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Procuring LIFT projects under the NHS
Estatecode
The NHS Estatecode
The newly revised “Estatecode” recently
published by the Department of Health provides NHS organisations
with best practice guidance on all aspects of managing their
estate, including acquisitions and disposals of owned or leased
land and property. Designed to be an up-to-date “user manual” for
all those involved in estates and facilities management in the NHS,
part of the Estatecode aims to provide a brief overview of the
formal procurement requirements for NHS organisations in relation
to the ownership of land and property.
There are many different types of procurement
initiatives being undertaken by NHS organisations and the
Estatecode acts as a signpost for organisations to seek further
guidance and advice where necessary. One of the NHS procurement
initiatives is “LIFT” (Local Improvement Finance Trust) and this
article aims to throw some more light on this initiative and on the
procurement rules that govern it.
How does LIFT work?
NHS LIFT is a Government-Led procurement
programme for the delivery of community-based health and social
care facilities. It is delivered through a public/private
partnership whereby a core property development company (Liftco)
acquires and develops land and property and leases them to NHS
organisations on a fully-serviced basis under a “lease-plus”
arrangement.
It begins with local NHS organisations getting
together to develop a Strategic Service Development Plan which
considers a joint strategy for delivering an improved service for
patients.
It is then necessary to search for a partner
with whom to set up the Liftco. A private sector partner is
identified through a competitive procurement, and then a long term
partnering agreement is established through the Liftco to deliver
investment and services in local care facilities. This company is
owned partly by the private sector and partly by the public sector
participants. The company acquires and develops land and property
and leases them to NHS organisations on a fully-serviced basis
under a “lease-plus” arrangement. It will deliver the Strategic
Service Development Plan and it will also enter in to a 20 or 25
year undertaking to deliver the partnering services.
What procurement rules and procedures
apply to LIFT projects?
All NHS organisations involved in the
procurement of LIFT projects are subject to the European Union
procurement rules i.e. EC Directive 2004/18/EC and the Public
Contracts Regulations 2006 (“Regulations”). These Regulations apply
to all LIFT projects that involve procuring contracts for works,
goods or services. The Regulations specify certain financial
thresholds (“Thresholds”) which regulate the manner in which a
procurement is carried out. Most LIFT contracts will surpass these
Thresholds and consequently the NHS organisation will be subject to
the full rigour of the Regulations. For contracts that fall below
these Thresholds, the EU Treaty principles of equality of
opportunity and treatment, transparency, proportionality will still
apply.
For those which exceed the Thresholds, the
Competitive Dialogue procedure, introduced January 2006, is likely
to be the standard procedure to be used in the procurement process.
Competitive Dialogue has replaced the “Negotiated” procedure which
is now only to be used in truly exceptional circumstances.
Overview of Competitive Dialogue
procedure
The entire Competitive Dialogue process is
likely to last between 18 months and two years and it is imperative
that a detailed plan of timescales and resources is prepared prior
to initiating the procedure. To briefly summarise the process
(where the project exceeds the Thresholds):
The NHS organisation publishes a Contract
Notice in the Official Journal of the European Union (OJEU Notice).
All potential contractors then have 37 days in which to request to
participate in the tender.
Following receipt of the requests to
participate the NHS organisation will issue a Descriptive Document
and a Pre-qualification Questionnaire to each candidate who has
responded to the OJEU Notice. A bidding conference may also be held
to provide further information to potential bidders and to clarify
any outstanding issues. A pre-qualification evaluation is
then conducted using pre-prepared tests and criteria to produce a
pre-qualification report (unsuccessful candidates should be offered
the opportunity for a debriefing). This process will sift the
number of tenderers.
The formal Competitive Dialogue Process then
opens by sending bidders an Invitation to Participate and an
Invitation to Submit Outline Solutions. This leads on to further
dialogue with relevant bidders on their proposed solutions to
arrive at short-list of bidders to enter into further dialogue on
Detailed Solutions (usually three or four bidders).
Following the issuing of the Invitation to
Submit Detailed Solutions to the
short-listed bidders, the bidders enter into
constructive dialogue with the Organisation to negotiate and
discuss their emerging solutions for delivering the project. Bid
submissions are then finalised.
It does not end there though as the
organisation may then de-select certain bidders, enter into further
dialogue, formally seek refined solutions or close the dialogue and
seek a final tender from all bidders. Finally, it will evaluate
bids, select the preferred bidder and achieve Financial Close.
Need for efficiency
There is widespread concern that this
Competitive Dialogue may result in higher bid costs for both the
public and private sectors. It is a lengthy process.
Contractors may be involved in the process for a significant period
and still not win the contract and NHS organisations may have
to pay compensation to unsuccessful tenderers. The process may
become even more protracted if an unsuccessful bidder or any other
dissatisfied party decides to mount a challenge to the appointment
of the preferred bidder within the mandatory ten day standstill
period allowed once the contract has been awarded.
It is therefore important to consider at an
early stage, and in detail, how the dialogue stage will be
conducted and inform prospective bidders of this. In this regard,
NHS organisations should always seek legal advice to guide them
through the entire procurement process and to alert them to the
potential pitfalls that await them.
For more information or advice, please contact
Rachel
Williams or Sharon Jones.