Ten tips on tendering
As many of the five-year Darzi and APMS contracts come to an end, lawyer Katharine Mellor gives some useful tips for GPs as potential providers of NHS services
1. Find opportunities
It is important that prospective bidders regularly check the Supply 2 Health website, which lists forthcoming tenders. There is often a short timescale between the announcement and the first deadline.
2. Consider your capabilities
Before tendering, it is important that prospective contractors ensure they have the internal capacity to take on any additional work. In order to do this, the contractor should carry out a thorough analysis of its strengths and weaknesses and carefully consider whether the advertised contract is right for it at the present time.
3. Identify the bidder
If successful, the contract will be awarded to the organisational entity noted in the tender, so it is important it is clear from the outset who is submitting the bid – an individual GP, a GP partnership or a company or entity formed specifically for the purpose of bidding for the contract.
If the prospective bidder intends for staff engaged on the contract to have access to the NHS Pension Scheme, it will need to ensure that its organisational structure complies with the strict requirements of the scheme's regulations.
4. Plan ahead
The tendering process can be quite rushed once the contract is advertised, and so commissioners will be looking for bidders that are prepared and organised. Prospective bidders should undertake as much preparatory work in advance as possible, such as ensuring they have all the relevant policies and procedures in place including health and safety, human resources, information governance, clinical governance and disaster recovery. They should also ensure these are in a suitable state for release to the tendering body if necessary.
To ensure the bidding process runs smoothly, the prospective bidder would be well advised to put together a bid team and ensure this team has enough time to do the work required at the various stages of the tendering process. The prospective contractor may need to obtain additional cover to release members of the bid team from some of their usual duties.
5. Adhere to the process
When tendering for any contract, it is imperative the advertised process is followed to the letter. There will be little or no scope for missing deadlines.
Click below to see a typical NHS contract tendering process.
6. Practice due diligence
If the prospective bidder is seeking to take over an existing service, it is essential it makes formal enquiries and carries out proper investigations in order to identify any problems and liabilities it may be taking on. This is particularly important in respect of premises and staff.
7. Name your premises
It is important to establish at an early stage which premises the services are to be provided from. In some cases, the successful bidder may be responsible for providing the services from its own premises. If so, it will need to ensure it can comply with the commissioner's requirements.
In other cases, the commissioner may be responsible for providing the premises or the bidder may be required to take an assignment of a lease from the existing provider or a new lease from a third party. If the bidder is taking on a lease, it is essential it obtains proper advice on the lease terms and ensures that the provisions of the lease tie in appropriately to the terms of the contract. In particular, it should check that:
- the term of the lease is for the duration of the contract or that it is clear who will be responsible for finding alternative premises if the lease ends before the contract
- lease obligations can be brought to an end at the end of the contract
- the bidder knows who is responsible for bringing the premises up to standard if it does not currently meet the commissioner's requirements
- the bidder is aware of what its obligations are in respect of rent and service charge and are confident that these are affordable – if it will be relying on any form of rent reimbursement, it will need to ensure that the rent review provisions relate appropriately to the district valuer's determination.
8. Find out about TUPE
If the successful bidder will be taking over an existing service or part of a service, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) will probably apply. Under TUPE, the employment contracts of the employees providing the service are transferred to the new service provider. Any liabilities relating to the transferring employees or arising from the acts and omissions of the existing service provider also transfer to the new service provider.
So it is essential the prospective bidder obtains as much information as possible about the employees, their terms and conditions and any actual or potential liabilities relating to them so that it can make an informed decision about the obligations it would be taking on. In some cases, it may be possible to obtain indemnities from the existing service provider or the commissioner in respect of employee liabilities, although this is unusual in the case of health service contracts.
Under TUPE, employees' terms and conditions and continuity of employment are preserved and the prospective bidder may therefore find itself in the position of having existing staff and transferring staff on different terms and conditions which may cause concern with its existing workforce.
There are particular difficulties when transferring in employees via TUPE who have previously been NHS employees, as they are likely to have a number of contractual benefits that it may be difficult or expensive to replicate.
The successful bidder will also be required to inform and consult with ‘appropriate representatives', which may include a trade union, not only in relation to the transferring employees but also to its own employees who are affected by the transfer.
Legal advice should always be sought where a contract involves taking over employees engaged by the previous contractor.
9. Check the contract terms
As mentioned, it is essential that the terms of the proposed contract are carefully checked when it is issued at the invitation to tender stage of the process.
There are a number of provisions that commonly cause difficulties. It is impossible to list all of them here, but some of the main issues are summarised below:
- Service specification and key performance indicatorsThe contract should accurately describe the services to be provided and the standard to which they must be provided. This may sound obvious, but it is surprising how frequently contracts fail to deal with this fundamental issue adequately. The prospective bidder should consider the key performance indicators carefully to ensure they are attainable, as it may well be penalised if it fails to achieve them. Penalties could include termination of the contract if the breach is serious.
- Termination by the commissionerThe prospective bidder should check the termination provisions carefully. The contract should clearly set out the grounds on which the commissioner may terminate the contract. It is common for the contract to require the provider to meet certain costs in the event the contract is terminated early.
- Provider break clauseContracts will almost always enable the commissioner to end the contract without cause, but will rarely include an equivalent provision in favour of the provider. This means that even if the contract proves not to be economically viable for the successful bidder, it will be unable to get out of it unless the commissioner agrees.
- Entire agreement clauseIt is common for contracts to include a clause that states that the written contract constitutes the entire agreement between the parties, thereby excluding matters agreed in pre-contract negotiations unless they are expressly incorporated in the written contract. It is therefore important that the successful bidder ensures any material provisions discussed and agreed that were not in the proposed contract are incorporated in the final version of the contract before it is signed.
10.Don't be afraid to walk away
Any bid team should be prepared to walk away from the process at any stage prior to submission of the bid. If the bidder has serious doubts about the financial viability of the contract or its capacity to deliver, it is far better for the bidder to cut is losses and abandon the exercise rather than compromise the health of its existing practice by taking on too much.
Katharine Mellor is a corporate partner and head of healthcare at DWF