is currently no national general policy for NHS healthcare services to be subject to a formal procurement process. However, there is an increasing number of independent, third sector organizations and NHS Foundation Trusts (who have greater autonomy including rights to holding legally binding contracts) who will be able to provide such services. Primary Care Trusts (PCTs) are required to ensure value for money as laid down in their Standing Orders and Standing Financial Instructions. Consequently PCTs need to follow appropriate Procurement processes when commissioning services. 6. EU principles require that the procurement processes used for procuring services are fair and transparent. PCTs need to ensure potential providers are given clear guidance on what services the PCT wishes to procure and the selection process that will be used to select the provider. 7. In carrying out its Commissioning role, NHSW will adopt the following key principles:- Transparency we will: o Ensure tender opportunities are sufficiently and appropriately advertised o Ensure conflicts of interest are declared and appropriate action is taken o Involve patients in procurement processes where it is appropriate to do so o Publish the results of decisions where appropriate. Proportionality we will o Ensure our procurement processes are proportionate to the value, complexity and risk of the services being contracted o Ensure potential providers are not excluded through overly bureaucratic or burdensome procedures. Equality we will o Ensure that all providers and sectors (both NHS and non NHS) have equal opportunity to compete where appropriate. o Ensure that we treat all providers and sectors equally (for example all financial and due diligence checks apply equally and are proportionate) Page 4 of 72
Non-discrimination and Consistency we will o Apply local and national procurement policies and procedures consistently and fairly Efficiency we will o Standardise our main operating practices for commissioning services from providers and will work with providers to improve efficiency and effectiveness of existing services. Continuity we will o Test key NHS Services such as Acute Emergency Services, Ambulance Services to ensure that they deliver best value for money. Development we will o Provide support to all providers to encourage continual improvement in the quality of services that are provided and where it is in the public interest will target new service areas to encourage new entrants 8. This Procurement Strategy responds to new and existing national and regional guidelines including but not limited to:- World Class Commissioning Competencies. PCT Procurement Guide for Health Services. NHS Operating Framework 2009/10. Rules for Co Operation and competition. Investing for Health, A Strategic Framework for the West Midlands. The NHSW Standing Orders and Standing Financial Instructions. 9. By following these guidelines NHSW will demonstrate that it: - Has procurement skills available that ensure healthcare services are provided within robust contracts. Will manage the provider market to meet demand for the services and to obtain the required clinical, health and other outcomes. Has developed a Competition Disputes Resolution Policy agreed by the Board and made available to all potential and current providers. Page 5 of 72
10. In summary in order to be a World Class Commissioner NHSW must carry out fair and open procurement and contracting processes that: - Identify and assess the needs of our patients and wider population; Meet such need through provider & market management; Ensure contracts held by NHSW are robust and viable; Manage contracts to ensure compliance and encourage continuous improvement; Obtain value for money for our patients and wider community; Ensure processes are clear to patients, the wider community and to current and future providers. Thus ensuring we commission services that give greatest benefit and value for money to patients and the wider community. Collaboration with Other Commissioners 11. For the benefit of the people of Worcestershire NHSW will work in clearly defined areas with key partners. The PCT has extensive partnering and consortia arrangements such as - Joint Commissioning arrangements with Worcestershire County Council including the establishment of a joint commissioning Unit for Adult services Consortia arrangements for Specialised Services for high value low volume specialist care with other West Midlands PCTs Extensive network arrangements in areas such as Cancer. Page 6 of 72
Section A - Introduction 1. Overview 1.1 This Procurement Strategy for NHS Worcestershire (NHSW) states our intent to use procurement as a strategic tool throughout the organisation to improve healthcare for the population of Worcestershire. The procurement strategy sets out the principles, rules and methodologies that NHSW Commissioners and other staff will work to and clearly outlines when it is appropriate to seek to introduce contestability and competition as a means of achieving the best clinical outcomes and achieve value for money. 1.2 Commissioning is considered to be the process of determining the needs of a population, planning to meet those needs, buying services to meet the needs, evaluating whether needs have been met and determining needs again. 1.3 The procurement process spans a life cycle from identification of the need, through the selection of providers, to post-contract award management, including disposal. It can be seen therefore there is very close connection between commissioning and procurement activities and procurement and commissioning will need to work closely and collaboratively to support and deliver the overall aims and objectives of NHSW. 2. National Context 2.1 NHSW s strategic principles, priorities and plans, including this procurement strategy, need to be understood within the national context of the development of health policy in the UK. Fundamental to the Department of Health s (DH) strategy to improve the NHS is the drive to provide better care, better patient experience and better value for money. The reforms are interdependent and mutually re-enforcing. 2.2 This procurement strategy aims to satisfy and comply with the relevant national and regional guidelines and systems management tools issued by the Department of Health and West Midlands Strategic Health Authority (SHA). Specifically the guidance states that NHSW needs to demonstrate: It has secured procurement skills that ensure the delivery of healthcare services within robust secure contracts; and that It manages the provider market to meet demand for these services and secure the required clinical, health and well being outcomes. Page 7 of 72
2.3 NHSW aims to be a World Class Commissioning organisation and this requires that fair and transparent procurement and contracting processes are in place and procurement guidelines are made clear to patients, the local population and existing and potential providers. 2.4 NHSW is committed to securing the best services for its local population, reducing health inequalities, increasing access to services and improving clinical quality and outcomes. This procurement strategy focuses on providing a meaningful procurement process to allow the greatest benefit in terms of health outcomes and achieving value for money. Proposed structural reform changes in the Secondary Care sector will result in NHSW leading and delivering more services in community based settings. 3. The Vision for NHS Worcestershire 3.1 NHSW has set a vision for the future of health and healthcare in Worcestershire in its draft strategic plan Investing in Health for Worcestershire 2008 2013. The vision is: Of a County where people live longer and live better, have the support they need to adopt healthy lifestyles and have a choice of high quality services which are delivered as close to home as possible 4. Scope and Aims 4.1. This strategy relates specifically to Healthcare and Social Care Commissioning over the period 2010-2014. The aims are to improve the quality of health services for and the health of the population of Worcestershire in accord with the Vision. 4.2. This procurement strategy sets out the framework within which NHSW will operate to ensure that procurement meets the requirements of the NHSW s Commissioning Services Arm and directly contributes to NHSW s corporate aims and objectives. Adherence to the Procurement Strategy will ensure individual procurement exercises comply with legislation and national and local policy whilst delivering value for money. 5. The Procurement Strategy 5.1 Procurement is the process of commissioning services from identification of need, to the decision whether or not to tender, through to the conclusion of a services contract and its ongoing management. The development and management of provider markets to ensure capacity and capability is essential to this process. 5.2 This Procurement Strategy supports consistent and transparent decision making within NHSW, when commissioning healthcare and social care services. Page 8 of 72
