Health service procurement: draft statutory guidance - Section 3: applying the regime

The specific processes to be followed when selecting providers are detailed in the procurement processes under the regulations section. When following any of the procurement processes, relevant authorities must act transparently, fairly, and proportionately.

Relevant authorities are expected to also consider issues relating to governance, planning, and provider landscape when applying the regime.

The regulations allow the award of a contract to more than one provider, either jointly or otherwise.

Procurement principles

Relevant authorities are expected to ensure that when following this regime, they make decisions in the best interests of people who use the service. To do this, they must act with a view to:

• securing the needs of the people who use the services
• improving the quality of the services
• improving efficiency in the provision of the services

Relevant authorities must also act transparently, fairly, and proportionately when procuring health services.

The regulations state that relevant authorities must also have regard to the Wales procurement policy statement published under section 14 of the 2023 act, and relevant authorities must also have regard for any other policy statement made by the Welsh ministers that is relevant to the health services being procured.

Governance

Relevant authorities are expected to establish how best to follow this regime within their wider structural and governance arrangements. This regime sets out step-by-step instruction on how to undertake a procurement process; however, it does not require decisions to be taken by specific organisational committees within relevant authorities or at a particular level within an organisational system. Relevant authorities are expected to ensure that their internal governance supports the effective application of this regime.

Planning

To apply this regime effectively, relevant authorities are expected to have a clear understanding of the services they want to arrange and the outcomes they intend the services to deliver.

These are prerequisites to any decision about selecting a provider. We expect these intentions to be clearly established in good time via the routine planning activity that takes place across a system. Relevant authorities are expected to reflect these intentions in their commercial pipeline, and decisions taken under this regime are also expected to serve and reflect these intentions.

The regime also sets out how to deal with unplanned urgent situations (see urgent award or contract modifications).

Provider landscape

Relevant authorities are expected to develop and maintain sufficiently detailed knowledge of relevant providers, including an understanding of their ability to deliver services to the relevant (local / regional / national) population, varying actual / potential approaches to delivering services, and capabilities, limitations, and connections with other parts of the system. Relevant authorities may wish to consider undertaking pre-market engagement to update or maintain their provider landscape knowledge.

We expect this knowledge to go beyond knowledge of existing providers and to be a general feature of planning and engagement work, developed as part of the commissioning process rather than only at the point of contracting. Without this understanding, relevant authorities may not have enough evidence to confirm the existing provider is performing to the best quality and value, miss opportunities to improve services and identify valuable innovations, and ultimately lead providers to make representations (see standstill period).

Taking a proportionate approach

The regime applies to the arranging of all relevant health services; there is no minimum threshold for application of the regime. Therefore, when applying this regime, relevant authorities are expected to take a proportionate approach. They are expected to ensure that their approach to implementing this regime does not create disproportionate burden relative to the benefits that will be achieved.

It is also important that decisions are defensible and made following relevant considerations.

Due diligence, basic selection criteria and exclusions

When applying this regime, relevant authorities are expected to undertake reasonable and proportionate due diligence checks on providers. Relevant authorities are expected to consider whether the provider with whom they propose to enter into a contract has the legal and financial capacities and the technical and professional abilities to deliver the contract.

For direct award process 2, the most suitable provider process, and the competitive process, and when establishing a framework agreement, relevant authorities must assess if providers are considered suitable to provide a service by applying the basic selection criteria as outlined in schedule 17. All basic selection criteria requirements must be related and proportionate to the subject matter of the contract or framework agreement.

It is not a regulatory requirement for relevant authorities to apply the basic selection criteria when following direct award process 1, or when awarding a contract based on a framework agreement. A relevant authority may, however, consider it best practice to confirm a provider’s legal/financial capacities and technical/professional abilities, when undertaking direct award process 1.

The basic selection criteria may relate to:

• The provider’s suitability to pursue a particular activity. Where the provider is required to possess a particular authorisation or be a member of a particular organisation to be able to perform the required services, the relevant authority may require a provider to prove that they hold such authorisation or membership.
• The provider’s economic and financial standing. The relevant authority may impose requirements ensuring that the provider possesses the necessary economic and financial capacity to perform the contract.
• The provider’s technical and professional ability. The relevant authority may impose requirements ensuring that a provider possesses the necessary human and technical resources and experience to perform the contract to an appropriate quality standard.

