The Impact of Brexit on NHS Procurement for Healthcare Services – five part series (Part Two)

The Impact of Brexit on NHS Procurement for Healthcare Services – five part series (Part Two)

Last week, we introduced Part One of our special five part series on the Impact of Brexit on NHS Procurement for Healthcare Services.   We are a team of experienced commercial advisors, health and care procurement managers and contract managers who work directly with clients to deliver commercial interventions.

Part one set the scene of what Brexit means for procurement. Part two explores the option of European Economic Area (EEA), part three explores the option of Government Procurement Agreement (GPA) – Plus, part four explores a ‘No Deal’ Scenario and the fifth and final part of our series will present our guidance for commissioners in preparing for change. Each part will be published every Monday over the next four weeks, so that you can start your year prepared for change.

Part Two: Exploring the options: European Economic Area (EEA) – business as usual?

In this article, we take a look at the EEA and what it means for the UK.

What is the EEA?

The European Economic Area (EEA) links the EU member states and three other states (Iceland, Liechtenstein, and Norway) into an internal market governed by the same basic rules. These rules aim to enable free movement of persons, goods, services and capital within the European Single Market.

If the UK adopted the EEA option, which is the category within which the Chequers proposal would have fallen into, the UK would maintain the application of the current Public Contracts Regulations 2015 (which may be renamed but remains essentially the same processes) the EU Law for procurement procedures for above threshold value contracts.

In other words, there would be very little to no change from the current procurement procedures and processes in place now.

With the EEA option, commissioners would continue to advertise their requirements in the Official Journal of the European Union (OJEU) for above threshold contracts (Health and Social Care £615,278) and continue to ensure that any contract variations were compliant with existing law, while also looking to the European courts for guidance on how to interpret any complex laws.

Indeed, if the UK became an EEA state the law will continue to apply to the following public bodies:

1. The State, Regional and Local Authorities
2. Health and Social Care Systems
3. Bodies governed by public law
4. Associations formed by one or more of the above

What types of contract are covered?

All Supply, Services and Works contracts are captured within the EEA Agreement.

Procedures under the procurement directives for above Threshold Contracts

The rules that exist now are unlikely to change and contracting authorities must continue to be diligent in their procurement processes to ensure fair competition, transparency, equal treatment and to deter discrimination against any of the other EU and EEA states.

The core elements are unlikely to change under an EEA agreement, the obligations are:

1. An obligation to advertise in a single forum by sending the notice to the OJEU
2. An obligation to award a contract by means of a fair and competitive award procedure
3. Reasonable timescales for different stages of the award procedure
4. Bidders will retain all their rights to challenge any unfair decisions

Uniformity and dynamism for the UK?

So the moral of EEA – well there isnt one really.  Ultimately, the EEA agreement is just a treaty – an agreement between sets of countries. But it does create two remarkable demands on the UK: uniformity and dynamism. The first means we will need to conform completely with EU law in the areas covered by the treaty. The second means that as the EU updates its laws, the UK’s laws will have to be updated, but without a say.

However the UK may prefer not to agree to the EEA model in its entirety given that it includes the possibility of free movement of workers and the jurisdiction of the european courts. An EEA Minus approach is another option that the UK could take forward which sounds exotic however all this means is that the UK could pick certain elements of the rules.  Therefore this would entail getting agreement to an EEA Model but without agreeing to the other Single Market rules.  EEA  is not just about promising to abide by the rules as they are now its about promising to abide by them in the future too.

So where does that leave the NHS with regard to the integration agenda? Much of the same will continue which means that we will be faced with similar challenges as we are now.  There are positives though with the processes and approach remaining consistent, commissioners of healthcare services and their provider markets understand this.  This option, in our view, is the most likely option that will be taken forward – if indeed there is a deal signed

Coming up in the next parts

While the precise details of the legislation that will exist after Brexit are not yet finalised, there are several potential options for procurement of Healthcare Services in the NHS when the UK leaves the EU. Our series will explore these in more detail, but here’s a summary:

Part three explores Option 2: Government Procurement Agreement (GPA) – Plus

This potential model involves access and rules based on the World Trade Organisation (WTO) GPA but potentially supplemented by additional rules. Example additional rules could include coverage for health and social care, more stringent transparency and remedies requirements and use of a single system for notices mirroring OJEU.

Part four explores Option 3: No Deal Scenario

There is a possibility that there will be no EU-UK trade and procurement agreement in place at the time of Brexit. Therefore, the link to the EU Procurement Directives would be severed. For example, it will not be possible to advertise via OJEU or to rely on European Court of Justice’s decisions. It would be expected that the government would amend the current Public Contract Regulations 2015 and remove any reference to the EU. Of course, the NHS’s Procurement, Patient Choice and Competition Regulations 2013 (PCCR 2013) would still apply*.

*Government is still silent on whether any amendments to PCCR 2013 will be forthcoming although we know that the NHS has put forward a ‘wish list’ of legislative changes to be made as part of the imminent 10-year plan. 

Part five of our series will present our guidance for commissioners in preparing for change.

Don’t miss part three, next week, where we explore Government Procurement Agreement (GPA) – Plus