Examining the Green Paper’s proposal to remove the Light Touch Regime and impact on social care

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Solicitor, Hannah Ismail, and trainee solicitor, Natasha Barlow, examine the significant changes proposed by the Green Paper on public procurement reform and how local authorities may need to rethink their approach to care and social services provision as a result.

One significant change proposed by the Green Paper on public procurement reform is the impact on the current Light Touch Regime (“LTR”) which covers health care, social care, education, cultural and other specific services (Regulations 74-76 Public Contracts Regulations 2015 (‘PCR’)), otherwise known as “Schedule 3 Services” (previously ‘Part B Services’).

The LTR was introduced for contracts that are of limited interest to companies outside the UK. For this reason, the threshold for such services is higher (currently £663,540) than standard services, which fall under a lower threshold (£189,330).

Under the LTR, contracting authorities can procure relevant services using a form of proportionate competitive process where there is no obligation for contracting authorities to comply with the full requirements of the PCR procedures. This has the advantage, particularly in the social care sector, of allowing a more flexible procurement regime that assists access for the many SME and third sector providers operating in the market.

Care and social services commissioning teams operating within local authorities are under constant pressure with heightened demand to respond quickly to adult and children social care and public health services.

It is not always feasible to undertake a full procurement process which requires a lot of planning and consideration to devise an effective procurement strategy.

A typical open or restricted procedure procurement process from start to finish tends to take 3-6 months in addition to any mobilisation period needed, which can be particularly relevant within the social services sector. Care commissioners do not always have the luxury of such time periods.

The higher threshold and flexible procedural rules allow care and social services to react more quickly to service needs and developments. Urgent services can be started quickly by directly awarding contracts to providers for short time periods while longer-term solutions are established using the full procurement procedures.

In particular, pilot programmes are often used for more complex social service procurements, such as supported housing and home care. These pilots allow contracting authorities to test the market in an active and meaningful way.

The Green Paper proposes that the LTR is removed on the basis that the introduction of the competitive flexible procedure leaves the LTR essentially defunct. The competitive flexible procedure is a new process that is intended to encourage greater commerciality, innovation and negotiation by reducing the number of prescriptive rules with which a contracting authority must comply, and is intended to allow flexibility to adapt the procedure to a buyer’s requirements.

At first glance this seems beneficial. However, it appears that the removal of the LTR will effectively result in a decrease in the LTR threshold to the lower £189,330 level and this present some concerns.

As outlined above, conducting procurements requires a good deal of time and resource. Alongside the lengthy procurement periods significant amount of time is spent on ‘back office’ work which in turn costs money. Local authorities often have very stringent budgets, so any money spent on advising and assisting on the procurement process takes away from necessary frontline services. Whilst the intention of the proposals appears to be to reduce the regulatory burden on all procurements, it seems the proposed changes have the potential to have the opposite effect on LTR services.

There would be more stringent transparency requirements through the use of the Open Contract Data Standard (OCDS). The OCDS requires the submission of procurement data to a central platform in a very specific format. Social care commissioners would be required to ensure data and documents are disclosed at all stages of the contracting process.

The contracting authorities would be required to declare in their tender documents when information would be disclosed and justify the information that is to be treated as commercially sensitive, which is likely to require thorough consideration and, perhaps, legal advice. For social services, it seems counterintuitive that this would be one area where the regulatory red tape would not also be decreased.

The new competitive flexible procedure could alleviate some of these concerns as the procurement process itself is not drastically different from the present flexibility offered by the LTR.

The proposed new procedure allows for negotiation, which would allow a contracting authority and providers to input into the specification and tailor the services together.

However, many social service providers are third sector organisations and SMEs and do not have the capacity to submit an increased number of tenders nor to negotiate all of their contracts. Indeed, these requirements could put a strain on a market that is already struggling.

The lower threshold also means that the new competitive requirements will apply to a whole raft of commission arrangements previously exempted.

It will be interesting to see how this new regime works and if the thresholds proposed are maintained in the final legislation.  Given the specific nature of the care and social services sector, this is an area where a higher threshold would still be justified but it does not appear from the Green Paper that two thresholds are being proposed in the new simplified regime.

If the thresholds remain low local authorities will need to re-think their approach to their care and social services provision and consider how best to use the new flexible procedure in a way that would best work for this service area.

Engagement with and training for service providers would also be beneficial as the new rules crystallise. A greater reliance on Framework Agreements also seems likely. Either way this heralds a significant change for care and social services commissioning teams.

If contracting authorities have any concerns about the practical effect of the Green Paper, please do get in touch with us to discuss how we can help you.

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