5.3 The Procurement Strategy will identify the systems and procurement procedures required for NHSW to meet patient needs and deliver cost effective high quality services whilst demonstrating good governance and probity, compliance with procurement best practice and achieving value for money. 5.4 Procurement is a key component of commissioning and together with market development activities features significantly within the requirements of World Class Commissioning. 6. Procurement Objectives 6.1 NHSW s procurement objectives are to: Support World Class Commissioning transformation through the delivery of high quality, responsive, affordable and sustainable clinical services. Stimulate the provider market to provide competition to meet demand and secure required clinical, health and well being outcomes. Apply procurement skills, expertise, processes and methodologies that ensure robust, viable and value for money contracts. Ensure procurement processes are effective, transparent and equitable. 7. Key Procurement Principles 7.1 To support NHSW s World Class Commissioning transformation, NHSW will ensure that it:- Sources efficient and effective clinical services. Achieves best value for money. Has robust project planning and management in place. Has rigorous processes that are transparent, fair and equitable. Competitively sources services where appropriate to do so Engages effectively with all stakeholders (clinical and non-clinical) Involves patient representatives in procurement decisions where it is appropriate to do so Minimises risk. Manages the Provider market. Encourages provider innovation. Makes procurement decisions that are defensible to scrutiny. Develops coherent procurement policies and procedures. Page 9 of 72
Protects key assets e.g. Intellectual Property Rights. Provides evidence based procurement. Makes appropriate use of purchasing techniques and methods. Ensures tender specifications are robust and non discriminatory Uses appropriate contract terms and conditions to drive the delivery of high quality services. Uses robust and objective evaluation processes/decision making. Facilitates better working relationships with providers. Purchases sustainable services. Manages and improves performance through appropriate use of key performance indicators and management information. Complies with EU and other legislation. Provides sound procurement advice, knowledge, skills and expertise. Undertakes Ethical procurement 8. Key Procurement Values 8.1 NHSW will undertake all Healthcare procurement within the constraints of Legislation, Government Policy, Department of Health Policy and NHSW Policy whilst obtaining value for money. 8.2 NHSW will be open and transparent in the way it conducts commercial relationships with potential providers and existing providers. 8.3 Each procurement will include a cost comparison of the new service (where applicable) with the cost of delivering the equivalent service with existing providers. 8.4 Service specifications will be clear, concise and non discriminatory utilising or based on Department of Health templates. 8.5 Complaints regarding procurement decisions on tendering and award of contracts will be investigated and resolved using the NHSW Competition and Promotion Dispute Resolution Process. 9. Benefits of this Procurement Strategy 9.1 Adoption of a procurement strategy benefits NHS Worcestershire and the local population through: Page 10 of 72
Clarity for both Commissioners and Providers around the procurement process leading to more efficient and effective administration thus reducing the overall cost of procurement Reduced likelihood of procurement cases being referred to the Competition Panel as Provider expectations will have been set and, provided the procurement strategy is adhered to, met Increased value for money by the effective development of markets and implementation of appropriate competitive tendering. Page 11 of 72
Section B - Overview of NHS Worcestershire and the area it serves 1. Overview of NHS Worcestershire 1.1. NHSW in 2009/10 is responsible for over 800M of public money. The Commissioning and Public Health functions of the PCT employ 127 members of staff. The health community has recently returned to financial stability with the PCT planning for and delivering a 5M surplus in 2008/09. The Provider Services arm of the PCT has a turnover of over 90M and employs 2,724 members of staff. 1.2. The role of NHSW is to purchase and plan health services for the population of the County of Worcestershire. It is responsible for everything from GP Practices and dentists to purchasing emergency services from local accident and emergency providers. 1.3. The NHSW Board has approved a series of values that NHSW follows in undertaking its role: - Everyone Counts services which are based on needs assessments and arranged for the benefit of the whole community; Commitment to Quality an organisation that is patient-focused and insists on high quality care and services; Improving Lives valuing excellence and professionalism in the everyday things that will improve the health and well-being of the people of Worcestershire; Working Together an environment where organisational boundaries and roles do not stand in the way of what is best for local communities; Respect valuing people as individuals and respecting their dignity. Procurement of safe, quality and value for money services assists NHSW in meeting these values. 1.4. Annex A provides an analysis of NHS Worcestershire s 2007/8 Accounts Payable data. This identifies the top 40 expenditure areas with key Public Sector and Independent and third sector providers. Further analysis should be undertaken to identify expenditure on specific services. Page 12 of 72
2. The Local Context 2.1. Worcestershire has a population of 556,700 with population density of 800 per square mile. Overall the population is older, more affluent and healthier than England as a whole. However the population is not homogenous: there is a mix of rural and urban areas with an older population in the former and a younger in the latter. 5% of the population are from black and minority ethnic groups and there are seven super output areas which fall within the top 10% most deprived nationally. This creates a complicated mix of health needs ranging from isolated rural settlements to poor, ethnically diverse urban neighbourhoods. 3. The health of the local population 3.1. Life expectancy Overall life expectancy in Worcestershire is 78.1 years for men and 81.7 years for women above the corresponding figures of 77.3 and 81.6 for England. 3.2. Deprivation Although the Index of multiple Deprivation (IMD) 2007 ranks Worcestershire in the 25% least deprived local authorities in England (114 th worst out of 149 County Councils and unitary Authorities) the County has deprived urban areas and rural areas that score very highly for deprivation in terms of geographical access to health services. 4. Local Priorities 4.1. As part of the World Class Commissioning process, NHSW has defined 7 local priorities for improving health outcomes, which have been built at the heart of the 2009/10 strategic plan. These are: 1. Staying healthy. 2. Maternity Services. 3. Children and Young People 4. Adult Mental Health and Well Being. 5. Long term Conditions. 6. Falls Prevention. 7. End of Life Care. Page 13 of 72
Section C - Current Commissioning Landscape 1. Introduction 1.1. This section outlines the commissioning arrangements of NHSW. In particular it details the joint commissioning arrangements with Worcestershire County Council and arrangements for Practice Based Commissioning. It also outlines the range of provider organisations from which services are commissioned for the population of Worcestershire. 2. Commissioning within NHSW 2.1. The NHSW commissioning team commissions a series of services directly. It has Lead Commissioners for Acute and Specialized Services Primary Care. Practice Based Commissioning Performance Management 2.2. These teams are supported by professionals in Performance Management, Finance, Information Management, Public Health and Procurement 3. Joint Commissioning 3.1. NHSW commissions a range of integrated services as Partners with the County Council, under formal agreements reached under Section 75 of the 2006 Health Act. The commissioning process is carried out by a Joint Commissioning Unit. NHSW has Joint Commissioning plans in place, which define the range of services, jointly agreed priorities, investment plans, work plans and monitoring arrangements adopted by the Partners. NHSW works closely with the County Council and Provider Trusts in Worcestershire to realise the benefits of partnership working. At the apex of partnership arrangements is the Worcestershire Partnership, which has a theme group for health and wellbeing. 3.2. In addition all health and social care partnership work is overseen by the Health and Social Care Partnership Board (HSCPB), which brings together NHSW, County Council and Trusts with representatives of the Voluntary Sector and District councils. Responsible to the HSCPB are: A Joint Commissioning Group (a group of senior NHSW and Worcestershire County Council managers with technical oversight responsibilities for partnership Page 14 of 72
