Provider Selection Regime – and what does it mean to partners?

❓ The PSR was introduced by the Health and Care Bill (2022), and came into force on 1 January 2024. The PSR is a set of rules for procuring health care services in England by any of the following organisations: 

• NHS England 

• Integrated Care Boards (ICBs) 

• NHS trusts and NHS foundation trusts 

• Local authorities and combined authorities

The PSR removes the commissioning of NHS healthcare services from the scope of the Public Contracts Regulations (2015) which remain in place for all provisions outside of NHS healthcare services.   

One definition includes NHS health care services and the other health services covered by the delivery of the public health functions (hence why local authorities are covered by the new rules): 

“Comprehensive health service designed to secure improvement in the physical and mental health of the people of England, and in the prevention, diagnosis and treatment of physical and mental illness.” section 275(1) of the National Health Service Act 2006  

👉 What makes a service ‘in scope’? 👈

To be ‘in scope’ a service must be either commissioned or subcontracted and meets the following three criteria: 

• is provided as part of the health service, whether NHS or public health; 

• consists of the provision of health care to individuals or groups of individuals; and 

• falls within one or more of the required Common Procurement Vocabulary codes (CPV codes) 

💢 What is the process? 

The PSR has introduced three procedures that Relevant Authorities can follow when awarding contracts for health care services. 

1. Direct Award Procedure 

• This is where Relevant Authorities award Contracts to providers where there is no reason to run a competition to assess various providers against one another, or seek to change from the existing provider for the following reasons: 

• The existing provider is the only provider that can deliver the services 

• Patients have a choice of various providers, and the number of providers is not restricted by the Relevant Authority 

• The existing provider is fulfilling its existing contract and therefore is likely to satisfy any new contract to a sufficient standard, and the proposed contracting arrangements are not changing considerably 

2. Most Suitable Provider 

• Awards a Contract to providers without running a competitive process, as the Relevant Authority can identify the most suitable provider to deliver the necessary services. 

3. Competitive Process 

• An open-market process to identify the preferred Provider subsequently awarded a Contract. Processes are clearly defined and must be well document to evidence their decision-making including record keeping and the publication of transparency notices.  

💫 What the Provider Selection Regime Means for Health and Care Services 

The Provider Selection Regime (PSR) is a new way for public bodies to choose who provides health and care services. It aims to give these organisations more flexibility in how they make decisions, while also making the process more open and transparent. Although it’s still early days, how well this new system works will depend on how it’s used in practice. 

For voluntary and community organisations, this change brings new chances to be chosen as service providers—especially when they offer unique, local, or specialist support that other services might not be able to provide as well. 

Instead of always using competitive tendering, the PSR encourages decision-makers to choose the provider that best meets local needs. This means voluntary organisations could be directly awarded contracts if they are the right fit. But to take advantage of this, they’ll need to show they offer good value, strong leadership, and clear results. 

The PSR also promotes fairness and openness in decision-making. Voluntary groups should be involved earlier in the planning process, which can lead to stronger partnerships and more community-led services. 

This approach also applies to other public sector organisations, like local councils and NHS bodies. The PSR supports joint working between these groups and the voluntary sector, helping them design and deliver services together in a more joined-up way.