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
• Help achieve fair cross border competition
and free movement of services, capital etc
• Public contracts awarded on merit alone
– Ancillary function of preventing corruption
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
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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
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
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
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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
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?
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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
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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
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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
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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?
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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!
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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
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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)
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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
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Public procurement law and NHS
healthcare
Competition Lawyers Association
Simon Taylor
staylor@keatingchambers.com
Tel: +44 (020) 7257 8755
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