agreements for services for adults. and a Joint Commissioning Board with similar responsibilities for Children and Young People s Services); Consultative groups (main vehicles for user, carer and voluntary sector involvement in strategy development and implementation). 3.3. The Joint Commissioning Group oversees the process of developing joint services. At present, mental health services for adults of working age and older adults, substance misuse and community equipment services are fully integrated with Agreements under Section 75 of the 2006 Health Act. Intermediate Care and Learning Disability services will be similarly integrated. This proactive approach is also exemplified by our work with the County Council to produce a comprehensive model of joint commissioning of services for vulnerable children and adults. 4. Practice Based Commissioning (PBC) 4.1. NHSW has worked with local practices to establish robust Cluster arrangements which allow practices to work together to jointly commission service improvements in a locality. 61 out of 67 practices are now members of Cluster arrangements. A further three operate as commissioners on their own, with only three practices outside of PBC altogether. 4.2. Additional staff resources to support PBC have been identified, using the 2 per head Local Enhanced Service, and Clusters now have access to commissioning, finance, information and public health support. 4.3. As a response to Lord Darzi's call to "re-invigorate" PBC, the PCT has reviewed its arrangements with leading clinicians and has strengthened PCT-PBC links as a result. An improved process for processing service proposals has also been implemented. This has allowed over 65 developments to be approved in the last 5 months. 4.4. Within the PCT, the processes for performance managing Clusters are being developed further. The Accountability Agreement has been reviewed and budgetary arrangements are also being strengthened. Clusters are producing three-year business plans which should address not only national and PCT strategic aims, but also local priorities. 4.5. Priorities for the future will be: to ensure that all practices are participating in PBC, including the GP-led health centre which opened in the summer of 2009; Page 15 of 72
to ensure that PBC activity is better linked in to PCT-led commissioning through involvement in contract negotiations, service planning and monitoring discussions; to make improvements in patient and public engagement. Clusters are already embarking on engagement activity and will be supported by the PCT to ensure greater involvement in developing business plans, specific service proposals, and the monitoring of the impact of service development; to improve clinical engagement, to bring other clinicians - such as practice nurses, pharmacists and secondary care clinicians into commissioning activity; to support for PBC Clusters in improving understanding of market management and procurement. Increasingly, the PCT will wish to test the market for new service proposals, and will be developing its capacity and expertise in this area. 5. Collaborative Commissioning 5.1. NHSW will continually engage with the public in the County and their views will be considered when decisions are made about their health and the health of the community. Planning of services will be flexible enough to accommodate the requirements of Personalisation of Services where this may be considered in the future. 5.2. NHSW is actively engaged in collaborative commissioning at a number of levels: Across Worcestershire - for example in joint commissioning with the County council and the Trust Provider Services Across Herefordshire and the West Midlands, (the Local Collaborative Commissioning Group LCCB). Page 16 of 72
Section D: The Current Provider Landscape 1. The Provider Landscape 1.1 NHSW commissions health care services from a number of acute, community and primary care providers. Many of these providers deliver services in Worcestershire; others are based in neighbouring counties. For more specialised hospital services, patients may have to travel to tertiary centres further afield. 1.2 The current provider landscape comprises:- Primary Care Medical Services NHSW commissions primary services from 67 GP Practices, 95 Pharmacies, 64 Dental Practices and 174 Optometrists in Worcestershire. The standard of General Practices is high: in 2007/08 97% (65/67) of practices achieved over 950 of the 1000 points available through the Quality and Outcomes Framework. The 2008 National Primary Care Survey showed that most patients are satisfied with access to primary care, although 16% wanted access to improve. Acute and Specialised Services - NHSW commissions hospital based care from 33 NHS and Non-NHS organisations. In addition it commissions a full range of specialised services via the West Midlands Strategic Commissioning Group and Local Collaborative Commissioning Board. Emergency and urgent ambulance services are commissioned from the West Midlands Ambulance Service NHS Trust. Community Services and Provider Arm Separation Plans - Community Services are commissioned primarily from NHSW s own Provider Services Arm which currently manages six community hospitals and a full range of community services. NHSW has responded to the challenges in World Class Commissioning, Lord Darzi s report and the SHA Investing For Health Programme and has established a programme of work streams to meet these challenges. Two of the projects are focussing on the provider landscape: Shaping the Market for Provision Project This project considers the development of the local health care economy and future landscape for healthcare services. The Chief Executive is leading the project; The Future of the PCT Provider Service This project will ensure our Provider arm is equipped and ready for the future and able to deliver services that meet the needs of the public as commissioned by NHSW. It will consider models outlined in High Quality Care for All. Page 17 of 72
Mental Health and Learning Disability Services - Most local mental health, substance misuse, and learning disability services are commissioned from the Worcestershire Mental Health Partnership NHS Trust. Most specialist services are commissioned through the Strategic Commissioning Group and Local Collaborative Commissioning Board. The Third Sector (Voluntary and Community Sector) - The third sector within Worcestershire is a vibrant and important section of the provider landscape. There are approximately 2,750 voluntary and community sector organisations of varying sizes with an estimated income of 365 million. An estimated 8% of the local population receive services through this sector. NHSW commissions an increasing range of mainstream services from this sector. We are increasing opportunities for commissioning from this sector where it is best placed to meet local needs. Private Sector Providers NHSW is increasingly utilising private sector providers to deliver high quality healthcare and in 2008/09 had contracts with private sector providers to a value in excess of 10M. 1.3 A list of the current top 40 contracts by contract value with all providers is attached at Annex A. Page 18 of 72
Section E - Market Management 1. Market Management 1.1 PCTs are charged with protecting and improving the health of their local population, and with planning and contracting for the health services which meet patients needs. Those needs are not always the same as patients wants and in a consumer society their wants cannot be completely ignored. The NHS is implementing system reforms which: more fully engage the public and patients in shaping the future of local health services; promote choice of provider; promote plurality and diversity in the range of providers and through cooperation and competition drive up the quality of services; move the NHS away from a traditional model where NHS services are commissioned from NHS providers, often in a monopoly situation. The system reforms are starting to re-shape the provider landscape in Worcestershire. 1.2 The NHS Worcestershire document A Framework for Market management and Contestability, sets out Ten Guiding Principles for Managing the Market (Annex B), which will be used to decide whether a contested procurement route is in the interests of local people. The underlying premise is that contestability will be NHSW s default position, whilst recognising the need to show due consideration to the risk and potential adverse consequences of a contested approach and the benefits of long term collaborative working. These principles indicate that the PCT can influence the shaping of the market and the contracting of services, providing it can demonstrate it is acting in the public interest, is acting in a fair and transparent way, is treating all providers under the same set of rules (including its provider arm) and is promoting for patients a wider choice of high quality, value for money services. 2. NHSW Commissioning Strategy 2.1 NHSW undertakes commissioning at a number of levels: Commissioning Services in its own right, for example, Acute Services, Primary Care, Continuing Healthcare. Joint commissioning with the Worcestershire County Council, for example, Mental Health, Elderly Care, Learning Disabilities, Services for Children and Young people. Page 19 of 72
Collaborative Commissioning across Herefordshire and the West Midlands, (the Local Collaborative Commissioning Board LCCB). 2.2 Services will be commissioned from providers who are best placed to deliver the needs of the NHSW s patients and the population it serves. 2.3 NHSW will improve the health and well being of the local population, including addressing health inequalities and improving life expectancy. This will be done by addressing the wider determinants of health through effective partnership working. Primary and secondary prevention within NHS Services will be improved by, for example, helping people to adopt and sustain healthier lifestyles. 2.4 Services will be targeted to reduce known health inequalities. 2.5 NHSW will improve health and wellbeing by paying attention to those measures of health which are particularly challenging in the local population. 2.6 People s access to care will be improved through increased availability of high quality and safe services. 2.7 NHSW will commission services in a way that delivers continuous improvement in the quality and safety of services. 2.8 NHSW will enable its Practice Based Commissioning Groups to fully engage in the commissioning of services by devolving indicative budgets to them. Services will be commissioned against a range of lead procurement options put in place by NHSW with the advice of our Procurement Advisors. This will allow Practice Based Commissioners and their patients to choose the most suitable providers. 2.9 NHSW will continually engage with the public in Worcestershire about their health and the health of the community. Their views will be considered when decisions are made about their health and the health of the community. Page 20 of 72
