Procurement Reform (Scotland) Act 2014: statutory guidance

7. Procurement of health or social care services

7.1. Introduction – special considerations for procurement of health or socialcareservices

This chapter recognises that buying many health or social care services requires special consideration by a contracting authority. This is because the quality or availability of these services can have a significant impact on the quality of life, health and wellbeing of people accessing the service and their carers^[41]. It describes key legislative requirements (including the Regulations^[42] and Act) that have a bearing on the purchase of these services while also considering the integration of health and social services as determined by the Public Bodies (Joint Working) (Scotland) Act 2014 and also self-directed support legislation^[43].

7.2. Purpose of this chapter

The overall purpose of this chapter is to provide statutory guidance for use by a contracting authority where it has chosen to procure health or social care services from an economic operator (see the full list of health or social care services within the scope of this chapter at Annex C.1).

7.3. Legal basis and scope oft his chapter

As mentioned in Chapter 1 of this document, Scottish Ministers have published this statutory guidance in accordance with section 13 of the Act. That section provides for the development of statutory guidance covering the procurement for health or social care services.

For the purposes of this chapter any references to health or social care services includes care and support services. Supporting best-practice guidance has also been developed separately with a particular focus on the procurement of those care and support services.

This chapter applies to any contract for health or social care services where the estimated value is equal to or greater than £50,000 for goods and services and not otherwise exempt from regulation.

It has been developed to support all staff involved in the procurement of these services including, for example, senior managers, commissioning and contracts officers, the third and independent sectors, care managers, legal officers and finance officers. It will also be of interest to regulators and those responsible for auditing the commissioning of services and to service providers, people who use services and also their carers.

This chapter applies to all regulated procurements which commence on or after 18 April 2016 and reflects changes taking effect from 11pm on 31 December 2020. It does not constitute legal advice. A public body should always seek its own legal advice where it chooses to procure.

Overall, this is procurement focused guidance and is intended to help contracting authorities interpret the public procurement rules introduced by the Regulations and the Act. It has been published together with the associated wider suite of procurement statutory guidance and should be read together with that.

7.4. Links to supporting best-practice guidance specifically covering care and support services

As mentioned at section 7.3, this chapter is supported by best-practice guidance. That best-practice guidance updates the 2010 Procurement of Care and Support Services Guidance and was produced together with, and has been endorsed by, a reference group of stakeholders.

The best-practice guidance establishes a set of key considerations for a contracting authority to have particular regard to for the specific procurement of those care and support services. In particular, it places the purchasing of those services within a set of principles which acknowledges a balance between human rights, outcomes for the individual, best value and procurement regulations.

In linking with the best-practice guidance this chapter also reinforces those messages.

7.5. Interpretation of this chapter

For the purposes of this chapter, the term 'contracting authority' describes the various organisations that might procure health or social care services. For example, this could include NHS Boards, criminal justice organisations and housing organisations^[44].

Procurement staff should note that Integration Joint Boards ⁴⁹ are not able to contract or hold contracts with third parties as contractual arrangements remain with either the local authority or the NHS Board. However, they are responsible for the production of Strategic Commissioning Plans and provide some direction and oversight where a decision has been taken to procure.

7.6. Summary of public procurement rules affecting health or social care services

A 'light-touch' regime is in place for certain services, including health or social services^[45]. That regime applies to contracts equal to or greater than the threshold specified by the Public Contracts (Scotland) Regulations 2015 and as amended by the Public Procurement etc. (EU Exit) (Scotland) (Amendment) Regulations 2020.

This is set at £663,540 from 11pm on 31 December 2020 (see Scottish Procurement Policy Notes (SPPNs) for any updates).

7.7. Specific procurement rules for health or social care services

As mentioned at section 7.1, buying health or social care services is a complex area and requires special consideration within a contracting authority's overall approach to procurement. This is because the quality or availability of these services can have a significant impact on the quality of life and health of people who might use these services and their carers. In addition, many of these services are becoming increasingly personalised to better match individual needs.