A relevant authority must disregard an excluded provider from participating in any of the procurement processes and may disregard an excludable provider if a provider would be an excluded or an excludable provider in accordance with section 57 and 58 of the 2023 act. Please note, for the purposes of applying sections 57 and 58 of the 2023 act under the Regulations, references to "supplier" and "contracting authority" within the 2023 act are to be read as "provider" and "relevant authority" respectively. Under the exclusion regulation, relevant authorities are required to prevent excluded providers from participating in procurement processes and being awarded contracts, and allows relevant authorities to prevent excludable providers from participating in procurement processes and being awarded contracts.

Excluded providers are providers that would be an excluded supplier under sections 57 and 58 of the Procurement Act 2023, were the relevant authority the contracting authority and the provider a supplier under those sections, and any reference to an associated person in those sections is omitted. Providers which are on the debarment list based on a mandatory ground for exclusion must also be considered an excluded provider. Providers may also be an excluded provider by virtue of a mandatory exclusion ground applying to its sub-contractors.

Excludable providers that would be an excludable supplier in accordance with sections 57 (meaning of excluded and excludable supplier) and 58 (considering whether a supplier is excluded or excludable) of the Procurement Act 2023, were the relevant authority the contracting authority and the provider a supplier under that Act, and any references to an associated person is omitted. Providers which are on the debarment list based on a discretionary ground for exclusion must also be considered an excludable provider. Providers may also be an excludable provider by virtue of a discretionary exclusion ground applying to its sub-contractors.

If it is the case that a provider or sub-contractor is on the debarment list because the provider or sub-contractor poses a threat to national security in relation to specific types of contract, the providers or sub-contractors must be treated as an excluded provider only in relation to the contracts of the kind described in the debarment list.

As such, a provider or sub-contractor is an ‘excluded provider’ if the relevant authority considers that a mandatory exclusion ground applies to the provider or sub-contractor, and the circumstances giving rise to the application of the exclusion ground are continuing or likely to occur again.

A provider or sub-contractor is an "excludable provider" if the relevant authority considers that a discretionary ground applies to the provider or sub-contractor and the circumstances giving rise to the application of the exclusion ground are continuing or likely to occur again.

In consideration of whether the application of an exclusion ground is continuing or likely to occur again, the relevant authority may have regard to:

• evidence that the provider or sub-contractor has taken the circumstances seriously
• steps that the provider or sub-contractor have taken to prevent the circumstances continuing or occurring again
• commitment that such steps will be taken or the provision of information to allow verification or monitoring
• elapsed period since the circumstances last occurred
• any other evidence, explanation or factor the relevant authority considers appropriate

Before determining that a provider or sub-contractor is an excluded or excludable provider, relevant authorities have a duty to give the providers a reasonable opportunity to make representations and provide evidence as to whether the exclusion grounds apply and whether the circumstances are likely to occur again (accordingly a "self-cleaning" process). When complying with this duty it is important the relevant authorities do not make disproportionate requests for information regarding the exclusion grounds. This includes disproportionate requests for proof of the absence of grounds for exclusion, or disproportionate requests for remedial action to be taken where grounds are met.

Therefore, a provider or sub-contractor considered an "excluded provider" must be afforded a reasonable opportunity to respond to a determination that a mandatory exclusion ground applies.

If an excluded provider fails to sufficiently evidence that the matters are remedied or unlikely to occur again, the relevant authority must exclude that provider from the procurement process and not award a contract or conclude a framework agreement with the excluded provider/sub-contractor.

However, if a relevant authority considers that there is an overriding need to protect public health, it may proceed with awarding the contract or concluding the framework agreement with the excluded provider.

As such, where a relevant authority determines that not making the award to the excluded provider would likely pose a risk to patient or public safety, the relevant authority may award a contract or conclude a framework agreement with an excluded provider as set out under regulation 21(2).

This regime must be applied whenever relevant authorities are making decisions about procuring health services.

The first step for relevant authorities applying this regime is to identify which of the following procurement processes are applicable.

Direct award process 1 must be used when all the following apply:

• there is an existing provider of the health services to which the proposed contracting arrangements relate
• the relevant authority is satisfied that the health services to which the proposed contracting arrangements relate are capable of being provided only by the existing provider (or group of providers) due to the nature of the health services

Direct award process 1 must not be used to conclude a framework agreement.

