Contracting, tendering and procurement

The commissioning process involves contracting with new and existing service providers and monitoring performance and quality. It can also include competitive tendering opportunities for the provision of new services or to secure service continuation where contracts are coming to an end.

Contracting in the NHS (known as Commissioning)

The commissioning process involves contracting with new and existing service providers and monitoring performance and quality. It can also include competitive tendering opportunities for the provision of new services or to secure service continuation where contracts are coming to an end.

NHS Surrey Heartlands has a clear responsibility to ensure we make decisions and commission services in a fair, open and transparent way, securing value for money and meeting the healthcare needs of our population. Through regular appraisal (significantly contract management) of the services we commission, we continually identify ways to improve efficiency, extend choice and access and improve patient experience.

Contracting is a fundamental part of the commissioning cycle encompassing two of its three central segments – “Procuring Services” and “Monitoring and Evaluation”. The detailed commissioning cycle provides more detail.

Procurements and Tendering

NHS Surrey Heartlands is responsible for securing safe, high quality and effective healthcare services for the population of Surrey Heartlands.  

Procurement is one of a range of mechanisms for securing safe services that meet the needs of the population whilst improving health outcomes and reducing inequalities. The process of specifying a service and identifying the appropriate provider or providers to deliver the service is called procurement. We need to commission the best provider to deliver these services to our population.

How we are governed during procurements

Buying NHS healthcare services is governed by the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013.

These regulations are designed to ensure that NHS England and ICBs buy high-quality and efficient health care services that meet the needs of patients and protect patient choice. They also prohibit commissioners from engaging in anti-competitive behaviour unless this is in the interests of health care users.

Regulation 3 sets out general requirements that commissioners must obey when they buy NHS healthcare services. These include the need to:

  • act transparently and proportionately, and to treat providers equally and in a non-discriminatory way
  • procure services from one or more providers that are most capable of delivering commissioners’ overall objective and that provide best value for money
  • consider ways of improving services (including through services being provided in a more integrated way, enabling providers to compete and allowing patients to choose their provider)
  • maintain a record of how each contract awarded complies with commissioners’ duties to exercise their functions effectively, efficiently and economically.

Stages in the NHS tendering process

A typical NHS tendering process will include some or all of the following steps:

  1. Issue of Prior Information Notice (PIN)
    A PIN provides advance warning of their intention to launch an NHS procurement. It can be issued up to 12 months in advance but the typical lead time is 6 months or less.
  2. Expression of Interest
    The level of interest shown for a potential procurement can influence how it is managed e.g. few expressions of interest may result in a simple one stage procurement process.
  3. Issue of contract notice
    Issued when the procurement is launched, this provides information about the contract.
  4. Market warming event
    Commissioners may invite potential bidders to a market warming event at which they will describe the background, objectives and other details of the contract and answer bidders’ questions. On larger or more complex contracts, commissioners may also seek the input of potential bidders to help to shape the contract and the procurement process itself.
  5. Issue of Pre-Qualification Questionnaire (PQQ)
    The PQQ is used to identify suitable bidders and is structured to elicit information about the bidder, not the bid. It topics such as organisation details, financial standing, insurances, relevant experience, workforce size and competencies. Questions are often ‘pass’ or ‘fail’; if an organisation is unable to provide a satisfactory answer it will fail the PQQ and be excluded from the tender stage of the process.
  6. Invitation to tender (ITT)
    The core element of the NHS tendering process. A typical ITT will include:
    • Instructions to bidders
    • Contractual documents
    • Service specification
    • Questions to be addressed by the bidder, usually broken into several sections, reflecting the nature of the service being procured The responses for each question are likely to have a strict word limit
    • Pricing schedule
    • Presentations and interviews. Once tenders have been scored, bidders may be invited to present to commissioners and /or be interviewed by commissioners
  7. Announcement of preferred bidder and contract award
    Once commissioners have identified a preferred bidder, there is a cooling off period during which unsuccessful bidders may challenge the tendering process and subsequent decision. The tender outcome will not be publicly announced until after the cooling off period.
  8. Mobilisation
    The period of time between contract award to 'go-live' during which the existing provider will plan to exit the contract and the newly appointed provider will take up the service. Mobilisation still applies if the existing provider wins the contract as there may be service design changes or newly established KPIs for which the service will need to prepare.
  9. Contract start
    Go live, service(s) commence.

Possible variations in the NHS tendering process may include:

  • Competitive dialogue: Bidders may be invited to submit an initial, less detailed tender response and to engage in dialogue with commissioners so that both sides can ask questions. Bidders will then prepare and submit final tenders, informed by the dialogue process.
  • Framework agreements: These are used for services which are being commissioned in multiple locations. Following tender submission, successful bidders are placed on a framework, rather than immediately being awarded a contract. Once on the framework, bidders may participate in ‘mini-tenders’ as services for different locations are called-off against the framework.
  • Any qualified provider (AQP): Successful bidders are granted AQP status and patients choose their provider from amongst the AQPs.
  • Single stage procurement: combines the PQQ and ITT elements of the process to save time and costs.