CCG Contracts: Friend or Enema!

Thursday, September 19th, 2013

CCG’s should ensure they have written Contracts with all Providers. These contracts will create obligations for the CCG and the Provider.

CCG Contracts: Friend or Enema!

It is an undoubted fact that, in the past, PCT’s have not always had written Contracts in place. Some arrangements were verbal, completely undocumented with custom and practice being the foundation of the arrangements. CCG’s should now have complete clarity regarding who in their organisation, has the accountability for ensuring written contracts are in place. Usually, the accountability would rest with Procurement, although it is recognised that Commissioners of Services have in the past created contracts. It is necessary to issue a health warning – no pun intended – about creating Contracts. Those who are untrained in the detail and formalities of Contracts should always seek guidance from colleagues who are appropriately trained. This is likely to be procurement legal specialists.

NHS England now have responsibility for preparation and publication of the NHS standard contract. The 2013/14 contracts reflect the requirements set out in ‘Everyone Counts: Planning for Patients 2013/14’. The contract comprises three parts:

  1. The Particulars
  2. Service Conditions (SC) and
  3. General Conditions (GC)

The contract was first published on 4 February 2013. Should clarification or additional support be required you can contact [email protected].  For completeness, it may be noted that the previous NHS standard contracts for 2012/13 is available on the Department of Health website. The advice at the publication date of 23 Dec 2011 was that the NHS standard contracts “should be used by Commissioners when commissioning, Acute, Mental Health and Learning Disability, Community or Ambulance Services.”

At a very practical level, CCG’s need to be assured that, robust contracts are in place with all Providers. As a minimum, there should be a service specification and related Key Performance Indicators, agreed prices for the provision of services (including dealing with variable quantities of work), provision for default in contract performance and detailed arrangements for contract management. Also at a practical level, Providers should review the CCG contract for their exposure to risk, as well as other areas briefly described in this article.

  The Particulars 

This section of the contract consists of 81 pages of detail. There are very important matters included; for example the ‘Service Commencement Date’. This is very relevant to the Provider for a number of reasons, including ensuring that the resources are in place and suitably trained/qualified; quality monitoring systems are in place; administrative support is available and a complaints procedure is credible and in place. The ‘Contract Terms’ is required to be specified. The Provider should ensure that the Contract Term is sufficient to recover any capital outlay, such as IT system investment, through the pricing mechanism.

It has to be stressed that this article is selective in the issues highlighted; it is not intended to be comprehensive guidance. In the ‘Governance’ section there is provision in Schedule 5 for ‘Documents relied on’ to be specified. The Provider should make sure this is included. If there is a future dispute, the base information provided by the CCG will be a serious consideration. There is also provision for ‘Mandatory’ and ‘Permitted’ sub-contractors to be named in Schedule 5. Providers are advised not to sub-contract without the CCG knowledge and approval. The Providers are advised to give serious consideration to their contractual arrangements with sub-contractors (noting that there may be special requirements for disclosure in Professional Indemnity Insurance policies).

Contract management is an activity where some CCG’s can improve their professional activity. There is a provision for inclusion of the ‘Frequency of Review Meetings’. There are serious implications for a Provider, not least the consideration of the ‘Management Information’ the CCG will require prior to a review meeting. Professionally conducted review meetings are an asset in a relationship, and is the forum to review contract performance, share frustrations and agree actions that need taking to deal with exceptional circumstances that may arise from time to time.

At Schedule 2 ‘The Services – (section A) it provides for inclusion of the service specification. This is of vital importance to the CCG and the Provider and, of course, the Service recipient. The Courts of England & Wales are regularly hearing cases where the dispute is founded on a seriously flawed specification. The Provider, at the formal Tender stage must read the specification and clarify any facets that are unclear, unsound or simply not deliverable. If, in the future, after contract award, there are CCG requests for changes to the specification, these should be carefully studied and, if acceptable to the Provider, the changes should be captured in a contract change note. If there are price consequences of the change this detail should also be captured.

Finally, in regard to the ‘Particulars’ section, we draw attention to the provision for a ‘CRS Continuity Plan/Essential Services Continuity Plan’. The authors have audited many service providers where there has been an absence of such plans. This is a serious matter and could be sufficient for a CCG to terminate a contract, assuming there is another alternative, available.

Providers should check what happens in the case of:

  • Fire at their premises
  • Resignations of key personnel
  • Failure of technical equipment
  • Sickness preventing service delivery
  • Theft of essential records
  • IT Systems failure.

CCG’s may ask themselves if they ever audit continuity plans at strategic suppliers and whether the CCG has the expertise to evaluate the effectiveness of such plans.