3. Driving Best Value 3.1 A large proportion of procured clinical services (for example Acute Hospitals Secondary Care) are governed by a set of mandatory national tariff rules and regulations. This framework poses a challenge to NHSW to develop new innovative pathways that result in fewer visits to providers, shortens the journey to treatment or discharge and makes the service more effective. Through collaborative partnership working with both Providers and Commissioners NHSW aims to deliver cost and activity/efficiency benefits. In support of this the NHSW will ensure: All contracts with Acute Hospitals include a schedule of service developments and pathways to be developed during the year, with ownership and engagement required at all levels throughout the organisations; All contracts to have set review dates, allowing the NHSW and the Providers the opportunity to review and discuss quality, performance indicators and the range of services provided under the contract agreement; All contracts will be under the appropriate DH Standard Services contract and accordingly will support and encourage providers to innovate to improve services and the patient experience Page 21 of 72
Section F Consultation, Overview and Scrutiny 1. Consultation 1.1. Section 11 of the Health & Social Care Act, 2001, requires PCTs to ensure patients and their representatives are involved in and are consulted on the planning of healthcare services. 1.2. Section 242 of the National Health Service Act 2006 provides that PCTs have, in relation to health services for which they are responsible, a legal duty to involve and consult patients and the public directly or through representatives on service planning, the development and consideration of service changes and decisions that affect service operation. This duty applies to a PCT irrespective of whether it is the relevant decision-maker (i.e. even in the context of centrally led procurements). 1.3. Involving and consulting means talking and listening to patients and the public about the need for changes, plans for changes, ideas, experiences and the best way to make use of resources. The law may not require a formal consultation process and does not always prescribe any duration. However, consultation must be adequate both in terms of time and content and appropriate to the scale of the issue being considered. 1.4. There are a number of options Commissioners could consider including:- Patient representation in decision making NHS Worcestershire has an Engagement and Involvement Framework that clearly outlines how this will be considered and encouraged throughout the organisation. Elements of this framework include a Patient and Public involvement Sub Committee of the Trust board that advises on general approaches to engagement and consultation strategy and a Patients panel, whereby suitably informed and trained patient representatives and volunteers can be identified for involvement in decision making. One such application of this could be in the inclusion of patient representatives on procurement panels and the Patients Panel could facilitate this. Local Involvement Networks (LINks) - These are being set up to enable people to have a bigger influence in how local health & social services are planned and delivered. A LINk is an independent network made up of a mixture of both local individuals and organisations such as voluntary organisations and community groups. Page 22 of 72
Each LINk is responsible for finding out what people want from their health and care services such as hospitals, GPs, care homes and pharmacists. They are also responsible for monitoring the care that services provide and reporting their findings. To help them do their job, the legislation establishing LINks also gives them certain powers such as being able to make visits to health and social care services to see them at work. LINks are intended to provide a new framework for dialogue between the public and health service commissioners through: Providing a flexible way for local people and communities to engage with health and social care organisations. Encouraging and strengthening open and transparent communications. Ensuring that organisations that commission health care services are more accountable to the public. LINks will gather information from a wide range of sources to inform them about what local people need in terms of their healthcare and their experiences of using the current services. This collated information will then be used to make recommendations to commissioners, providers, Overview and Scrutiny Committees and regulators regarding the shape of services in an area. Local Medical Committee (LMC) there is an expectation that when considering the provision of healthcare services that Worcestershire Local Medical Committee is consulted. This will assist in ensuring that new services integrate effectively with existing General Practitioner services within NHSW. 1.5. Commissioners will need to ensure that they carry out whatever consultation they deem to be adequate both in terms of time and content that is appropriate to the scale of the issue being considered. 1.6. As part of the consultation process an equality impact assessment will be undertaken at relevant stages in the procurement process to ensure that the proposed/planned changes are assessed with regard to the impact on groups, individuals or communities. Page 23 of 72
The outcome of such equality impact assessments will be published by NHSW upon request and as part of its equality schemes. 2. Health Overview and Scrutiny Committee (HOSC) 2.1. The government requires Councils to take a stronger role in scrutinising public services outside their own organisation. Accordingly, the Health and Social Care Act 2001 provided Councils with powers to call in witnesses from local NHS bodies, and make recommendations that NHS organisations must consider as part of their decision-making processes. Worcestershire county Council has established the Health Overview and Scrutiny Committee (HOSC) to undertake this role. 2.2. Similarly the Health and Social Care Act 2001 and Section 244 of the National Health Services Act 2006 places requirements on NHS organisations to consult with health overview and scrutiny committees (OSC) when considering substantial developments or substantial variations to services. 2.3. The role of the HOSC is to scrutinise the activities of organisations that provide local health care and determine: Whether the services are appropriate to the needs of local people. If the decisions made are evidence based. If the experiences of the patients are leading to improvements in the way services are delivered. 2.4. The OSC are encouraged to focus on commissioners and in particular to ask how they have involved local people in the decisions they have made; what evidence they have used to support their decisions and how they are proposing to address failings, concerns and gaps in services. 2.5. Under the legislation, health scrutiny committees have significant powers to summon officers of health trusts to committee meetings to require information from NHS bodies on the planning and provision of health services and must be consulted by health trusts about significant changes to service provision. Page 24 of 72
2.6. The proposals are that the LINks will have a close relationship with OSC so that they can inform them of views and allow them to pursue critical issues based on the evidence of users experiences. 2.7. The current and future legislation relating to LINks and OSC make it essential for NHSW to have a strategy to consult on projects that change the landscape of service provision in an area and shall therefore be necessary for future procurement projects. 2.8. OSC have the power to refer contested proposals to the Secretary of State. The engagement and consultation process should be at all times sufficiently robust to withstand a potential challenge. Page 25 of 72
