What you need to know about PCN sub-contracting

Practices wishing to sub-contract their services to PCN companies or other groups of providers since October 2022 have had to use an NHS standard template. But many PCNs have yet to adopt this contract or adjust it to their local needs.

This became increasingly important earlier this year when eligibility for NHS pensions and Clinical Negligence Scheme for General Practice access required evidence of these contracts.

Robert McCartney looks at the main clauses, obligations and key areas of this template to help you get a better understanding of how to use it.

Since April 2023 the Subcontract for the provision of services related to the Network Contract Directed Enhanced Service (‘DES Subcontract’) has been required to obtain NHS pension access for PCN workers employed by a PCN company or a third-party service provider.

The consequence has been the use of the DES Subcontract to create a formal contractual relationship between the PCN practices and the entities who employ the staff.

This is a great improvement from the previous position of ad hoc contracting without a consistent NHS standard being applied. But it has resulted in the use of a detailed contract which many people and organisations have yet to fully understand.

This article will examine the content of the DES Subcontract, review the extent to which it can be varied and highlight areas that GPs need to be aware of when entering into it.


Since PCNs’ formation the legal relationship between core member practices has been an area of significant debate and contention. The original concept of an informal grouping of GP practices collectively working together was rapidly challenged by the practicalities of structuring employment models and delivering shared objectives in accordance with the DES specification.

Many PCNs relied on the network agreement, which was a contract but did not fully account for the complexity of the employment relationships and service delivery obligations on member practices. As a result, significant liabilities and risks arose within and among practices.

Prior to the commencement of enhanced access requirements in October 2022, PCNs raised concerns with commissioners that delivery would often rely on practices contracting with other providers, including federations and with each other, to meet the requirements. This created a complex relationship with increased levels of risk and liability.

In the summer of 2022 NHS England responded by releasing the DES Subcontract for 2022-23. It was rapidly implemented across the country to ensure enhanced access could be provided within an NHS approved contractual framework.

This gave the DES Subcontract a relatively narrow purpose, although it was structured to allow for a wide range of PCN DES services to be sub-contracted, which some PCNs and practices took advantage of.

However, a small but significant change by the NHS Business Service Authority (NHSBSA) in April 2023 in relation to pension eligibility for PCNs has resulted in the DES Subcontract being a mandatory requirement to ensure all eligible PCN workers can access the NHS Pension.

Before then, PCNs could access the NHS Pension through a time-limited option designed solely for them. Consultation documentation at the time identified a need for this to be made permanent.

But on publication of the application forms, NHSBSA added the requirement that each application had to include evidence that the DES Subcontract had been entered into by the parties.

This was not an issue for those PCNs who had implemented this for enhanced access, but it became a concern for those PCNs that used a GP federation or their own incorporated vehicle to employ staff without the DES Subcontract.

Consequently, many PCNs who previously had pension access were no longer eligible.

PCNs are now implementing the DES Subcontract in a rush to secure NHS pension access. However, this often results in a risk that the contract and its requirements are not fully understood.

What can the DES Subcontract be used for?

The DES Subcontract is specifically designed for use in conjunction with the network contract DES. As an enhanced service, the DES requires GMS, PMS or APMS providers to deliver certain requirements once they form a PCN.

As identified above, enhanced access was the initial priority, but any DES service can be subcontracted to another provider.

In practice this is often focused on hosting Additional Roles Reimbursement Scheme (ARRS) employees and other key roles.

Structure of the DES Subcontract

The DES Subcontract consists of three parts:

  1. Summary (including signatures)
  2. Conditions
  3. Schedules

Understanding all elements of the DES Subcontract is important but here is a selection of the most important clauses to consider in each section.


Parties: The DES Subcontract is between the core network practices and the sub-contractor.

The agreement does not cover other ‘members’ as they do not hold the primary care contract responsible for delivering the DES services.

Services commencement date: This will need to align with the actual delivery of services or hosting of services. It may result in triggering the transfer of staff if TUPE applies (which it will in most cases) and is likely to require the sub-contractor to be CQC registered. This date will also be the start of the entitlement to NHS pension eligibility.

Expiry Date and Termination Notice Period: The sub-contract should not extend beyond the period of the then current DES Specifications (currently 2023/2024) so ensure these dates align and provide sufficient time to respond to any national changes to the DES.


NHS England has confirmed these cannot be changed. Any variation may place entitlement to NHS Pension access at risk. Unfortunately, some clauses may not be optimal in primary care settings but understanding this will help PCNs adjust their contract management to mitigate the risk.

Commencement and Duration: Clause 3.1.3 gives the ICB the power to remove the subcontractor or to terminate the sub-contract, or any service within it.

