Contracting Jennifer Finch Commissioning Manager Commissioning Centre of Excellence Birmingham City Council

Contents Purpose of the contract Developing contracts Different types of contracts NHS and LA Contracting Procurement thresholds Managing Contracts

Commissioning Cycle

Benefits of a Contract DISCUSSION IN GROUPS Discuss one contract you are signed up to (non household) Name one benefit of signing a contract

Main Aspects of a Contract Terms and Conditions Payment Terms Termination Transfer of Undertakings (Protection of Employment) - TUPE Confidentiality Safeguarding / Child Sexual Exploitation

Main Aspects of a Contract Main Schedules Service Spec Finance Schedule KPIs / Reporting Requirements Data Sharing / Processing agreements

Main Aspects of a Contract Quality NHS – Friends and Family test Compliments / Complaints Serious Untoward Incidents (SUI’s) Service User Surveys Mystery customer shoppers Audits

Main Aspects of a Contract Signing of the contract Delegated authority Signature / Sealing

Types of Contracts ORAL CONTRACTS SUPPLIER CONTRACTS (Goods and Services) STANDARD CONTRACTS MODEL CONTRACTS

Oral Contracts Can be binding if the essential elements of a contract are present Risks: Lack of understanding Mistakes Disadvantageous Terms Oral Contracts – oral agreement can be binding if the essential elements (Offer, Acceptance, Consideration, Intention, Capacity) Risks – mistakenly signing up to unknown T&C’s, mistake as in lack of genuine agreement

Supply Contracts One off Purchases Standing Orders Blanket Ordering Framework Agreements One off Purchases e.g. office furniture, IT, re-location Standing orders – each acceptance is a distinct contract – cleaning services, catering services Blanket Ordering – provider agrees to provide an estimated quality of items over an agreed amount of time. E.g. Stationary replacement of note pads, pens etc. Framework Agreements - – for small, similar type services utilising a variety of providers in LA we use this for the individual based commissioning e.g. child placement, individual care. Framework is set up T&C’s are agreed before hand and there will be a list of approved and vetted suppliers where its agreed that specific purchases can be made when needed.

Model Contracts Published by 3rd party experts incorporating standard practice for specific industries ensure fair and balance of contractual rights between buyer and supplier. E.g. Engineering contracts (NEC3) CIPS contracts

Standard Contracts Contract template based on generally accepted practice in industry or supply market or based on past negotiated agreements E.g. NHS Standard Contract (Unilateral and Multi-Lateral), Non- Mandated Public Health Contract

Major changes will still need legal advice Saves costs - legal fees ADVANTAGES DISADVANTAGES Helps reduce time Major changes will still need legal advice Saves costs - legal fees Unfair terms can be negotiated Not reinventing the wheel Cost to train employees on those contracts Fair to both parties Widely accepted in the industry

Public Procurement Regulations Regulates the purchasing by public sector bodies for goods, works or services. Purpose: open up the EU's public procurement market to competition Part A services must advertise in EU, light touch process for Part B Services Public procurement law regulates the purchasing by public sector bodies and certain utility sector bodies of contracts for goods, works or services. The law is designed to open up the EU's public procurement market to competition, to prevent "buy national" policies and to promote the free movement of goods and services. When do the Regulations apply? Where the following pre-conditions are met a contracting authority must normally advertise the contract in the EU's Official Journal and follow the procedural rules set down in the Regulations: The body doing the buying is a "contracting authority".  The definition is wide and includes central government, local authorities, associations formed by one or more contracting authorities and other "bodies governed by public law" (e.g. universities and housing associations); The contract is for public works, public services or public supplies. Sometimes the contract will be a mixed contract (e.g. the supply and maintenance of computers). Where it is, a contracting authority must determine which element (e.g. the supply element or the service element) is the predominant element and, therefore, which set of rules will apply. This can be important to get right as the rules vary slightly depending on the type of contract (e.g. lower financial thresholds apply to services and supplies contracts than to works contracts); The estimated value of the contract (net of VAT) equals or exceeds the relevant financial threshold. The rules expressly prohibit deliberately splitting contracts to bring them below the thresholds

Public Procurement Thresholds Supplies & Services (except subsidised services contracts) Schedule 1 bodies -£106,047 Others -£164,176 Subsidised services contracts All bodies -£164,176 Works All bodies -£4,104,394 Light Touch Regime for Services All bodies -£589,148 Small lots Supplies and services -£62,842 Works -£785,530 Total value of the contract over the whole term of the contract NOT just the one year value.

NHS Contracting Process Process set out by Department of Health Timelines – October to March each year All major contracts must be negotiated and signed by 8th April Dispute resolution

QIPP Quality, Innovation, Productivity and Prevention National, regional and local level programme designed to support clinical teams and NHS organisations to improve the quality of care they deliver while making efficiency savings that can be reinvested into the NHS. QIPP stands for Quality, Innovation, Productivity and Prevention. It is a national, regional and local level programme designed to support clinical teams and NHS organisations to improve the quality of care they deliver while making efficiency savings that can be reinvested into the NHS. Twelve national QIPP workstreams NHS organisations at regional and local level have QIPP plans in place to address the quality and productivity challenge. Supporting these are twelve national workstreams designed to help NHS staff successfully deliver these changes.  Five workstreams relate to commissioning of care and five relate to the running and staffing of NHS organisations. Two focus on primary care commissioning and contracting, and digital technology.

Contracting Arrangements BLOCK CONTRACT PAYMENT BY OUTCOMES ACTIVITY CONTRACT CQUIN PAYMENTS

Block Contract vs Activity Contract

CQUIN Payments Commissioning for quality and innovation Introduced in 2009 A proportion of the providers income is conditional on demonstrating improvements in quality and innovation specific areas (does NOT apply in local authorities) CQUIN stands for commissioning for quality and innovation. The system was introduced in 2009 to make a proportion of healthcare providers' income conditional on demonstrating improvements in quality and innovation in specified areas of patient care. E.g. Productivity in pathways and improvement programme – Mental Health

NHS Payment by Results National Tariff System in place e.g. cancer services Tariffs are reviewed every year Cost per activity / service Agreement of tariff from Commissioners and Providers Local variations can be implemented

Difference Advantages Disadvantages DISCUSSION IN GROUPS OUTPUTS OUTCOMES

Payment by Outcomes - Example £600,000 contract Moving from an output focus to outcome focus to deliver a better outcomes for citizens

Relationship Management Relationship management is dependant upon: Contract value Type of service Importance Length of contract

Performance Management Contract Review Meetings Performance Monitoring Remedial Action Plan

Future of Contracting More emphasis on Corporate Social Responsibility (CSR) More partnership working between Health and Social Care

Commissioning Cycle

Quick Quiz What are the four main stages of the commissioning cycle? What is the purpose of the Friends and Family test within an NHS Contract? When does the NHS Contracting cycle start and finish? Name one advantage of model / standard contract? What is a remedial action plan?

Any Questions