The Five Routes to Awarding Contracts
Direct Award A
Direct Award A is used in the circumstances that the services can only be provided by the existing
provider and there is no realistic alternative. This is detailed more thoroughly in Regulation 7.
To use Direct Award A, the service must be an existing service provided by an existing provider, the Authority must be satisfied that those services can only be provided by that provider, and the service must not be a framework.
The types of services covered by Direct Award A are likely to be essential services provided by NHS Trusts under the Standard Contract, such as 999 emergency ambulance services and NHS urgent mental health crisis services.
To award a contract under Direct Award A, the Authority must publish notice of the award within 30 days of the award (that is, the signing of the contract). The requirements of a valid notice are set out in Schedule 2.
Direct Award B
Direct Award B is used where the patient has a choice of provider and there is no restriction on
provider numbers. Direct Award B must be used if the following circumstances apply:
(i) the health care services are ones where patients get a choice of provider (either because the relevant Authority has decided to offer patients a choice or because there is a legal obligation to offer choice);
(ii) there is no restriction on the number of providers;
(iii) contracts are offered to all providers who meet all requirements for delivering the services in question;
(iv) steps have been taken to make providers aware of these contracts and of how to express an interest; and
(v) it is not a framework.
The award process is the same as that for Direct Award A, above.
Direct Award C
Direct Award C is used where the Authority intends to continue working with an existing provider.
The conditions for Direct Award C are:
(i) the Authority is not obliged to use either Direct Award A or B;
(ii) there is an existing contract which is about to expire, and a subsequent contract must replace it;
(iii) the considerable change threshold is not met; this test will be met where:
a. new arrangements significantly change the nature of the contract from when it was first entered into;
b. if there are no material changes to the contract, the lifetime value of contract is considered – if it is at least either:
i. £500k higher; and
ii. 25% higher,
then Direct Award C route is not available, and the Authority must use either the Most Suitable Provider or Competitive Process. It is worth noting that some exclusions do however apply, which are detailed at Regulation 6;
(iv) The Authority believes, taking in account the Key Criteria and applying the Basic Selection Criteria (see below for these) that the incumbent is satisfying the requirements of the existing contract and this will continue under the new contract; and
(v) it is not a framework agreement.
To award a contract under Direct Award C, the Authority must publish a notice of intention to
award as well as the confirmation of award required in Direct Award processes A and B.
The Key Criteria are set out at Regulation 5 (and detailed at Annex D of the Statutory Guidance):
(i) quality and innovation;
(ii) value;
(iii) integration, collaboration and service sustainability;
(iv) improving access, reducing health inequalities and facilitating choice; and
(v) social value.
The Authority should record in the decision-making record for the relevant process the reasons
why it favours some of the criteria above over others. It must ensure it continues to comply with its
obligations under existing legislation and statutory and NHS guidance outside of the PSR.
The Basic Selection Criteria are not prescribed but must be decided by the Authority, they may
relate to the selection criteria under the PCR 2015, i.e.:
(i) suitability to carry out a specific activity (obviously one which is in relation to the contract)
(ii) economic and financial standing, and
(iii) technical and professional ability,
(see Regulation 19 and Schedule 16 for more detail)
Most Suitable Provider
The Most Suitable Provider route may be used where an Authority believes it can identify the
most suitable provider, taking into account the ‘likely providers’ and all information available at the
time.
It may be followed provided there is no obligation to use Direct Award A or B and the conditions
allowing use of Direct Award C are either not met or they are met but the Most Suitable Provider
route is preferable to the Authority.
The guidance urges Authorities to carry out ‘pre-market engagement’ to ensure more efficient
outcomes.
To award a contract under Most Suitable Provider, the Authority must:
(i) notify providers of its intention to use this process. Schedule 5 does not stipulate that authorities must expressly invite providers to get in touch or how to do so but if they do, providers need to be taken into consideration by the Authority;
(ii) wait 14 days after the notice is published, within which providers may respond to the notice. The Authority is not permitted to take any steps towards identifying potential providers until 14 days after the day on which it published the relevant notice, however this is not a standstill period;
(iii) take into account any provider that responded to the notice about the intention to follow this process;
(iv) identify potential providers with reference to the key criteria and basic selection criteria;and identify the most suitable provider and publish notice of its intention to award. Subject to no representations being made by unsuccessful providers, the contract can be awarded at the end of the standstill period.
The necessary notices for the Most Suitable Provider process are:
(i) intention to use the MSP process
(ii) intention to award; and
(iii) confirmation of award.
The Competitive Process
The Competitive Process may be used where the other processes do not apply.
To award a contract under the Competitive Process, the Authority must:
(i) decide on the award criteria;
(ii) consider the Key Criteria and the Basic Selection Criteria (as above)
(iii) publish a notice seeking offers (the requirements of this notice are in Schedule 8). The competition may be broken down into stages but the Authority must state this in its Schedule 8 notice. The stages are not prescribed; it is possible for commissioners to use, for example, the restricted procedure under the PCR 2015; and
(iv) assess offers and notify the winning provider of its success. Unsuccessful providers must be given the information set out in Schedule 9, such as the reasons why the successful provider won and the reasons why the unsuccessful provider did not. ‘Relative advantages and characteristics’ need not be considered as under the PCR 2015.
Notices are important to the collaborative process as they improve transparency. Transparency notices are to be published on the government’s Find a Tender website. We expect notice templates are to be developed but for the time being, an Authority will need to adapt the notices which are already available.
The necessary notices are:
(i) a notice of intention to award – this triggers the standstill period (see below); and
(ii) confirmation of award.
