As with all public purchasing, the NHS and its various departments including PCTs, CCGs, etc. is no different from any other public body and is bound by the EU/UK procurement regulations and associated EU/UK case law. The principles set out in this section apply to public procurement.

This article sets the core principles of good practice procurement, which underpin procurement in the NHS, its various departments and arms such as PCTs, CCGs, etc. and indeed all public bodies engaging in tendering for service contracts.

Key principles of good practice in procurement

1. Transparency and FairnessFairness and transparency in all procurements including the use of sufficient and appropriate advertising of tenders, transparency in taking the decision not to tender and the declaration and separation of conflicts of interests

2. ProportionalityEnsuring that procurement processes are proportionate to the value, complexity and risk of the services contracted and that they are critically not excluding potential providers through overly bureaucratic or burdensome procedures

3. Non-discriminationEnsuring that there is consistency of procurement rules, transparency on timescale and criteria for shortlist and award

4. Equity and EqualityEnsuring that all providers and sectors have equal opportunity to compete where appropriate, that financial and due diligence checks apply equally and are proportionate, and that pricing and payment regimes are transparent and fair

Principles which should be applied in undertaking a procurement exercise

1. Value for money – Price shall not be the sole or over-riding factor in the decision making process. The Most Economically Advantageous Tender (MEAT) approach should be used in tender appraisal. Providers will be required to demonstrate that their services offer the best possible value for money. This assessment must be based on a number of criteria for evaluation including price, quality, sustainability, innovation and technical merit;

2. Compliance with EU/UK procurement and competition law – The NHS as a whole is a public body. Therefore the purchasing procedures and decisions it takes must comply with EU/UK regulations and case law. Purchasers must recognise that such decisions may be challenged by providers in the UK and other countries. As a result the NHS may be susceptible to claims for damages, the rescission of contracts by the courts or Judicial Review in the High Court. Some matters may also involve the legal obligations to consult with the public and/or Health Overview and Scrutiny Committee (HOSC);

3. Risk management – the NHS should use formal methods of assessing and managing risk as part of overall performance management;

4. Record keeping – Purchasing departments must keep records in accordance with good commercial practice, its Standing Orders and with reference to the Freedom of Information Act. The information recorded must be clear and auditable in the event of a provider raising a dispute;

5. Effective programme and project management – Each tendering exercise and subsequent contract must be managed as a separate entity, using the processes which comply with the EU/UK procurement and competition law.

Partnerships with Providers – It is important that a positive and ongoing relationship is maintained with providers so that services are sustained and improved continuously. Subject to its overriding legal obligations to advertise and/or procurement requirements departments will (as part of its assessment process) seek providers that are committed to the health and well-being of the local population.