Direct award process 2, the most suitable provider process or the competitive process may be used when all the following apply:

• the relevant authority is not required to follow direct award process 1
• the term of an existing contract is due to expire, and the relevant authority, proposes a new contract to replace that existing contract at the end of its term
• the proposed contracting arrangements are not a considerable change
• the relevant authority is of the view that the existing provider (or group of providers) is satisfying the existing contract and will likely satisfy the proposed contract to a sufficient standard

Direct award process 2 and the most suitable provider process must not be used to conclude a framework agreement.

The most suitable provider process or competitive process may be used when all the following apply:

• the relevant authority is not required to follow direct award process 1
• the relevant authority cannot or does not wish to follow direct award process 2
• the relevant authority is of the view, considering likely providers and all relevant information available to the relevant authority at the time, that it is likely to be able to identify the most suitable provider (without running a competitive process).

The most suitable provider process must not be used to conclude a framework agreement.

The competitive process must be used when all of the following apply:

• the relevant authority is not required to follow direct award process 1
• the relevant authority cannot or does not wish to follow direct award process 2 and cannot or does not wish to follow the most suitable provider process

The competitive process must be used if the relevant authority wishes to conclude a framework agreement.

Once the relevant authority has identified which of these circumstances applies and has identified the appropriate procurement process to follow, it will then need to follow that procurement process as set out in detail in the sections below.

Relevant authorities are expected to identify which procurement process is applicable sufficiently in advance of a contract coming to an end. The fact that a particular procurement process was used to select a provider in the past does not mean the same approach must (or will be able to) be used for that service in future.

It is permitted to make certain modifications during the term of a contract to allow for changes to services or circumstances. The section on contract modifications sets out the conditions and transparency requirements for these modifications.

In limited circumstances relevant authorities may need to act rapidly, for example, to address immediate risks to patient or public safety, within which it would be impractical to follow the steps required under this regime. The section on urgent awards or contract modifications sets out these circumstances and how relevant authorities must act if they arise.

The type of service means there is no realistic alternative to the current provider. This process must not be used to award contracts when establishing a new service or to conclude a framework agreement or to award a contract based on a framework agreement.

Direct award process 1 must be used to award contracts to the existing provider (or group of providers) when the nature of the service means there is no realistic alternative to the existing provider (or group of providers). Even when there are alternative providers in the market, as long as these are not considered to be realistic alternatives for the relevant authority’s specific requirements, direct award process 1 must be used to award a contract.

Direct award process 1 must not be used to:

• award a contract when establishing a new service
• conclude a framework agreement
• to award a contract based on a framework agreement

Relevant authorities must follow the required transparency steps (see transparency section and annex B) when they award contracts to the existing provider (or group of providers) using this approach.

Relevant authorities must consider the exclusions in regulation 21 and 22 and apply them as appropriate.

The existing provider is satisfying the existing contract and likely to satisfy the proposed contract, and the proposed contracting arrangements are not a considerable change from the existing contract. This process must not be used to award contracts when establishing a new service or to conclude a framework agreement or to award a contract based on a framework agreement.

Direct award process 2 may be used to award a proposed contract to the existing provider (or group of providers), to replace an existing contract that is coming to an end, when all the tests below are met:

• the relevant authority is not required to follow direct award process 1
• the term of an existing contract is due to expire, and the relevant authority is proposing a new contract to replace that existing contract at the end of its term
• the proposed contracting arrangements are not a considerable change from the existing contract (see establishing that a proposed contracting arrangement is not a considerable change)
• the relevant authority is of the view that the existing provider is satisfying the existing contract to a sufficient standard, according to the detail outlined in the contract, and taking into account the key criteria and applying the basic selection criteria
• the relevant authority is of the view that the existing provider will likely satisfy the proposed contract to a sufficient standard taking into account the key criteria and applying the basic selection criteria

Direct award process 2 must not be used to:

• award a contract when establishing a new service
• conclude a framework agreement
• to award a contract based on a framework agreement

Once the relevant authority has ascertained that it can use direct award process 2, it must follow the below steps:

1. Publish a notice containing its intention to award the contract to the existing provider (see transparency section) and observe the standstill period (see standstill period).
2. Enter into a contract with the existing provider after the standstill period has concluded.
3. Publish a notice confirming the award of the contract to the existing provider within 30 days of the contract being awarded.

Even where the tests for using the direct award process 2 are met, relevant authorities do not have to use the direct award process 2. Relevant authorities may still choose to follow the most suitable provider process or the competitive process, for example because they wish to test the market.

Relevant authorities must consider the exclusions in Regulation 21 and 22 and apply them as appropriate.