  Service Conditions

This section consists of 45 pages and contains critical ‘clauses’ that place obligations on a Service Provider. The detail is very precise as to which conditions will apply to Service categories. Some conditions will apply to all, whereas others are category specific, e.g. some may only be applicable to Radiotherapy or Substance Misuse.

Again, our commentary is selective. The Service Provider must, diligently, carefully review the whole document.

At SC3 “Service Standards” this sets out what the Provider must do, namely:

3.1.1          meet the Local Quality Requirements and the National Quality Requirements

3.1.2          meet the Operational Standards

3.1.3          ensure that Never Evens do not occur; and

3.1.4          meet the applicable national standards and outcomes measures from time to time set out in Guidance.

To those who are not initiated in contract detail, any capitalised words or phrases should be defined in the contract to remove uncertainty about their meaning. SC 3 has demanding obligations on the Provider. At clause 3.3 the CCG reserves a number of rights to deal with a non-compliant Provider, including removing a Service User from the Provider’s care. Clearly, this outcome is unwelcome and could have a detrimental impact on the Provider’s service.

Providers should scrutinise the contract for the obligations placed upon them. For example, at SC9 ‘consent’ it states (9.1) “The provider must publish, maintain and operate a Service User consent policy which complies with Good Practice and the Law.” If this wording is scrutinised, what exactly does “publish” mean? It is not a defined term, so would it be acceptable to have it available on the Provider’s website or does hard copy have to be available? What does ‘maintain’ actually mean? Does it require an annual review? How does the Provider satisfy the ‘operate’ requirement? The definition for ‘Good Practice’ can be found in the third document “General Conditions”. The Law is not defined but at GC 39 the Governing Law and Jurisdiction is that the Contract will be subject to the laws of England. This rather simple ‘Consent’ clause is an illustration of the need to navigate around all the contract terms and conditions and to be absolutely clear what the obligations and risks really are.

All Providers will be interested in Clause 36.4 “Prices”. It states that the prices payable will be:-

36.4.1          for all Services for which the National Tariff Rules mandate or specify a price:      the Full Tariff; or      the Permitted Variations to Tariff Prices;

for the relevant Contract Year.

There are situations where particular services will be tendered to a CCG and a price submitted. What happens then? The Provider is advised to consider the length of time to which the price will apply. Is there an annual review and, if so, what is the mechanism? Is it linked to the Retail Price Index or Consumer Price Index?

  General Conditions

This part of the contract has 80 pages. Readers should note that if there is any conflict or inconsistency between the provisions of the Contract, the General Conditions are first in the order of priority.

Providers are required at GC 4 ‘Transition Period’ to “work together and use all reasonable endeavours to assist each other to facilitate the delivery of the services…….” There is a requirement for the Co-ordinating Commissioner to deliver the Commissioner Documents to the Provider. There have been legal arguments in other contracts about the term ‘reasonable endeavours’. It is not as demanding as ‘best endeavours’ which fundamentally would require the Provider to commit almost unlimited resources to solve an issue.

At GC 5.2 there are potentially serious consequences for a Provider who is sub-contracting services. The clause provides “The Provider must have and must ensure that any sub-contractors have sufficient appropriately qualified and experienced medical, nursing and other clinical and non-clinical staff to ensure that the Services are provided in all respects and at all times in accordance with this Contract.” If a sub-contractor does not comply with all these requirements, it is the Provider who is contractually accountable to the CCG. The Provider therefore requires an excellent process to audit the sub-contractor’s compliance. Note the word ‘sufficient’ – who decides what sufficient means? Note the words ‘qualified’ and ‘experienced’ – who decides what these words mean? They are not defined in the contract.

At GC 8 ‘Review’ it provides for Review Meetings to be held at intervals set out in the Particulars. The contract provision uses the word ‘must’ and that leaves no doubt that it is an obligation on the Co-ordinating Commissioner and the Provider. In the past there is no doubt that, in some instances, no review meetings have been held by Trusts. It requires a resource and also knowledge and skills to conduct an effective review meeting. The ‘Review’ required at GC 8 is very much in the interest of a Provider. Among the provisions are to review and discuss:

8.1.2      performance of the  Parties under this Contract

8.1.4      levels of Activity, Referrals and Utilisation under this Contract

8.1.6      the Prices; and

8.1.7      any other matters that either considers necessary as relation to this Contract.


  CCG Contracts: Friend or Enema! Conclusion

There is inevitability that occasionally the parties to a contract will have a dispute. One way to reduce the potential for this occurring is for both parties to have a clear understanding of the detail of the contract. It can be postulated the CCG’s are more likely to have expert legal advice readily to hand than are many Providers. The latter are advised if in any doubt, to seek advice on any facet of a contract of which they are unsure of the consequences.


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