Global Digital Exemplars – GDE and procuring technology
In an article in digitalhealth in July 2017, Matthew Swindells, NHS England’s national director for operations and information, was reported as stating at a conference that: “At the core of the GDE model is the idea that we should be learning from each other. If the GDE and fast follower model goes well in the future, nobody will run procurements to buy IT systems again”.
Can it really be that easy?
To be fair Mr Swindells does appear to accept that the requirements of procurement legislation do need to be followed, so on that basis this article sets out the requirements of the procurement legislation and how best Trusts can meet those requirements in light of the GDE and fast follower programme.
The Public Contracts Regulations 2015
The basic starting point is the 2015 Regulations – for any IT requirements over the relevant threshold (currently £106,047 for NHS trusts and £164,176 for FTs) a trust must procure its requirements under a set competitive procedure involving advertisement in the Official Journal of the EU (OJEU). Alternatively a trust can make its purchase quickly and more efficiently through a compliant framework such as one of the many various frameworks set up by the Crown Commercial Service.
For straight forward purchases a standard procedure, such as the open or restricted procedures, is used or a call-off is made from a framework. But what about more complex requirements and/or where framework providers do not provide the system/software that are wanted by the trust? If you are a GDE and are in the process of trying to produce a blueprint for deployment to fast followers are you going to be able to do this without negotiating a solution? It seems unlikely and so the standard procedures in the 2015 Regulations are unlikely to assist. Trusts will need to consider alternatives.
The competitive dialogue procedure and competitive procedure with negotiation
Both of these procedures are likely to be available to a GDE Trust for a number of its requirements under the GDE programme. Grounds available for using the more flexible procedures include:
- The fact that the trust cannot meet its needs without adapting readily available solutions;
- The services or supplies including design or innovative solutions;
- The contract needing to be negotiated because of specific circumstances related to the nature, complexity, or the legal and financial make up of the project, or the risks attaching to the contract; and,
- The fact that technical specifications cannot be established with sufficient precision by the Trust.
Some or all of these grounds may be present which means that a trust can use either the competitive dialogue (CD) or competitive procedure with negotiation (CPN). The 2015 Regulations are not prescriptive about how negotiations are conducted (other than ensuring compliance with the familiar principles of equal treatment, transparency and non-discrimination) so a trust can pick the areas for negotiation – there is no need to negotiate everything and indeed it would be an inefficient procurement process that aimed to. The main difference between the two procedures is that, under CD, there is an opportunity to carry on negotiations with the preferred bidder (subject to conditions) whilst there is not the same flexibility under the CPN. CD has something of a bad reputation in the public sector but some of that reputation comes from the way it was used under the previous legislation (2006 Regulations) and a failure by contracting authorities to run a “lean” process and focus in on the key areas for negotiation. A well run, well resourced and well planned negotiated procedure (either CD or CPN) should be an effective procurement tool.
In order to be able to use this procedure a trust must show that it requires “innovation” and this term is quite specifically defined in the 2015 Regulations. It will not therefore be available for all planned contracts under the GDE programme but we envisage that where true innovation is sought it may well have a place in a trust’s GDE procurement strategy.
“Innovation” under the 2015 Regulations means:
“the implementation of a new or significantly improved product, service or process, including but not limited to production, building or construction processes, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations, including with the purpose of helping to solve societal challenges or to support the Europe 2020 strategy for smart, sustainable and inclusive growth”.
Under this procedure the trust would advertise its need for an innovative solution and select suppliers to set up a partnership – negotiations can take place. A partnership can be set up with one or more providers and the partnership essentially goes through R&D stages. This process has the advantage of allowing, once a successful solution is found, the trust to purchase that solution without any further competition. Hempsons advised on one of the first innovation partnerships in Europe and so are uniquely placed to assist clients where this procedure may be an attractive option.
Negotiated procedure without competition
Trusts will be aware that in certain limited circumstances the requirement for competition may be waived. Where integration with existing systems is a requirement then Trusts could consider whether one of the grounds in the 2015 Regulations may be relevant albeit the grounds are strictly interpreted so Trusts are advised to seek advice before using this procedure, particularly where the contract value is high and the subsequent risk of challenge may therefore be higher.
Grounds which may be relevant include:
- for all types of contract, including supplies and services: where the contract can only be delivered by a particular supplier because (a) competition is absent for technical reasons or (b) the supplier has exclusive rights (including IPR). However, these grounds can only be used where “no reasonable alternative or substitute exists” AND the absence of competition is not “the result of an artificial narrowing down of the parameters of the procurement”. In practice it is very hard to make out this exception without infringing the “artificial narrowing down” aspect of the requirement – however, it has been used in an IT context previously so can be worth considering.
- for supply contracts only – categorisation of the overall contract is therefore key: for additional supplies as partial replacements or extensions of existing installations where a change of supplier would oblige the Trust to acquire supplies having different technical characteristics which would result in incompatibility or disproportionate technical difficulties in operation and maintenance. This ground may be useful for some aspects of an overall procurement strategy but is unlikely to be sufficient as a ground for an entire GDE programme strategy. Again, the ground is strictly interpreted so a Trust would have to have reasonable and objective evidence in relation to the incompatibility or disproportionate technical difficulties.
It has been reported that the GDE organisations will be “put” on a new procurement framework where they will work with suppliers to sell digital transformation services to less advanced organisations. The HSJ reports: “…soon any trust wanting central support will be expected to buy from the global digital exemplar framework, essentially paying another NHS organisation to help them deploy the clinical system it is using”.
In theory this presents a neat solution to the procurement problem faced by fast followers and others – once the GDE organisation has a system which works a trust can simply “call off” that solution from a framework. BUT – the framework will need to be set up in accordance with the 2015 Regulations in order for the call off made by the Trust to be compliant with the legislation. There is no clear indication of how NHS England plans to do this. Rather worryingly the HSJ article also refers to “new trusts, running different IT systems, could be added to the framework if they proved they were up to exemplar standard”. Unfortunately frameworks under the 2015 Regulations are static – once they are set up then suppliers cannot be added to the framework so this aspiration would not be lawful under the current legislation.
Trusts should pay careful attention to any conditions attached to their funding: in particular Trusts should look for any conditions which require any competitive tendering or requirement to comply with all relevant legislation. Failure to abide by any funding conditions could result in claw-back.
Matthew Swindells’ aspirations to “do away” with the need for procurement in the context of GDEs simply don’t sit with the current procurement legislation and the wider value for money requirements in the public sector. GDE trusts will need to find ways to lawfully procure their IT suppliers – innovation partnerships may well be a useful procurement tool in this context – and careful thought will then need to be given to the implementation of a strategy which allows fast followers and, in due course, all other trusts, to adopt the exemplar of a GDE. This could be achieved by way of a compliant framework but it is not clear at this stage how the current proposals are compliant with the 2015 Regulations.