Establishing that the proposed contracting arrangements are not a considerable change from the existing contract

Considerable change is defined in regulation 7(9) and 7(10). Circumstances where a change is not a considerable change are set out in regulations 7(11) and 7(12).

To use direct award process 2, the relevant authority must be satisfied that the proposed contracting arrangements are not a considerable change, that is they do not fall within the circumstances set out in regulation 7(9) and 7(10).

Under this regime, a considerable change is where either:

a) the proposed contracting arrangements are materially different in character to the existing contract when that existing contract was entered into

b) where the proposed contracting arrangements meet the considerable change threshold

The considerable change threshold is met where all of the following apply:

• the proposed contracting arrangements (as compared with the existing contract), is attributable to a decision made by the relevant authority
• the estimated lifetime value of the proposed contract is £500,000 or higher (that is equal to or £500,000 more) than the estimated lifetime value of the existing contract when it was entered into
• the estimated lifetime value of the proposed contract is 25% or higher (that is equal to or 25% more) than the existing estimated lifetime value of the existing contract when it was entered into

The proposed contracting arrangements do not meet the considerable change test, as set out in regulation 7(11) and 7(12), where either:

• There is a material difference in character from the existing contract (when that existing contract was entered into), but it is solely because of a change in the identity of the provider due to succession into the position of provider following corporate changes including for example takeover, merger, acquisition or insolvency and the relevant authority is satisfied that the provider meets the basic selection criteria. Additionally, the considerable change threshold is not met.
• The proposed contracting arrangements are not materially different in character to the existing contract when that existing contract was entered into, and the considerable change threshold has been met, however the change between the existing and proposed contracting arrangements is in response to external factors beyond the control of the relevant authority or the provider. Examples of this include changes in patient or service user volume, or changes in prices in accordance with a formula provided for in the contract document.

Where the proposed contracting arrangements are materially different in character to the existing contract, this is deemed a considerable change. Where contracting arrangements are considered materially different the relevant authority cannot rely on direct award process 2 to award the proposed contract (unless regulation 7(11) is applicable).

Where the proposed contracting arrangements are not materially different in character to the existing contract, however the proposed contracting arrangements meet the considerable change threshold, the relevant authority cannot rely on direct award process 2 to award the proposed contract (unless regulation 7(12) is applicable).

The method for calculating the estimated lifetime value of a contract is set out in regulation 4.

Example of a considerable change

A. A relevant authority holds a contract with an estimated lifetime value of £3 million. The contract is coming to an end and the relevant authority wants (so attributable to a decision of the relevant authority) to continue with the current provider. The estimated lifetime value of the proposed contracting arrangements is £4million. The proposed contract is not going to be materially different in character.

The change in the estimated lifetime value of the proposed contract is £1million, which is more than £500,000 and represents 33% of the estimated lifetime value of the existing contract, which is over the 25% threshold. Therefore, the relevant authority must not use direct award process 2 for the proposed contracting arrangements and instead must follow the approach for the most suitable provider process or the competitive process.

Example of a change that is not considerable

B. A relevant authority holds a contract with an existing provider, the contract has an estimated lifetime value of £1 million. The contract is now coming to an end and the relevant authority wishes to increase the estimated lifetime value by £400,000 when the contract is renewed. However, the remaining contracting arrangements are to be the same. The estimated lifetime value of the proposed new contract will therefore be £1.4million. The proposed contract is not going to be materially different in character. Therefore, the next consideration is whether the considerable change threshold is met.

As it is something the relevant authority wishes to do, it is attributable to a decision of the relevant authority. The £400,000 change in the estimated lifetime value of the proposed contract is 40% of the estimated lifetime value of the existing contract when the existing contract was entered into, which is over the 25% threshold. However, the last limb of the threshold is not met as the change is under the £500,000 threshold and therefore this is not a considerable change. The relevant authority can proceed with the approach under direct award process 2.

C. A relevant authority holds a contract with an existing provider, the contract has an estimated lifetime value of £10million. The contract is coming to an end and the relevant authority wishes to continue with the provider that has taken over the existing providers organisation in a recent acquisition. The provider that has acquired the existing providers organisation meets the basic selection criteria. The estimated lifetime value of the proposed contracting arrangements is £10.2m.