Section G - Procurement Rules and Principles 1. Procurement Rules 1.1. NHSW will adopt the rules set out in:- The Public Contracts Regulations 2006 (the Regulations) that detail the rules public bodies must follow when tendering for goods and services. The full Procurement process is described at Annex C. The Regulations distinguish between two service types: - Part A Services which include consultancy services, cleaning, catering and security services amongst others. The Regulations apply in full to Part A services. Part B Services or residual services which include healthcare services and social care services where the general principles of equal treatment, transparency, objectivity and non discrimination apply. To meet transparency obligations service contracts must be adequately advertised to ensure all potential providers wishing to compete for the contract may do so. NHSW Standing Orders & Standing Financial Instructions The Principles & Rules on Cooperation & Competition - With the creation of Foundation Trusts and as more independent and third sector providers enter the Healthcare market there are increasing opportunities to seek competition. The Principles and Rules for Competition & Cooperation published by the DH in December 2007 and effective from April 2008 require commissioning and procurement to be open, transparent and non-discriminatory, i.e. following similar the principles to those contained within the Regulations. The Principles and Rules for Competition & Cooperation set out 10 principles for effective procurement of healthcare and these are detailed in Annex D Principles and Rules for Cooperation and Competition. 1.2. NHSW has a Competition & Promotion Dispute Resolution Process in place to effectively manage any disputes regarding the application of these rules (Annex E). Page 26 of 72
2. Procurement Principles 2.1. NHSW decides whether and when to competitively tender services but all Procurement must comply with the Standing Orders, Standing Financial Instructions and the Regulations and follow guidance issued by the DH. NHSW s position is that ALL Healthcare Services commissioned will be by open competition unless there are compelling reasons for not doing so. 2.2. Where appropriate, NHSW will follow the Principles applying to Part A Services when tendering for Part B Services including Healthcare & Social Care Services. This will minimise any risk of a challenge to its processes as it will be able to demonstrate openness, transparency, fairness and good commercial practice. 2.3. All NHSW processes will be: Transparent using sufficient and adequate advertising; publishing evaluation processes and ensuring that no conflicts of interest exist in the procurement and decision making process. Where decisions are made not to tender or open up services for competition, the reasons will be documented. Equitable all providers and sectors will have equal opportunity to compete where NHSW decides to open up services for competition. All contracts will be adequately advertised. All Healthcare Service and Social Care service contracts over 100,000 must be advertised in NHS Supply2Health. Additionally, other avenues can be used such as websites, publications, etc. Where appropriate, a Contract Advertisement Notice will be placed in the Official Journal of the European Union (OJEU). Where this is appropriate, all other advertisements must be placed AFTER the OJEU advert is sent for publication. All evaluation processes and checks, including those for short listing and contract award, will be applied equitably. Pricing and payment mechanisms will be clear and fair. Page 27 of 72
Non Discriminatory The criteria for the selection of bidders and award of contract will be clearly detailed and published to potential providers. All potential providers will be treated equally. Proportionate all procurement processes will be as simple as possible and overly bureaucratic processes will be avoided. The processes used will give consideration to the value and complexity of the services being tendered. 2.4. NHSW will also ensure fair competition by: Managing Conflicts of Interest - Whatever method is used to commission services NHSW will ensure that all Conflicts of Interest are declared and managed appropriately in accordance with the Conflict of Interest Policy as set out in the Standing Orders. Setting Realistic Timescales sufficient timescales will be set to enable bidders to submit their tender having regard to the value and complexity of the contract. Consideration will also be given to the bidder population. For example, GP Practices are unlikely to be geared up and as familiar with tendering as, say, a national independent organisation. As a general rule, where an OJEU advertisement notice is placed, the timescales detailed in the Regulations should be followed. In all instances where a competitive procurement process is to be undertaken Commissioners must seek advice from their Procurement Advisors at an early stage. It is not unusual for complex procurements to take many months to complete. An appropriate contract implementation period needs to be included in the procurement plan, to allow sufficient time for the contractor to mobilise. Using the Standstill Procedure where an OJEU advert is used a 10 day standstill period between notification of a contract award and the actual contract award will be used. Whilst this will not eliminate all risks of challenge, it will go someway to minimising risk Providing De-briefs Unsuccessful bidders mar request a de-brief to explain where their bid failed. The de-brief should enable the unsuccessful bidder to be in a better position to bid for future contracts. Establishing Valid Contracts a signed contract MUST be in place before services commence. The contract must contain contract monitoring and performance Page 28 of 72
management processes to ensure that contractual obligations are met and quality standards are met & improved. All contracts must follow DH model contracts where available. Page 29 of 72
Section H - Procurement Strategy 1. Background 1.1 As stated in the DH PCT Procurement Guide for Health Services (PCT Procurement Guide for Health Services,) there is no general policy requirement for NHS Clinical Services to be subject to a formal procurement process. 1.2 However, there is a number of procurement options that are available depending on service type, market status, and value and risk profile of the service required and the guide supports commissioners in deciding whether and how to procure health services through formal tendering and market testing exercises. This Procurement Strategy sets out NHSW s overall approach to procurement which, in short, will be to use competitive procurement processes for commissioning all Healthcare Services unless Commissioners can justify alternative routes for commissioning. All such decisions will be documented for audit purposes. 1.3 The NHS aims to provide quality services that are patient focused and are provided by the most appropriate provider. This has allowed a number of independent and third sector providers to provide NHS funded services. In addition NHS Foundation Trusts, which are legal entities in their own right, can and do enter into contracts for healthcare services. With more choice of provider available to PCT s the opportunity to evaluate services and market test to obtain value for money is increasing. 1.4 NHSW s aim is to improve the quality and accessibility of services to patients through a process of service review, robust contracting, key performance indicators (KPIs) and provider development activity. NHSW will work to develop provider markets as well as working with existing providers to improve service quality. 2. World Class Commissioning 2.1 By delivering these objectives NHSW will move towards becoming a World Class Commissioning Organisation (See World Class Commissioning Competencies,). In summary, the 11 Competences that PCTs must meet are: Competency 1 Locally lead the NHS Become a recognised Local Leader of the NHS Page 30 of 72
Competency 2 Work with community Partners - To work collaboratively with community partners to commission services that optimise health gains and reduce health inequalities. Competency 3 Engage with public and patients - Meaningfully engage with the public and patients to shape services and improve health. Competency 4 Collaborate with Clinicians - To inform strategy & improve quality. Competency 5 Manage knowledge and assess needs - To understand current & future local health needs. Competency 6 Prioritise investment - According to local service requirements and values of the NHS. Competency 7- Stimulate the Market - To meet demand and secure required clinical & health wellbeing outcomes. Competency 8 Promote improvement and innovation - In quality & outcomes. Competency 9 Secure procurement skills - To ensure robust & viable contracts. Competency 10 - Manage the local health system - To ensure contract compliance & continuous improvement. Competency 11- Ensuring efficiency and effectiveness of spend 2.2 This procurement strategy is intended to assist NHSW in meeting the requirements of World Class Commissioning. Whilst the interests of patients are fundamental in the commissioning of health services NHSW has an equal obligation to ensure value for money and to be transparent, equitable and non discriminatory when commissioning services. 2.3 To that end this Procurement Strategy will address the following key points: - Organisation structure, capacity and training Planning and service review Procurement Gateway Process Stages in the procurement process Market development and management Page 31 of 72