For these reasons, these types of services are often purchased differently to other services. That is, a contracting authority has some flexibility to decide how to handle these contracts on a case-by-case basis. For example, a contracting authority can decide how it applies the principles of procurement^[46] that apply to all public procurements. This includes if these require advertising and competition (i.e. only for contracts below £663,540) and the form that this should take.

The 'light-touch' regime of the Public Contracts (Scotland) Regulations 2015 applies only to health and social care contracts equal to or greater than £663,540 over the life of that contract. Contracts below that threshold, but which are worth at least £50,000, are regulated by the Act.

7.8. Quality and cost considerations before procuring

7.8.1. Quality

In accordance with regulation 76(9) of the Public Contracts (Scotland) Regulations 2015 , a contracting authority may now also take account of some other issues when procuring these services including:

• the quality of the service
• the continuity of the service
• the affordability of the service
• the availability and comprehensiveness of the service
• the accessibility of the service
• the needs of different types of service users
• the involvement of service users
• innovation

This is not an exhaustive list. Other considerations may be relevant and should be assessed on a case-by-case basis.

7.8.2. Cost

The Public Contracts (Scotland) Regulations 2015 confirm that a contracting authority is not able to award a contract on the basis of lowest price only. This includes contracts for health or social care services that fall within the scope of those Regulations. This means that, in accordance with regulation 76(10) of the Public Contracts (Scotland) Regulations, contracts for health or social care services must be awarded on the basis of both quality and price.

7.9. Application of the rules – thresholds and other considerations before procuring health or social care services

A contracting authority should first estimate the total value of a contract. This includes, where appropriate, any option for an extension of the contract. More detail on valuing contracts is in regulation 6 of the Public Contracts (Scotland) Regulations 2015 .

Equal to or greater than the £663,540 threshold specified in the Public Contracts(Scotland) Regulations 2015 and as amended by the Public Procurement etc. (EU Exit) (Scotland) (Amendment) Regulations 2020	Light touch provisions in the Public Contracts (Scotland) Regulations 2015 apply. Must be advertised on Public Contracts Scotland (PCS) for onward transmission to the UK Find a Tender service (FTS) or the EU Tenders Electronic Daily (TED) depending on the start date of the procurement process or whether it is a European Structural and Investment Fund (ESIF) project: procurements which start before 11pm on 31 December 2020 and those which are part of ESIF projects, on or after this time, must be advertised on TED procurements which start on or after 11pm on 31 December 2020, and are not part of ESIF projects, must be advertised on FTS
£50,000–£663,539.99	May award without seeking offers, but should consider the principles of procurement where relevant. For contracts over £50,000, a contract award notice must be published on PCS and certain other rules apply (see section 7.9.3.).	May choose to seek offers: in which case all provisions of the Procurement Reform (Scotland) Act 2014 apply
Below £50,000		Non-regulated Procurement

The table below summarises the different rules that apply to health or social care contracts at different threshold levels.

The specific rules that apply to the procurement for health or social care contracts, at these different threshold levels, are described in more detail below.

7.9.1. Specific rules for health or social care contracts under the Public Contracts (Scotland) Regulations 2015

For contracts or framework agreements with a value equal to or greater than £663,540, the 'light-touch' provisions (introduced at section 7.6 and described in the Public Contracts (Scotland) Regulations 2015) apply. Specifically, the following applies:

• publish a contract notice or prior information notice as a call for competition (unless it is a direct award without competition) on PCS for onward transmission to FTS (or TED if applicable)
• publish a contract award notice
• continue to follow a process that ensures the observance of the principles of procurement

Regulation 58(1) and 58(3) of the Public Contracts (Scotland) Regulations 2015 also require that a contracting authority must consider whether any of the mandatory exclusion grounds referred to in those Regulations apply in respect of the potential economic operator.

7.9.2. Specific rules for health or social care contracts between £50,000 and £663,540– award with advertising

For contracts or framework agreements with a value equal to or greater than £50,000, but less than £663,540, a contracting authority should decide on a case-by- case basis whether to seek offers in relation to the proposed contract.

