The PCR 2015 and the Care Act 2014

Clair Ruskin-Brown looks at the issues raised by the interplay between the Public Contract Regulations and the Care Act when it comes to service provision.

These two pieces of legislation come together in the field of social care and health. The question on everyone’s lips is:

“How do local authorities afford their residents the choice under the Care Act whilst simultaneously adhering to the open, transparent and competitive processes required to regulate public spend under the Public Contract Regulations?”

It is no secret that at first glance there appears to be a ‘tension’. On the one hand, the Care Act requires the service user to have as much choice as possible as to who provides their services and this choice "must not be to those settings or individual providers with which the local authority already contracts with…or those within the local authority’s geographical boundary"[i]. On the other hand all public money must be spent in accordance with the open, transparent and competitive process which cannot always ensure that all providers who are delivering a specific service will win a contract. The CCS and the Department of Health have issued their view in respect of this issue[ii].

In short the answer is not always straightforward and is often scenario-specific. A “one answer fits all” alludes us but keep reading if you are interested in Staffordshire Legal Services’ (SLS') practical solution to this legal quandary and our creative use of Direct Payments in this context. 

Direct Payments have the nuance that when the service user contracts directly with a provider instead of using local authority-procured services, the contract will not fall with the definition of “public contract” for the purposes of the Public Contract Regulations. However, local authorities are also not able to force service users to take Direct Payments and in some instances service users are not capable of taking a direct payment. The service user must also be able to choose whether or not they want to receive direct payments and they may choose not to take direct payments. 

It is useful to note here that the Care Act principles of choice and personalisation are not a service user ‘right’ as such, it is more an obligation on a local authority to endeavour to facilitate choice or ‘preference’ where possible.

The 'Light Touch Regime' does allow for local authorities to include service user choice as an evaluation criterion in multi provider service user frameworks. However, the issue arises where the service user chooses services from a provider with whom the local authority does not already have an existing contractual arrangement. The Care Act Guidance makes clear that local authorities cannot restrict a service user’s choice to only those providers they already contract with[iii]. Where the services are provided under a Dynamic Purchasing System (DPS) the position is simpler in that, following a service user choice, providers can be contacted (and if willing) added onto those systems from time to time and therefore satisfying “choice/preference” and the Regulations.

The issue however gets more complex where: (i) the services are not provided under a DPS and/or (ii) the provider chosen refuses to contract with the local authority under the DPS. 

CCS seem to be suggesting[iv] that, subject to aggregation rules[v], because individual care contracts are likely to be below the LTR threshold they may be “spot purchased”. SLS issue a note of caution here for several reasons. Firstly, it is difficult to be certain which care packages will remain, during the life of the package, below the threshold. Secondly SLS consider it would be inadvisable to argue that the spot purchasing services for individual service users where the same services (but for the services user choice/ preference) have already been the subject of a procurement process. Therefore it is highly unlikely that the circumstances would ever arise that meant “spot purchasing” in this way would not amount to a breach of the aggregation rules. Thirdly as we in the public sector know all too well “spot purchasing” presents a considerable risk and potential “flood gate” scenario within local authorities, leading to stressed budgets and best value uncertainty. “Spot purchasing” can go under the radar within an organisation, and is difficult to predict and control and as such makes forecast budgets problematic to keep to.

In both (i) and (ii) above the local authority could as a default positon offer direct payments to circumvent the risks of disaggregation and “spot purchasing”. 

As mentioned above Direct Payments avoid the need to comply with procurement processes under the Regulations as the money is not being spent by local authority. If the money trail leads to the local authority the spend is ‘public’ and therefore covered by the Regulations.

The genuine concern with this approach is that service users are being forced to take Direct Payments. However, provided Direct Payments are the last step after having tried to accommodate ‘choice’ in another PCR-compliant way first, SLS’s advice is that this approach is perfectly permissible. 

If the circumstances arose where the service user refused Direct Payments and the provision of services via the local authority’s PCR acquired provider, then the service user would be considered to be “refusing care”, which leads to very different issues and considerations. This advice does not however deal with the issue where a service user is not ‘capable’ of taking a Direct Payments. In that scenario and in this currently untested environment SLS advise that whatever method is employed, to meet both the service user choice/preference and the PCRs, that method should  accommodate the spirit of both pieces of legislation as far as possible. For example, from a procurement perspective the method should embrace the principles of procurement prescribed in the PCRs 2015.[vi]

Clair Ruskin-Brown is Team Leader (Contracts) at Staffordshire Legal Services. She can be contacted on 01785 854983 or This email address is being protected from spambots. You need JavaScript enabled to view it..