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A legal guide to commissioning new services

The authorisation process may be the main focus for many CCGs at present, but service reform is an exciting prospect for GP commissioners, and possibly a way to help meet the financial challenges ahead. 

There has been much debate about Clinical Commissioning Groups over the past two years, and debates about structure, funding and conflicts (and the current necessary focus on authorisation) have sometimes taken precedence over discussions about opportunities for service reform.

CCGs will need to have regard to all of the relevant guidance, policy and legal requirements when considering the reform/commissioning of services. While this can be seen as burdensome, it can help to provide a framework to help CCGs achieve their objectives while managing associated risks. 

This does mean CCGs will need to ‘know what they don’t know’. They can then seek the help they need, whether from their internal colleagues, Commissioning Support Units or elsewhere.

Here are four key legal steps for GPs to take when looking to decommission an existing service and commission a replacement.

1 Evaluate existing terms

The first step for a CCG will be to review the current service and the terms on which the existing provider is engaged. 

In most cases, terms and conditions applicable to any clinical services should be those of the NHS standard contract (explored in more detail below). But a different form of contract may have been used, or the provider may be engaged on an oral contract. 

In the latter case, applicable terms and conditions may be unclear, but where there is a written contract, it should be fairly easy to determine the CCG’s rights. 

The contract should specify its duration and any early termination rights. There should be rights to terminate in the event of default (and other events) and there will often be a right to terminate simply on notice at any time. That notice period may be quite long (12 months in the case of the current NHS standard contract, although contracts based on that version of the standard contract may have an expiry date of 31 March 2013).

Of course, the service being considered for decommissioning may be one of several covered by a single contract, and the CCG may be looking to partially terminate or vary the contract to remove just the one unwanted service.  If the contract does not allow the CCG to do that unilaterally, it will need to be the subject of negotiation.

2 Assess needs and involve service users

CCGs will be expected to determine what their population needs and wants. Of course, one of the aims of clinical commissioning is the involvement of knowledgeable local GPs in commissioning decisions, but there are also a number of important documents you should look at before making decisions. 

When considering new services the CCG should consult the joint needs assessment and joint health and wellbeing strategy prepared with the local authority. CCGs must also consider whether they have a legal duty to involve service users.

PCTs were under a duty to involve service users when considering certain service reforms and CCGs will have a similar duty (contained in section 14Z2 of the NHS Act 2006 – see the online version of this article).

The CCG is not required under this provision to involve the public on every change, but it must involve service users when developing or considering proposals
(or making decisions) which would have
an impact on the range of services available or the manner in which services are delivered.

It is worth noting that, when assessing the impact on ‘delivery’, it is the point at which the services are received that is relevant, rather than any change in delivery behind the scenes. So if a supplier changes the way it delivers a service (for example, by relocating a call centre), that change may not trigger the need to involve patients so long as the service is essentially unchanged from the patient’s perspective.

Each CCG will also need to check its constitution as that must include a description of its involvement arrangements and a ‘statement of the principles which it will follow in implementing those arrangements’.

If a CCG needs to involve service users in a proposal or decision it must consider the available options.  Those options are beyond the scope of this article, but it is worth noting that the extract from the aforementioned NHS Act 2006 refers to service users being ‘involved (whether by being consulted or provided with information or in other ways)’. 

There was detailed guidance available to PCTs about the ways in which they should discharge their duty,1 and the NHS Commissioning Board will no doubt publish similarly helpful guidance in due course. Before making any decisions, GP commissioners should consult this guidance.

In addition to the duty to involve relevant service users, the CCG is also likely to
have to undertake a more formal
consultation exercise where a substantial development/variation is proposed. 

3 Select a new provider

The NHS Commissioning Board released some useful guidance last month that outlines the procurement options available to CCGs, including the situations in which Any Qualified Provider (AQP) may be appropriate.2 It also provides a useful summary of the relevant legal and policy requirements, some of which are outlined below. 

For the purposes of this article we assume the CCG is looking to appoint a single provider, rather than go down the AQP route.

When determining the process it should follow, the CCG must consider the legal requirements (EU and domestic) and the requirements established through guidance and policy.

There is a financial limit of roughly £174,000 (which, broadly speaking, relates to aggregate payments under the contract) before the procurement legislation applies, but it will apply to most healthcare contracts. 

Usefully, healthcare services currently fall within a category of services not subject to the full rigour of the procurement rules. However, where the contract could attract cross-border interest from overseas providers, some general principles (equal treatment, non-discrimination, mutual recognition, proportionality and transparency) will also apply. 

For some contracts, the CCG will be legally required to undertake some kind of procurement process. It is worth noting that the advice here may change as the European Commission is currently negotiating a new procurement directive due to be implemented into UK law by June 2014.

Existing guidance documents (the Principles and Rules for Co-operation and Competition3and the Procurement Guide for Commissioners of NHS-funded Services4) also impose various requirements on commissioners, including that all healthcare contracts over £100,000 be advertised on the NHS Supply2health website.

4 Award the contract

When commissioning healthcare services, the CCG will usually be required to use the NHS standard contract (available from the Department of Health website).

That contract has evolved gradually over the past eight years since the creation of foundation trusts.  Initially it was just a model document for acute services, but models for other services were subsequently introduced and there is now a single document covering most healthcare services (other than primary care).

That document is now a ‘standard’ rather than ‘model’ contract.  Consequently, there are constraints upon how the contract can be tailored. A traffic light approach has been adopted showing where text is not mandatory but can be included (green),
is mandatory but can be tailored locally (amber), or is mandatory and cannot be amended (red).  The core legal terms are in one of the red sections and cannot be amended. 

In recent years a new version of the standard contract has been released just before Christmas each year (for use from
the following April).  A new standard contract is expected to be released in the coming months for use during the 2013/14 financial year.

Jonathan Hayden is a partner in the commercial health team at national law firm Browne Jacobson LLP


1 Department of Health. Search on ‘consultation guidance’. Accessed 16 October 2012.

2 NHS Commissioning Board. Procurement of healthcare (clinical) services: Briefings for CCGs. 14 September 2012.

3 Department of Health. Principles and rules for cooperation and competition. 30 July 2010.

4 Department of Health. Procurement guide for commissioners of NHS-funded services. 30 July 2010.