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Public procurement law and NHS healthcare

Public procurement law and NHS healthcare. Competition Law Association 30 April 2014 Simon Taylor. Purpose of Procurement Law. Establish and protect the Single European Market by regulating way in which public money is spent Prohibit ‘ buy national ’ policies

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Public procurement law and NHS healthcare

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  1. Public procurement law and NHS healthcare Competition Law Association 30 April 2014 Simon Taylor

  2. Purpose of Procurement Law • Establish and protect the Single European Market by regulating way in which public money is spent • Prohibit ‘buy national’ policies • Help achieve fair cross border competition and free movement of services, capital etc • Public contracts awarded on merit alone • Ancillary function of preventing corruption

  3. Nature of NHS competition • Traditional local monopolies for general hospital – large bundled annual contracts • Single buyer – NHS commissioner (now CCG) • Patient choice – if choose to use another hospital then money follows patient • Provider choice - competition from private sector, social enterprise and NHS Trusts • Advertised competition an option for an increasing range of NHS services

  4. Legal Instruments • Directive 2004/18/EC Public Sector • Directive 2007/66/EC Remedies • Public Contracts Regulations 2006 (amended in 2009 and 2011) • New Directive 2014/24 published 28/3/2014 • Draft Implementing Regulations due in June • Commission’s Interpretative Communication on Part B/below threshold contracts, 2006

  5. Who do rules apply to? • Public bodies – “Contracting authorities” • Bodies listed in reg. 3, Sch. 1 e.g. government departments, NHS trusts • Reg 3(1)(w) sweep up category covers corporations with purpose of meeting needs in general interest, not having an industrial or commercial character and majority financed or controlled by a contracting authority • Procurement of above threshold contracts

  6. What is required? • OJEU advertisements save where derogation applies • Transparency of selection and award criteria • Follow prescribed procedures and timelines • Non discrimination and proportionate exercise of discretion • Clear feedback and reasons

  7. Who can invoke rules? • Economic operators from GPA countries • Which have suffered loss or risk suffering loss due to the breach - generally unsuccessful bidders • GPA countries include US, Japan, Canada • Proceedings for breach of Regulations or EU law started in the High Court • Judicial review by persons with sufficient interest • R (Unison) v NHS Wiltshire PCT [2012] EWHC 624

  8. Are healthcare contracts covered? • Yes, partially if above threshold (£172,514) • Categorised as “Part B” services, so no need for OJEU advertised tender • Reg 4(3) requires authority to treat operators equally and act in a transparent way • Certain other rules apply to Part B but less onerous than for Part A services (Commission v Ireland C-226/09) • Obligation to compete healthcare contracts?

  9. EU rules apply to healthcare • EU Treaty principle of transparency requires advertising where cross border interest in the tender eg from international healthcare groups • Telaustria Case C-324/98 • Fed. Security Services v NI Chief Constable [2009] NICh 3

  10. Derogations? • Procurement specific • Exclusion where special/exclusive rights • Sole supplier exception • Unforeseen additional services which can’t be provided separately (up to 50% value) • Treaty “imperative requirements” • To protect services of general economic interest (Art. 106(1))? • Case C-475/99 Ambulanz Glöckner

  11. Effect of Directive 2014/24 • Article 74-77 apply to healthcare contracts with contract value above €750,000 • Must make known intention to award in a prior contract notice (plus a contract award notice) • Must be national rules to ensure compliance with principles of transparency and equal treatment taking into account eg specific needs of users • Special provisions for contract awarded to mutuals • Implementation in UK by early 2015

  12. Effect of NHS Regulations • To tender or not to tender? • CCGs must consider a wide range of factors • How best to secure needs of patients? • Who is most capable provider (only one?) • How to improve quality and efficiency of services (eg through competition and choice)? • How best to secure best value for money? • How best to act in a proportionate, transparent and non discriminatory way?

  13. Conflicting rules? • Cost benefit analysis under NHS Regs may point to no tender when EU procurement law requires an advertised competition • EU law trumps NHS Regulations!

  14. Choice of Forum • Complainants can choose whether to bring a High Court action or seek Monitor’s help • Wide powers of investigation and direction to remedy failures • But can’t order a competitive tender! • Claimants can sue for damages (Art 76(7) HSCA 2012) for breach of NHS Regs • No limitation period

  15. NHS Procurement cases • Newcastle upon Tyne Hospital NHS Foundation Trust v Newcastle Primary Care Trust [2012] EWHC 2093 (QB) • Healthcare at Home Ltd v The Common Services Agency [2013] ScotCS CSIH 22 • Roche Diagnostics Ltd v Mid Yorkshire Hospitals NHS Trust [2013] EWHC 933 (TCC)

  16. Conclusions • Wide range of NHS service contracts have never been competed • NHS Regulations ensure that patient interests, value for money etc considered • EU procurement law mandates advertised tenders • Many more competitions anticipated

  17. Public procurement law and NHS healthcare Competition Lawyers Association Simon Taylor staylor@keatingchambers.com Tel: +44 (020) 7257 8755

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