The change in the estimated lifetime value of the proposed contract is £200,000 which is 2% of the estimated lifetime value of the existing contract when the existing contract was entered into. The proposed change is under the 25% and £500,000 considerable change threshold. The proposed contract is materially different in character due to the change of provider, however the material difference is solely because of a change in the identity of the provider due to the corporate change. Therefore, regulation 7(11) is applicable, and the relevant authority can rely on direct award process 2 for the proposed contracting arrangements.

D. A relevant authority holds a contract with an existing provider, the contract has an estimated lifetime value of £2million. The contract is coming to an end and the relevant authority wishes to continue with the current provider. The estimated lifetime value of the proposed contracting arrangements is £2.6m. The proposed contract is not going to be materially different in character.

The change in the estimated lifetime value of the proposed contract is £600,000 which is 30% of the estimated lifetime value of the existing contract when the existing contract was entered into. The proposed change is over the 25% and £500,000 threshold. Therefore, the considerable change threshold has been met, however the change between the existing and proposed contracting arrangements (£600,000) is due to a change in patient volume requiring the specific health service. As such, the proposed change is in response to external factors that are beyond the control of the relevant authority and the provider. Therefore, regulation 7(12) is applicable, and the relevant authority can rely on direct award process 2 for the proposed contracting arrangements.

Establishing that the existing provider is satisfying the existing contract, and is likely able to satisfy the proposed contract to a sufficient standard

Once the relevant authority has established that the proposed contracting arrangements are not a considerable change, it must assess whether the existing provider is both:

• satisfying the existing contract to a sufficient standard, according to the detail outlined in the existing contract, and taking into account the key criteria and applying the basic selection criteria
• will likely be able to satisfy the proposed contract to a sufficient standard, according to the detail outlined in the proposed contract, taking into account key criteria and applying the basic selection criteria

To do this, the relevant authority must decide the relative importance of the key criteria for the service in question before assessing the existing provider in relation to each of the key criteria.

The relevant authority must be of the opinion, based on its assessments, that the existing provider is satisfying the existing contract and will likely be able to satisfy the proposed contract to a sufficient standard. The relevant authority must also assess whether the existing provider is continuing to meet the basic selection criteria.

If direct award process 2 is not applicable because the proposed contracting arrangements are a considerable change from the existing contract, or the existing provider is not satisfying the existing contract or is not likely to be able to satisfy the proposed contract, then the relevant authority must follow the most suitable provider process or the competitive process.

Relevant authorities must keep records of these considerations (see transparency) and the resulting decisions, as they may need to disclose information on the rationale for their decision if a representation is made (see standstill period).

The relevant authority is able to identify the most suitable provider without running a competitive exercise.

This procurement process is designed to allow relevant authorities to make an assessment on which provider (or group of providers) is most suitable to deliver the proposed contracting arrangements based on consideration of the key criteria and the basic selection criteria, and to award a contract without running a competitive exercise.

This procurement process gives relevant authorities a mechanism for a reasonable and proportionate process without running a competitive exercise. It is suitable for circumstances where a relevant authority is of the view, taking into account likely providers and all relevant information available to it at the time (see provider landscape), that it is likely to be able to identify the most suitable provider to deliver the health services to the relevant population (local / regional / national). Relevant authorities are advised to follow this procurement approach only when they are confident that they can, acting reasonably, clearly identify all likely providers capable of providing the health services and passing any key criterion or sub-criterion which has been designated as pass/fail.

The most suitable provider process must not be used to conclude a framework agreement or to award a contract based on a framework agreement.

Following this procurement process

This procurement process may be followed where any of the following apply:

• the relevant authority is not required to follow direct award process 1
• the relevant authority is changing an existing contracting arrangement considerably (such that it must not be continued under direct award process 2)
• a new service is being arranged
• the existing provider no longer wants to provide the services
• the relevant authority wants to consider potential providers (even where the proposed contracting arrangements are not a considerable change or otherwise), as this is in the best interest of people who use the service, but there is no benefit to running a competitive process or it is disproportionate to do so

When following the most suitable provider process, the relevant authority:

1. Is advised to take account of any relevant existing contractual provisions relating to termination and contract exit where there is an existing contract with an existing provider in place, whether the existing provider no longer wants to or is no longer able to provide the services.
2. Is advised to consider undertaking a pre-market engagement exercise (see provider landscape) to help identify all suitable providers and develop the service specification.
3. Must decide the relative importance of each of the key criteria for the service in question (see key criteria), carefully considering the relative importance of the value criterion. It is advised that for procurement processes with higher contract values, greater focus is given to value for money and the quality and efficiency of the services to be provided, unless this means the service does not best meet the needs of the population it is serving.
4. Must be of the view that, considering providers it understands are likely to have the ability to deliver services to the relevant (local / regional / national) population and all relevant information available at the time (see provider landscape), it is likely able to identify the most suitable provider.
5. Must publish a notice setting out its intention to follow the most suitable provider process (see transparency). The relevant authority must not proceed to the assessment of likely providers until at least 14 days after the day on which the notice of intention is submitted for publication. The relevant authority is also advised to make potential providers aware that they are being considered for the award of the contract.
6. Is advised to ask the providers it identified as likely to have the ability to deliver services to the relevant (local / regional / national) population, and any providers that responded to the notice publishing the intention to follow the most suitable provider process, for further information that would help the procurement process, as necessary.
7. Must identify potential providers that may be the most suitable provider, taking into account the providers it understands are likely to have the ability to deliver services to the relevant (local / regional / national) population and any providers that responded to its notice publishing the intention to follow the most suitable provider process, with reference to the key criteria and the basic selection criteria.
8. Must assess the potential providers identified, considering the key criteria and applying the basic selection criteria, and the exclusion criteria set out in Regulation 21 and 22, in a fair way across them (that is on the same basis), and choose the most suitable providers with which to make an award.
9. Must publish a notice containing its intention to award the contract to the chosen provider (see transparency) and observe the standstill period (see standstill period).
10. May enter into a contract with the chosen provider after the standstill period has concluded.
11. Must publish a notice confirming the award of the contract within 30 days of the contract being awarded.

Relevant authorities are expected to use their established knowledge of potential providers (see provider landscape). Relevant authorities may approach providers and ask for information as necessary but are advised to take a proportionate approach.

Relevant authorities must be able to demonstrate that they have understood the alternative providers and reached a reasonable decision when selecting a provider – but this does not need to be via a formal competitive exercise. Relevant authorities must keep robust records of these considerations and follow the relevant transparency requirements (see transparency). They may need to disclose information on the rationale for their decision if a representation is made (see standstill period).

If at any point in the most suitable provider process the relevant authority has insufficient information to make an assessment under the most suitable provider process, for example, because it did not receive sufficient information to help its procurement process, it is advised to use the competitive process. If the relevant authority fails to identify the most suitable provider (or a group of providers), then it must follow the competitive process to select a provider or abandon the procurement process altogether if appropriate.

If the relevant authority decides to change from the most suitable provider process to either the direct award process 2 or the competitive process after it has published intention to follow the most suitable provider process, then the relevant authority must abandon the most suitable provider process before commencing the direct award process 2 or competitive process.

Relevant authorities must consider the exclusions in regulation 21 and 22 and apply as appropriate.

Further information

Relevant authorities are expected to develop and maintain a sufficiently detailed knowledge of relevant providers that have the capability to meet the needs of patients within the relevant geographical footprint, which can be used to identify suitable providers (see provider landscape). Relevant authorities may identify suitable providers through market research, regular engagement with providers, registers of relevant providers or responses to their intention to follow the most suitable provider process notice.

Conducting a competitive procurement exercise

This procurement process must be followed when the relevant authority is not required to follow direct award process 1, or where the relevant authority cannot or does not wish to follow direct award process 2 or the most suitable provider process (for example, because it has not been able to identify a most suitable provider or because it wishes to test the market).

This procurement process must be used when concluding a framework agreement and may be used when awarding a contract based on a framework agreement, in accordance with the terms of that framework agreement (see framework agreements).

Following this procurement process

The steps outlined in the regulations and the transparency requirements must be adhered to. Relevant authorities may determine additional procedures to be applied in selecting a provider using the competitive process, taking into account the specificities of the services being procured to design a bespoke procedure.