If a PCN obtains approval to sub-contract from its commissioner, the risk of this is relatively low but any threat to changes in services which could result in the commissioner taking this action must be acted upon immediately.

The consequence of a termination could have major financial, service, and staffing issues if it arises. This is highly unlikely, but the risk exists.

Representatives: Clause 4.2 gives the named representative to act for the practices. This person has the ability to bind all the practices, despite not necessarily being a partner.

This power is significant and should be balanced by having a clear appointment and management process for the representative. It is recommended that this is clearly set out within the PCN Network Agreement, which should be amended to work in conjunction with the DES Subcontract.

Sub-contractor obligations: Clause 7 outlines these and confirms the quality standards and performance requirements expected of the practices are applicable to the sub-contractor. Ensure a system is established to monitor
this and consider using Schedule 9 to add clarification on this requirement.

Insurance: Clause 10.5 confirms the CNSGP may be applicable to the services but there is an obligation on the sub-contractor under clause 10.1 to ensure it has suitable coverage for other claims, such as employers’ and public liability
insurance. Practices should have a method of recording compliance with this.

Indemnities: Clause 12 includes reciprocal indemnities between the practices and the sub-contractor against any damages, costs, or liabilities arising from personal injury, damage to property and breach under the sub-contract.

This applies to an action by the staff, agents or sub-contractors of the relevant party. So this could have significant financial implications and the parties need to understand the risks.

Complaints: Clause 23 places an obligation on the sub-contractor to inform practices of any complaint and not act on a complaint without the practices’ express permission. This may be an unsuitable arrangement when you are working with an established provider, such as a local federation, but the obligation cannot be varied.

Parties should be aware of this and the risk there could be conflicting complaints policies. Sharing and developing joint procedures and policies to manage matters like this will benefit all the parties.

Dispute Resolution: Clause 24 allows parties to agree a dispute resolution method of their choice, by adding the detail to schedule 7. They should ensure they are happy with the final method and that it can work effectively when multiple parties may be pulled into a dispute.


The schedules, unlike the conditions, can be amended and rewritten to meet parties’ preferences. This should be utilised to ensure the DES Subcontract works in accordance with how the parties want. It can allow for local variation and specific nuisance which may only be applicable for the PCN and its practices.

Key issues

Here is a selection of key issues – but ensure all of them are understood by the parties.

Schedule 1 – Subcontract Services:

This schedule allows parties to define the service specification. It is essential to get this right to avoid service gaps, confusion and to assist with accountability. It is not uncommon for it to include a simple reference to all DES services being sub-contracted but consider if any parts should be retained by the practices.

Some PCNs go to the other extreme of creating detailed specifications for each DES element. This allows them to carefully control what is delivered. It is particularly useful for the more complex elements, such as enhanced access or enhanced health in care homes. But there is a risk that elements can be missed.

Drafting a suitable Schedule 1 will highly benefit all parties.

Schedule 2 – Payments:

Within the conditions clause 11 provides basic payment mechanisms. These may be too simplistic and fail to confirm what the value of the contract is. The value is important if the sub-contract is to be used to support an application for Independent Provider Employing Authority status with the NHS pension.

It is recommended parties consider issues such as cashflow, reconciliation and reporting against activity requirements such as ARRS data to ensure that the practices and sub-contractor work closely to reduce the risk of NHS payment delays.

Schedule 3 – Premises:

This section allows the PCN to define the premises relationships and it is useful to obtain advice about suitable tenancy agreements, licences and leases which may need to be referenced here.

Schedule 8 – TUPE Provisions:

This section will manage the consequences if staff transfers are required at the start and end of the contract. These must be followed if they are applicable and further advice should be sought to reduce the risk of these procedures.

Schedule 9 – Patient Records:

Information and Other Matters: This schedule provides parties with a place to include any other clauses and procedures they would like. Some have used this to clarify the data reporting requirements, quality management obligations and localised referral parties.

If parties wish to include any other information that does not fit easily into the other sections, this schedule is perfect for that use.

By understanding these key sections, parties will be better positioned to confirm they have entered into it from an informed position. They can then enforce and act in accordance with the sub-contract with a reduced risk of problems occurring.

Specialist advice is needed to help ensure the DES Subcontract is appropriately tailored to the practices’ and sub contractor’s needs. This is particularly important with the schedules.

Don’t underestimate the DES Subcontract’s importance. It is the building block for the next stage of formalising the relationship between the practices and the provider organisation of choice within the PCN.

As PCNs become responsible for more services and additional contracts are awarded at neighbourhood level these contracts will become the core building blocks of the legal relationship between all parties.

Ensuring this is understood and well drafted at this stage will make the future development of PCNs an easier process.

First published in AISMA’s Autumn 2023 edition.