NHS procurement laws set to change on January 1

22-Dec-2011

Legal experts explain the new regulations

RULES governing the procurement of works, services and supplies by contracting authorities, including the NHS, will change on 1 January, raising the financial thresholds above which contracts must be opened up to the European market.

From 2012, the financial thresholds governing when the Public Contracts Regulations 2006 apply to contracts awarded by NHS bodies will change to £113,057 for supplies and some service contracts; to £173,934 for other service contracts; and to £4,348,350 for works contracts.

The financial thresholds are reviewed every two years to reflect the increasing cost of products and services and the exchange rates. The thresholds are decided in Euros and then converted to local currencies.

Commenting on the announcement, Andrew Daly, an associate at legal firm, Hempsons, which specialises in the health and social care sectors, said: “Procurement law is basically there so that when public money is used to buy something over a certain value then a process has to be run to ensure the market is open for competition across the EU.

“The thresholds are reconsidered every two years, so between 2008-2010 it was circa £93,000 for supplies, then the last time, 2010-2012, it was circa £101,000. Now it is in the region of £113,000.

“The increase of around £12,000 for supplies and services is unlikely to have a very big impact on the NHS or the market itself.”

But he said the NHS, in particular, was always looking for cost savings. He added: “Publicly-funded organisations may run some form of competition in any event, whether required to by the Public Contracts Regulations 2006 or not. NHS bodies, for example, are governed by their own internal rules and often, even where contracts fall under the financial threshold, there is still a requirement to get a number of quotes before deciding who they will use for a particular requirement.”

This, he said, worked in the market’s favour as procurement laws were first introduced to ensure a fair playing field.

“Procurement law is not primarily about getting a good deal for the contracting authority, it’s about making sure the deal they do get is secured in a fair way. The challenge for any authority is to get a good deal, but also to achieve this in a fair way. It’s about competition and everyone in the market having an equal chance.”

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The complicated rules are due to be reconsidered by the European Union over the coming years in a bid to make them simpler and cheaper for contracting authorities and bidders. A new draft procurement directive has just been published (20 December 2011) which puts forward a large number of proposals that may form the basis of a revised set of procurement laws for EU member states. The new laws would build on the current system.

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