When following the competitive process, relevant authorities:

1. Will need to develop a service specification setting out the relevant authority’s requirements for the service. In doing so, relevant authorities may consider undertaking a pre-market engagement exercise.
2. Must determine the contract or framework award criteria for the service being procured, taking into account the key criteria and applying the basic selection criteria (see key criteria and basic selection criteria).
3. Must formally publish the opportunity to bid (see transparency) and ensure providers are given a reasonable timeframe to respond. The publication of the opportunity must include information relating to how bids will be assessed, including whether the award criteria will be assessed in stages.
4. Must assess any bids received by following the assessment process – that is, against the award criteria, and the exclusion criteria set out in regulation 21 and 22, in a fair way across all bids (that is on the same basis). This may be done in stages, in accordance with step 3 above.
5. Must identify the successful provider (or group of providers).
6. Must inform in writing the successful provider (or group of providers) of its intention to award a contract or conclude a framework agreement, and must also inform in writing each unsuccessful provider that its bid has been unsuccessful.
7. Must publish a notice of its intention to award the contract to or conclude a framework agreement with the chosen provider (or group of providers) (see transparency) and observe the standstill period (see standstill period).
8. May enter into a contract or conclude a framework agreement with the chosen provider (or group of providers) after the standstill period has concluded.
9. Must publish a notice confirming the award of the contract within 30 days of the contract being awarded.

The award criteria referred to above consists of the basic selection criteria, the key criteria and any other elements of the contract award. These components can be assessed in stages – for example, a provider that does not meet the basic selection criteria may be discounted without further assessment.

Relevant authorities may engage in dialogue or negotiate with all bidders or with shortlisted bidders prior to determining to whom to award a contract and with a view to improving on initial offers, provided that they do so in a fair and proportionate way and treat all bidders equally.

Relevant authorities must keep records of the procedure followed to select a provider (including details of the bespoke procedure), of how each bid performed against the award criteria, and the rationale for selecting the successful bidder (see transparency).

Relevant authorities must consider the exclusions in regulation 21 and 22 and apply as appropriate.

Relevant authorities may establish framework agreements under the regulations to arrange health services in scope of the regime (or that are categorised as mixed procurements within the regime).

What is a framework agreement?

Framework agreements for the purposes of this regime are agreements in relation to health services in scope of this regime between one or more relevant authorities and one or more providers. Framework agreements set out the terms and conditions based on which the provider may enter into one or more contracts with a relevant authority during the period the framework agreement is in place.

The relevant authority (or relevant authorities) that may award contracts based on the framework agreement must be identified in the framework agreement (either by name or by describing the type of relevant authority). Contracts awarded based on a framework agreement must only be between the relevant authority (or relevant authorities) identified in the framework agreement and a provider that is party to the framework agreement.

The length of a framework agreement must not exceed eight years, other than in exceptional cases where the relevant authority is satisfied that the subject matter of the framework agreement justifies a longer term.

The terms and conditions of a framework agreement may be modified in line with the requirements for contract modification for this regime (see contract modifications).

Concluding a framework agreement

When concluding a framework agreement, relevant authorities must use the competitive process to select providers to be party to the framework agreement.

During the term of a framework agreement, the relevant authority must commence a competitive process to allow additional providers to be selected to be party to the framework agreement. This must be commenced at least once during the first four years of the initial framework agreement, and then at least once in the proceeding four years.

Framework agreement, further competitive process examples

During the term of the framework agreement the relevant authority is required to allow further providers to be selected to be party to the framework agreement.

Example A: a framework agreement is concluded for a 6-year period under the regulations, from 1 April 2025 to 31 March 2031

The relevant authority determines it appropriate to run a further competitive exercise to select additional providers to be party to the framework agreement on the one-year anniversary of the initial award of the framework agreement (that is on the 1 April 2026, undertaken within the first four years of the award of framework meeting the regulations (regulation 17(1)(a)). The relevant authority is then required to undertake another competitive exercise for additional providers to be party to the framework agreement by the 5th anniversary of the initial framework agreement award (1 April 2030). In completing the further competitive exercise by the 1 April 2030, the relevant authority will be within the four years from the commencement of the first competitive process to select additional providers (1st year anniversary – 2 April 2026), therefore meeting the requirements set out under regulation 17(1)(b).

Example B: a framework agreement awarded for an 8-year period under the regulations, 1 April 2025 to 31 March 2033

The relevant authority determines it appropriate to run a further competitive exercise on the four-year anniversary of the initial award of the 8-year framework agreement (1 April 2029, commenced within the first four years of the award of framework meeting regulation 17(1)(a)). The relevant authority is not required to commence another competitive exercise for additional providers to bid and be assessed, to meet regulation 17(1)(b) due to the four-year period and the expiration date of the framework agreement being coterminous.

Relevant authorities are not restricted in the number of times they commence competitive processes to select additional providers to a framework agreement. Relevant authorities may determine it appropriate to open a framework agreement to further providers more frequently than the minimal period set out within the regulations. Relevant authorities should ensure that the frequency of opening the framework agreement is transparent, fair, and proportionate.