Cost modelling Procurement options Advertisement and Pre-Qualification Questionnaire Specification and Invitation To Tender ITT Evaluation Contracting Provider development and performance Use of Information Technology Transfer of Undertakings & Protection of Employment Regulations (TUPE) Decommissioning services NHS Supply2Health Ethical and sustainable procurement Asset Management 3. Organisational Structure, Capacity and Training 3.1 It is essential to have the appropriate organisational structure, capacity, training and infra-structure in place to complement the procurement strategy. Partnership working in areas of procurement can give rise to a number of benefits including economies of scale and varied skills in the procurement workforce. 3.2 A measure of success for NHSW will be that competitive procurement activity increases over time. Accordingly, NHSW must ensure that staff are adequately trained to meet this growing demand. NHSW will increase the skills and knowledge levels of key commissioning staff members in the areas of: Preparing specifications Legal aspects in placing and awarding of tenders. Tender evaluation. Negotiation Contract management 3.3 Healthcare procurement skills are a limited resource and securing skills throughout NHSW is a key objective in achieving World Class Commissioning (competency number 9). NHSW will obtain appropriate procurement advice on all aspects of the procurement process to assist Commissioners in carrying out the Procurement of Healthcare Services & Social Care Services. This will be secured through the ongoing partnership arrangements with Healthcare Commissioning Services (HCS), a well established NHS Page 32 of 72
shared service provider of purchasing services. Under the partnership arrangements NHSW has secured a procurement advice service included provision of an onsite Procurement Account Manager to work with Commissioners to give guidance and support on procurement matters. 4. Planning & Service Review 4.1 Current Contracts 4.1.1 NHSW has inherited from three subsumed PCTs a range of contracts and arrangements for services which are variable in both content and complexity. In addition to services being provided by third parties NHSW s own Provider Arm also provides a range of services. 4.1.2 These existing arrangements will be reviewed against the Commissioning Strategy in particular to identify whether or not there is a continued need for the service or where changes need to be made to services being provided. 4.1.3 The review will evaluate services against NHSW s Commissioning strategy and ensure that where appropriate standard Contractual Terms developed around the DH Model Contracts are introduced 4.1.4 The review will also establish: - What services are being provided ( the specification ) Who is provider these services ( the Provider ) The duration of the arrangements ( the contract period ) How much is being paid ( the contract cost ) Performance monitoring & management arrangements ( Performance Management ) The terms of the contract or arrangement against which the services are being provided ( contract terms ). 4.1.5 NHSW will establish a programme ( the Programme ) to review all these current services. The Programme will enable NHSW to establish that all contracts are reviewed and decisions made regarding continuity, changes or abandonment of services. 4.1.6 The Programme will include a review of the Provider Arm services and a contract has been placed with a Consultancy company (Mouchel Management Consultancy Ltd) to provide support and assistance with this review. Page 33 of 72
4.1.7 NHSW will adopt the DH Standard Contracts and will comply with the nationally set regulations on the provisions for primary care services. The DH Standard contracts will be used for new services and NHSW will agree with all existing providers to move to these standard NHS Contracts where practicable. The DH Standard contracts include Acute Services, Ambulance Services, Community Services, and Mental Health Services. Primary Care Services contracts include General Medical Services (GMS), Personal Medical Services (PMS), Special Personal Medical Services (SPMS), Alternative Provider Medical Services (APMS) and General Dental Services (GDS) contracts. 4.1.8 Contracts based on the DH Model are in place for all Community & Mental Health Services. 4.2 Service Review New Services 4.2.1 NHSW will implement a planned process for determining what services it needs to commission. The need for services will be derived from the service review and from applications received from various sources to set up and develop new services. 4.2.2 These applications will be considered by a panel of Senior Managers - the Commissioning Executive Team, chaired by the Director of Delivery. Applications will be prioritised before being forwarded to the Executive Team for consideration. A list of services to be commissioned will be approved by the Trust Board as and when required. 4.2.3 In planning new services or changes to services it is paramount that the needs of patients comes first whilst ensuring the services being delivered are of high quality and value for money. 4.2.4 When undertaking the Services review the template shown at Annex F (Service Review Template) will be completed. From this the Service Procurement options can be considered as follows: - Protected Services, for example Accident & Emergency Services these may be procured by negotiating directly with the Acute Unit Provider and contracted under Standard DH Contract Terms. Page 34 of 72
Tariff Based Services these may include Any Willing Provider arrangements against DH Standard contracts. Special Funded arrangements grants may be awarded as appropriate but note that contractual terms are still required using or based on DH standard contracts. Competitive will follow tendering procedures as laid out in the NHSW Standing Financial Instructions. Non-Competitive where a case is made on value for money grounds not to seek competitive tenders. 4.2.5 NHSW will develop a procurement plan detailing known and potential procurement priorities for the next 5 years, updated on an annual basis. NHSW will prioritise the procurements following review and consultation with senior NHSW members and will allow adequate timescales for delivery (refer to Annex G Procurement Plan Template). 4.3 NHSW PCT Provider Services 4.3.1 NHSW continues to provide its own community services. The 2008/9 Operating Framework requires Primary Care Trusts to review their requirements for provision of community services and to use this process to consider all the models of provision. In addition, whilst PCTs are carrying out this review, they should create an internal separation of their operational provider services, and agree Service Level Agreements for these based on the same business and financial rules as applied to other providers. 4.3.2 NHSW has established its Provider Arm as a separate fully functioning business unit. As stated above a Consultancy Company has been engaged to provide advice on preparing the Provider Arm for an autonomous future. Whatever arrangements apply in future the Provider Arm will continue to be separated from the Commissioning Arm of NHSW (Delivery Directorate). 4.3.3 The DH requires that all Community Based Services are reviewed. This review will result in a plan which will show proposals FOR EACH SERVICE - for example to discontinue the service, to tender the service, etc. Page 35 of 72
4.3.4 The Commissioning Unit has established an internal contract with the Provider Arm so that the Provider Arm business it is neither advantaged nor disadvantaged with providers of other services. It must operate on a full cost basis so that there is no competitive advantage over other providers (which could lead to challenge) and to ensure Value for Money is fully tested. 5. Procurement Gateway Process 5.1. There are a number of stages in a full competitive tender process. 5.2. Some of the stages are also applicable for other procurement methods, for example Any Willing Provider where PQQ, Supplier Selection, Finalise Contract schedules and supplier Performance & Development would be relevant. 6. Stages in the procurement process 6.1. The procurement process used should reflect the market, value and complexity of the service being commissioned so that a proportionate procurement approach is applied. 6.2. The process will consist of some or all of the following stages: - Planning Stage A review of the service need, specification and options available to procure the service will take place. Where appropriate a project team should be established and a project plan drawn up. Advertisement Stage Opportunities to be procured through a competitive process must be sufficiently advertised to ensure fair competition. Specification stage The specification is the expression of the requirement using the appropriate DH template in output based terms sufficient that a prospective Provider is able to offer a firm proposal and price for undertaking the work. The use of output based specifications will allow providers greater scope to offer innovative solutions that provide improved quality and better value for money. Where Page 36 of 72