The flowchart at Annex C.2 provides some illustration of the sort of things that might be considered by a contracting authority when deciding whether to seek offers for contracts of this value. A number of factors may influence this decision, as explained below, but are not limited to:

• the estimated value of the contract
• the application of the procurement rules, procurement policy and benefits and risks to people who use services
• application of local financial regulations and standing orders
• benefits and risks to people who use services and service delivery
• the specifics of the sector concerned (for example, the size and structure of the market and commercial practices)

Where a contracting authority chooses to seek offers in relation to a contract, it must be advertised on PCS as is the case with all contracts with a value equal to or greater than £50,000. All of the provisions of the Act apply in that case.

7.9.3. Specific rules for health or social care contracts between £50,000 and £663,540 –award without advertising

For contracts of a value equal to or greater than £50,000, but less than £663,540, a contracting authority may choose to award a health or social care services contract, or framework agreement, without seeking offers in relation to the proposed contract.

This is consistent with the provisions of section 12 of the Act and this chapter should be read together with that. Under the Act, there are some provisions that will still apply when a contracting authority chooses to award without advertising. These are:

section 23(2) of the Act

A contracting authority must publicise the award of a contract on PCS.

section 27 and 28 of the Act

A contracting authority must consider whether any of the mandatory exclusion grounds referred to in the Procurement (Scotland) Regulations 2016 apply in respect of the potential contractor/service provider.

section 35 of the Act

A contracting authority must keep and maintain a register of contracts.

section 15 of the Act

"A contracting authority which expects to have significant procurement expenditure (equal to or greater than £5,000,000) in the next financial year must, before the start of that year –

(a) prepare a procurement strategy setting out how it intends to carry out regulated procurements; or

(b) review its procurement strategy for the current financial year and make such revisions to it as the authority considers appropriate."

section 18 of the Act

A contracting authority which is required to prepare or revise its procurement strategy in relation to a financial year must prepare an annual procurement report on its regulated procurement activities as soon as reasonably practicable after the end of that financial year^[47].

In addition to these minimum requirements, a contracting authority, when not seeking offers in relation to a proposed contract, should also consider, where applicable:

• the general duties ( section 8 of the Act)
• technical specifications ( section 30 of the Act)
• charges for participation in procurement process ( section 31 of the Act)

7.9.4. Specific rules for health or social care contracts below £50, 000

Contracts or framework agreements with a value below £50,000 are not regulated under the Act. As a matter of best practice, a contracting authority should consider following a procurement process that is proportionate to the value of the contract.

7.9.5. Rules covering other services (i.e. those services that are not principally health or social care) and which are also covered by the 'light-touch' regime

There are some other services covered by the 'light-touch' regime that are not health or social care. Schedule 3 of the Public Contract (Scotland) Regulations 2015 describes these services. Procurement staff should note how these other services (i.e. non-health or social care) are handled – albeit not the main subject of this guidance.

The 'light-touch' rules apply when these services are equal to or greater than the £663,540 threshold (see section 7.9.1. for the main rules applying at that level). Below the threshold – and unlike for health or social care services contracts of the same value – there is no bespoke provision which allows general exemption from advertising these other services. This means that contracts of that value for these services are subject to the full provisions of the Act. Contracts below £50,000 are not regulated by either the Act or the Regulations.

7.10. Compliance

The principles of procurement apply to all relevant procurement activity regardless of value. This includes the principles of equal treatment and non-discrimination and transparency and proportionality which should be adopted by a contracting authority when running a competition.

It is the responsibility of an individual contracting authority to decide whether, and if so at what level, advertising is required taking account of the procurement rules. A contracting authority is largely free to decide to use the procurement procedures, tools and techniques of its own choosing where procuring a health or social care services contract. That said, as a matter of best practice, it is likely it will want to follow a procurement procedure that is proportionate to the value of the contract and to take account of some fundamental considerations (for example, fair work practices) and other matters described in more detail in the other procurement statutory guidance.