Relevant authorities are advised to set out how and when a framework agreement will be opened for additional providers to be selected within the terms and conditions of that framework agreement. Relevant authorities must use the approach for the competitive process to select additional providers to the framework agreement, and relevant authorities are advised to use the same award criteria as when setting up the original framework agreement.

When concluding a framework agreement, relevant authorities must set out the duration of the framework agreement and which relevant authorities can award contracts based on the framework agreement. Relevant authorities are expected to set out:

• the procedures for calling off the framework agreement
• the terms and conditions for any contracts awarded based on the framework agreement
• how additional providers can be added to the framework agreement at a later date

Relevant authorities must not conclude a framework agreement with a provider and may exclude a provider from the procurement process if the provider meets the exclusion criteria detailed in regulation 21 and 22. Relevant authorities are advised to set out in the terms and conditions of their framework agreement that they may remove a provider from the framework agreement if that provider meets the exclusion criteria.

Awarding contracts based on a framework agreement

Only relevant authorities that are identified as being able to award contracts under the framework agreement may award contracts to providers that are party to that same framework agreement. Relevant authorities may decide that the award criteria for awarding contracts under a framework agreement are different from those for concluding the framework.

Relevant authorities must award a contract under a framework agreement in accordance with the terms and conditions of that framework agreement.

Relevant authorities may award a contract based on a framework in one of the following ways:

• without competition if the framework agreement only includes one provider (via a direct award)
• if the framework agreement includes more than one provider, choose whether to award the contract:
  a) without a further competition (via direct award), or 
  b) by following the competitive process (via a mini competition)

In all these scenarios, relevant authorities must make decisions in accordance with the framework agreement.

If awarding a contract based on a framework agreement without competition (via a direct award), relevant authorities must:

• publish a notice confirming the decision notice within 30 days of the contract being awarded (see transparency section and annex B).

If awarding a contract based on a framework agreement following a competitive process (via a mini-competition), relevant authorities must:

• follow the process for competitive process, substituting step 2 (the step advertising the opportunity to the market, regulation 11(5)), and instead must invite providers party to the framework to submit an offer
• follow the terms and conditions of the framework agreement, including how competitions must run when awarding a contract based on that framework agreement (if this is set out)
• follow the relevant transparency requirements (see transparency and annex B)
• observe the standstill period as required for the competitive process (see standstill period)

When awarding a contract based on a framework agreement, the term of the contract may exceed the length of the framework agreement.

Contracts awarded from a framework agreement are expected to not exceed the total estimated lifetime value of the framework agreement.

Relevant authorities may decide to abandon the procurement process (and not award a contract or conclude a framework agreement) at any time before an award is made, provided that this decision is transparent, fair, and proportionate. If a relevant authority decides to abandon a procurement process during the standstill period, the authority may only abandon the procurement process after the standstill period has ended.

After deciding to abandon a procurement process, relevant authorities are expected to notify providers that were being considered for the award of a contract or framework agreement (such as in response to a tender under the competitive process) of the abandonment. Relevant authorities must also submit for publication a notice of the decision to abandon and must include the information set out in schedule 16. This notice must be submitted within 30 days of the decision to abandon a procurement process, or if the decision was made during the standstill period, then within 30 days after the end of the standstill period. Where the decision to abandon a procurement process is made during the standstill period, relevant authorities must ensure that they follow the necessary steps set out in regulation 12 (see the standstill period).

Relevant authorities must also keep a record of their reasoning for abandoning a procurement process (see record keeping).

When following direct award process 2, the most suitable provider process or the competitive process, relevant authorities may choose to return to an earlier step in a procurement process. All providers that have previously been notified that they are being considered for the award of a contract, or to be a party to a framework agreement, must be informed in writing that the relevant authority is returning to an earlier stage in the procurement process, including the stage and any changes to timeframes. Where the decision to return to an earlier step in a procurement process is made during the standstill period, relevant authorities must ensure that they follow the necessary steps set out in regulation 12. For the avoidance of doubt, if the relevant authority is repeating a step as a response to a representation received during the standstill period, they do not need to communicate this decision twice (see standstill period).

Relevant authorities should not use the option to return to an earlier step in a procurement process as an opportunity to modify the selection parameters (that is to modify the key criteria or change the service specifications). If relevant authorities need to modify the selection parameters, then they should abandon the procurement process (in accordance with the regulations) and start a new one.