appropriate providers will be given the opportunity to assist with the development of specifications to ensure that new ideas and approaches can be considered and adopted where beneficial. Bidder Selection stage - When selecting potential bidders the process used must be open, transparent and fair. No sector of the market should be given an unfair advantage (including the current provider if there is one and the PCT Provider Arm and other NHS Organisations if bidding). For high value complex, contracts a formal Pre Qualification stage will be used to evaluate potential providers' capabilities, capacity and financial standing. All Bidders must declare any potential Conflicts of Interest so that these can be dealt with to ensure a fair & impartial approach to any selection. Offer stage This is where the potential provider offers to provide the service and states their price for providing those services. Where competition is waived or is not applicable agreement will be by direct negotiation with the Provider and once finalised a contract will be signed. Offer Evaluation and Award stage - the award of contract is usually on the basis of the most economically advantageous tender (MEAT) to the purchaser. Post Award Stage - Where NHSW has placed an OJEU advertisement a 10 day standstill period will apply. Whilst a standstill period is not legally essential for Part B Services it will further demonstrate openness & transparency of processes and help mitigate risk of any challenge. Supplier debrief meetings may be held. A signed contract may be entered into with the successful provider(s). Contract Management stage- The Procurement process does not end with the award of Contract. Once awarded the contract will be managed to ensure: - The contractor meets their obligations under the contract (and that NHSW meets its obligations). Contract performance is measured. Payments are made in accordance with the contract. Page 37 of 72
Contract variations are dealt with. Contract issues are identified and resolved. This will be achieved through regular contract review meetings at a frequency agreed and dependent upon the strategic importance of the contract, supplemented by regular reporting from the Provider against pre determined KPIs 7. Market Development & Management 7.1. In order to procure services there has to be providers of those services, i.e. a market. The market will differ depending upon the services and some markets may be more competitive than others. The availability of competition may be restricted, for example, by geography such as in the case the provision of urgent care or ambulance services. 7.2. In order to procure services effectively NHSW will need to understand the provider market for the services required. Furthermore, NHSW will need to work with existing and new providers to help develop the market place by, amongst other things: Publishing future commissioning intentions, Helping potential bidders to understand procurement processes, Developing open specifications which are based on outputs or outcomes rather than how the service will be delivered, and Developing standard terms & conditions, etc. 7.3. Market analysis should be undertaken for each service required to identify the:- Structure of the market are providers locally, regionally, national or multi national based. Capacity of the market is the size of contract attractive? Are all the necessary attributes in place to deliver the service, for example workforce, equipment, facilities, etc Page 38 of 72
Status of the market is the market established, new, innovative, are there any restrictions; for example types of organisation that can provide services, e.g. emergency ambulance services. Prospect for competition is there competition in the market place? Can competition be developed? Is it a buyers or sellers market? 7.4. Where there are insufficient providers in the market, NHSW will put in place plans to address this. These plans could include:- Identifying clear commissioning requirements. Identifying the key requirements that providers need to have to enable them to compete for business. Holding Provider Events where interested parties can learn more about NHSW s requirements and tender processes, etc. Producing specifications that are output based, that can be delivered and encourage innovation. Ensuring that Contract duration is such that the contract will allow providers the opportunity to recover costs and make a reasonable return on investment. Ensuring contracts are clear, open and fair with agreed performance measures and adequate dispute resolution processes. Understanding the capabilities of providers. Ensuring that adequate time is allowed for bidders to respond to tenders bearing in mind some providers may not have commercial departments to deal with tender responses. Where there is a limited concentration of capable alternative providers, working in partnership with current providers to develop and improve standards of services offered. 7.5. Good provider development and effective commercial relationships are essential to developing the market but all providers and prospective providers must be treated equally and any information disclosed MUST be made available to ALL potential providers irrespective of their status. 7.6. An annual Health Economy Audit will be undertaken (by an external organisation if necessary).this audit should identify and set out local capabilities, existing and potential providers, risks & opportunities. This will be a useful basis for future market analysis work. Page 39 of 72
8. Cost Modelling 8.1. NHSW will develop cost models that can be used to benchmark the costs of existing services and that can also be used in assessing affordability and assessment of bidders proposals. The production of these cost models will require input from commissioners, procurement and finance personnel, where appropriate.] 9. Procurement options 9.1. There are a number of Procurement options available. Selection of the most appropriate for the circumstances will be dependent on a number of factors including:- Contract value the higher the value the greater the case is likely to be for competitive tendering. Provider Market the greater the number of providers the stronger the case for open competition. Geography if the service is local in nature, for example, an additional service in a health centre, there may be a case for awarding the contract to the existing provider. Single or multiple provider(s) would the needs of the population be best served by a single or multiple supplier arrangement? Multiple supplier options may lend themselves to framework agreements or Any Willing Provider arrangements. Regulations These will include the Standing Financial Instructions & Standing Orders, the Public Contract Regulations and DH Guidance. Government policy on protected services for key services that are a significant and vital part of the NHS, for example Accident & Emergency Services, Intensive Care Services, Emergency Ambulance Services, etc. procurement may follow a preferred provider route and negotiation can take place directly with that provider. Page 40 of 72
Jointly Funded Projects - Competition may not be appropriate for jointly funded projects. Patient Choice Competition may increase patient choice and satisfy any consultation outcomes such as choice of providers, models of care and location. Patient Safety if there is a risk to patient safety by changing provider NHSW can negotiate directly with the existing provider of the services. 9.2. The following Procurement options will be considered taking into account the over riding principle of What is in the Public Interest : - (a) Any Willing Provider The Principles & Rules for Competition & Cooperation state that commissioners should not restrain competition for routine elective services or services delivered through Practice Based Commissioning (other than in exceptional circumstances such as concerns over clinical quality). This process is intended for tariff based services are being procured. There is no volume commitment and no price negotiation. Contract terms will be set using the standard DH Contracts. Under Any Willing Provider arrangements competition is generated by Patient choice and NOT price. There are no guarantees regarding either volumes of business. There are two processes that can be used: Open Process- where proposals can be accepted at any time if the provider meets minimum standards of clinical care at an NHS tariff price and meets the regulatory standards for Independent Sector providers registered with the Health Care Commission. (as from April 2010 the registration requirements that will apply to all providers under the Health & Social Care Bill 2007). Managed Process arrangements made against standard DH Contracts on a periodic basis and for particular purposes, for example to meet a local demand for a specialist service. These arrangements may not lead to an award to all providers meeting minimum standards. Some Page 41 of 72
element of competition, based around quality responses and capacity will exist although prices will be at tariff. When considering Any Willing Provider arrangements NHSW must act:- Transparently intentions are made known to the market place. Requirements for both managed and open processes are advertised on the NHS Supply2 Health site. Advertising MUST be adequate for the type of service required. Proportionally processes used are proportionate to the size, complexity and risk of the service being purchased. Equitably processes do not distort competition, e.g. create monopoly situations, reduce choice or favour existing providers. In the managed process qualification and evaluation criteria are objectively set and assessed. Local Quality and risk arrangements are managed fairly. The most appropriate standard DH Contract (or where not available standard provisions) will be utilised, for all Any Willing Provider Contracts. Practice Based Commissioners may use these arrangements when procuring services. (b) Competitive Tendering an increasing number of services will be subject to competitive tendering in order to comply with the requirements of transparency, openness, equitability and obtaining (and proving) value for money. Competition may be waived in circumstances such as (genuine) urgency, monopolistic rights or where only one provider can provide the service for technical reasons or special exclusive rights. In these circumstances the Noncompetition procedures set out in the Standing Orders & Standing Financial Instructions must be followed. Where it is decided not to competitively tender for new services or where services are significantly changed NHSW Board approval MUST be obtained to proceed and the Strategic Health Authority notified. Page 42 of 72
(c) Partnerships/Preferred Provider Where collaboration and co ordination is essential, for example in developing new pathways, enabling sustainability of services, ensuring smooth patient handover, coordination etc. NHSW may wish to continue with existing partnership arrangements. Examples include General Practitioners, existing acute and mental health NHS Providers; hospital outreach services. These Partnership arrangements must be formalised using the appropriate standard contracts and must provide: - Transparency particularly with provision of information sharing. A contribution to system re-designs. Timely provision of information and performance reporting. Evidence of improved patient experience year on year. Evidence of value for money. Partnership status must NOT be used as a reason to avoid competition and should only be used appropriately and be regularly monitored. For partnership services NHSW may choose to commission the service from a partner but may also choose to tender for provision of the service, for example where the partner cannot meet the service model requirements or costs cannot be agreed. (d) Spot Purchasing - There will remain the need to spot-purchase for particular individual patient needs or for urgency of placement requirements at various times. During these times, the usual competitive tender process can be waived. It will be expected however that these contracts will undergo the same best value reviews and potential tendering over time to ensure that NHSW is receiving value from the contract and the Provider is fit for purpose and delivers the same continuing improvement and commitment as all NHSW providers. Page 43 of 72
(e) Framework Agreements - NHSW is able to use other public sector framework agreements where a provision has been made in the framework agreement for use of the framework agreement by NHS bodies. The EU rules for tendering state that framework agreements should be for no longer than four years in duration. In some framework agreements there is provision for undertaking mini competitions. Here all providers on the framework able to meet the requirements are invited to submit a bid. These are then evaluated and the business awarded following the same processes used for conventional tenders. Any contract awarded can run beyond the framework agreement period but the length of the contract extension must be reasonable. (f) Grants - Public bodies must follow public procurement policy at all times. In certain circumstances grants may be payable to third sector organisations. However, there should be no preferential treatment for third sector organisations. A third sector organisation describes a variety of organisations that are neither state nor private sector and includes voluntary and community organisations (registered charities, associations, self help groups, social enterprises, cooperatives, etc). They are independent of government, pursuing social, environmental & cultural objectives and reinvest any surplus in pursuit of these objectives rather than in making a profit. Grants come in two forms: - Grant - payments to outside bodies where a department is required, or wishes, to maintain detailed control over the expenditure and where a procurement approach is not suitable. Grant in Aid - A payment by a government department (the sponsor department ) to finance all or part of the costs of the body in receipt of the grant in aid. Grant in aid is paid where the government has decided, subject to Parliamentary controls, that the recipient body should operate at arm's length. Use of grants can be considered where: - Page 44 of 72
The service required is difficult to specify but is currently being met by a third sector organisation The service required is unique and there is no competition (or competition is not required in accordance the Standing Financial Instructions) The level of funding will be based on the cost of provision and not the price that could be achieved in an open market The outcome is uncertain It is not possible to establish an enforceable contractual arrangement The value of the arrangement is low usually less than 90,000 Funding may be withdrawn and there is little scope for the recipient to appeal the decision The funding is a contribution to the service cost not payment for a service received Funding is provided for development or strategic purposes. The provider market is not well developed. Innovative or experimental services. Grants should NOT be used to avoid competition where it is appropriate for a formal procurement to be undertaken. Supplier Selection 10. Advertisement & Prequalification Questionnaire (PQQ) 10.1. When required an appropriate advert will be placed commensurate with the value and complexity and extent of the services being procured. Opportunities that are selected for a competitive process must be sufficiently advertised to ensure fair competition. 10.2. When selecting potential bidders the process used must be open, transparent and fair. No sector of the market should be given an unfair advantage (including the current provider if there is one and the PCT Provider Arm and other NHS Organisations if bidding). For large high value complex contracts a formal Pre Qualification stage will be used to evaluate potential providers' capabilities, capacity and financial standing. The PQQ should reflect the overall requirements of the service. Page 45 of 72
10.3. All Bidders must declare any potential Conflicts of Interest so that these can be dealt with to ensure a fair & impartial approach to any selection. 11. Specification and Invitation to Tender 11.1. Generic terms should be used when specifying the services required avoiding brand names and other references which would have the effect of distorting competition. Specifications should be performance based specifications linked to achieving KPIs to trigger payment of a proportion of the contract price. 11.2. Contract specifications for Healthcare Services and Social Care services must utilise the DH specification Templates where available, for example Community contracts. Where a template is not available follow the principles in the model templates. Use of DH Templates is mandatory (please refer to DH Website) where NHS standard contracts are to be used. 11.3. The specification must include agreed evaluation criteria. Where services are tendered the Evaluation Criteria used MUST be published and once published CANNOT be altered. 11.4. All appropriate interested parties should be involved in writing the specification and the results of consultation must be also considered. Sufficient time must be allocated to ensure the delivery of a robust specification. 11.5. The Invitation to Tender (ITT) is a written document describing the purchaser s requirements against which a bidder submits an offer to deliver these requirements. A sufficient number of tenders should be invited to ensure adequate levels of competition taking in to account market conditions, complexity and contract value. 11.6. Where competition is waived or is not applicable this will be by direct negotiation with the Provider and once agreed a contract will be signed. 12. ITT Evaluation 12.1. A fair and effective evaluation of tenders will ensure that challenges are kept to a minimum and will generate confidence in NHSW s decision making process. Working in conjunction with our Procurement Advisors, Healthcare Commissioning Services, we will Page 46 of 72
develop appropriate and robust evaluation models that we will use when evaluating bidders responses. Note on Post tender negotiations There are restrictions on the use of post tender negotiation under the open and restricted procedures. The European Commission has issued a statement on post tender negotiations in which it specifically rules out any negotiation on price: In open and restricted procedures all negotiations with candidates or tenderers on fundamental aspects of contracts, variations in which are likely to distort competition, and in particular on prices, shall be ruled out; however, discussions with candidates or tenderers may be held only for the purpose of clarifying or supplementing the content of their tenders or the requirements of the contracting authorities, and provided this does not involve discrimination. 12.2. Following the Evaluation of bids (whether as a result of a competitive or non competitive process) a recommendation for award of contract(s) or otherwise should be made in accordance with the NHSW Standing Orders & Standing Financial Instructions. 13. Contracting 13.1. NHSW will utilise Standard NHS Contracts wherever available for all new Service Contracts populating the Schedules with the detail from the successful tenderers tender response. 13.2. Where an additional service is required from a current provider, for example a new Direct Enhanced Service, this can be added to the Providers existing contract and the existing conditions reviewed appropriately. If the additional service is a significant proportion of the total cost of the revised contract the appropriate standard NHS contract should be introduced where practicable. Page 47 of 72