How NHS Contracts Are Awarded: The Provider Selection Regime Explained
Since 1 January 2024, most NHS health care contracts are awarded under the Provider Selection Regime, not the Procurement Act 2023. This guide explains what the PSR covers, its three selection processes, how it differs from the rules for goods and non-clinical services, and where suppliers find live opportunities.
Most NHS health care contracts are no longer awarded under general procurement law. Since 1 January 2024 the Provider Selection Regime, not the Procurement Act 2023, governs how the NHS and local authorities select providers of relevant health care services, through three named processes rather than a single competitive tender.
What is the Provider Selection Regime?
The Provider Selection Regime (PSR) is set out in the Health Care Services (Provider Selection Regime) Regulations 2023 (SI 2023/1348), made under section 12ZB of the National Health Service Act 2006. The regulations came into force on 1 January 2024 and replaced the National Health Service (Procurement, Patient Choice and Competition) (No. 2) Regulations 2013. NHS England's statutory guidance describes the aim as a "flexible and proportionate process for selecting providers" that supports greater integration and collaboration across the health system, rather than defaulting to a full competitive tender every time a contract is renewed or extended.
Regulation 4 requires a relevant authority to act with a view to securing the needs of the people who use the services, improving quality, and improving efficiency, and to do so transparently, fairly and proportionately. Regulation 5 sets out five key criteria authorities must weigh when choosing a provider: quality and innovation, value, integration and collaboration, improving access and reducing health inequalities, and social value. These criteria stand in place of the published "award criteria" a supplier would expect under general procurement law.
Which NHS contracts does the PSR cover?
The PSR applies only to "relevant health care services": services falling within the CPV codes listed in Schedule 1 to the regulations, covering categories such as hospital services, medical practice services, dental services and ambulance services (regulation 2, Schedule 1). It applies where the contracting body is a "relevant authority" — NHS England, an integrated care board, an NHS trust, an NHS foundation trust, a local authority in England, or a combined authority (section 12ZB(7), National Health Service Act 2006).
Not every NHS-adjacent service sits inside the PSR. Community pharmacy essential services provided under the Community Pharmacy Contractual Framework, which are governed by the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013, generally fall outside the regime; NHS England's supplementary guidance on arranging primary care services sets out the specific circumstances (such as locally commissioned enhanced services) in which pharmacy services do come into PSR scope, while most primary medical services and primary eye care services are within it. Where an authority wants to combine health care and non-health care requirements in one procurement, regulation 3 allows a "mixed procurement" only where the health care element is the main component by value and running two separate processes would work against the regulation 4 principles.
Which regime applies: the PSR or the Procurement Act 2023?
This is the distinction suppliers most often get wrong. Regulation 27 of the PSR regulations amended the Public Contracts Regulations 2015 so that Part 2 of those regulations "does not apply to contracts or framework agreements to which the Health Care Services (Provider Selection Regime) Regulations 2023 apply" — relevant health care services were carved out of general public procurement law from 1 January 2024, before the Procurement Act 2023 later replaced the 2015 regulations for everything else. The result today: an NHS body arranging a relevant health care service (treatment, diagnosis, care of patients) follows the PSR. The same NHS body buying goods (medicines, medical equipment), or non-clinical services that fall outside Schedule 1 (cleaning, catering, consultancy, estates management), follows the Procurement Act 2023, in force since 24 February 2025, exactly as any other contracting authority would. A single procurement exercise can therefore sit under two different legal regimes depending on which part of it a supplier is bidding for.
What are the three PSR processes?
Regulation 6 sets out which of three processes applies, and it is a decision tree rather than a free choice. Two of the three routes are mandatory once their conditions are met, one is the fallback, and the middle ground is discretionary.
- Direct Award Process A (regulation 7) applies where the existing provider is the only one capable of providing the service; the authority awards without competition and publishes an award notice within 30 days. No standstill period applies.
- Direct Award Process B (regulation 8, read with regulation 6) applies where patients have an unrestricted choice of provider and the authority awards contracts to every provider that meets the criteria; again, an award notice is published within 30 days with no standstill.
- Direct Award Process C (regulation 9) is discretionary: it lets an authority stay with a provider that is performing to a satisfactory standard without running a competition. It requires a published notice of intention to award, an 8-working-day standstill period (regulation 12) during which an aggrieved provider can make written representations, and an award notice within 30 days.
- The Most Suitable Provider Process (regulation 10) lets an authority identify, without a competition, whichever provider it judges best against the regulation 5 key criteria and basic selection criteria. It starts with a notice of intention to use the process, followed by a mandatory 14-day pause before the authority can identify its preferred provider, then an award notice, an 8-working-day standstill, and a final award notice.
- The Competitive Process (regulation 11) is a full tender. It is mandatory for framework agreements and is the fallback wherever none of the other conditions apply (regulation 6(7)). It also carries the regulation 12 standstill period.
An authority can abandon a chosen process and switch to another if it decides a different one is more suitable (regulation 6(9)) — a live procurement's process can change while it is still running. Contract modifications during a PSR contract's term are also permitted without a fresh procurement process where the change is not "materially different in character" and its cumulative value stays below whichever is larger of £500,000 or 25% of the contract's lifetime value (regulation 13); above that, a new process or a fresh notice is generally required.
Key facts: the Provider Selection Regime
| Aspect | Detail |
|---|---|
| Legal basis | Health Care Services (Provider Selection Regime) Regulations 2023 (SI 2023/1348), in force 1 January 2024 |
| In-scope services | "Relevant health care services" under the Schedule 1 CPV codes (hospital, medical practice, dental, ambulance and related services) |
| Relevant authorities | NHS England, integrated care boards, NHS trusts, NHS foundation trusts, local authorities, combined authorities |
| The three processes | Direct Award (Processes A, B and C), the Most Suitable Provider Process, the Competitive Process |
| Standstill period | At least 8 working days; applies to Direct Award Process C, the Most Suitable Provider Process and the Competitive Process (regulation 12); not to Direct Award A or B |
| Transparency requirements | Notices published on the UK e-notification service (Find a Tender); records of decisions, conflicts of interest and reasons kept under regulation 24; an annual summary of contracting activity published under regulation 25 |
| Goods and non-clinical services | Procurement Act 2023, in force 24 February 2025 — not the PSR |
How do suppliers find NHS opportunities?
Every PSR notice — a notice of intention to award, a notice of intention to use the Most Suitable Provider Process, or a full Competitive Process advertisement — is published on the UK e-notification service, which for practical purposes means Find a Tender, the same platform now used for Procurement Act notices. NHS England's own guidance confirms there is, as yet, no PSR-specific template on Find a Tender, so authorities currently adapt the existing notice formats; a bulk notice appearing on a third-party portal is not a substitute for the authority's own published notice.
For a supplier chasing NHS work, three habits matter. First, register on Find a Tender and set alerts against the Schedule 1 CPV codes for your service line, alongside keyword alerts, in the same way our guide to finding tender opportunities recommends for general procurement. Second, watch each relevant authority's regulation 25 annual summary, which lists how many contracts it awarded through each process and how many providers joined or left — useful market intelligence on how open (or closed) an authority's approach actually is. Third, treat a Direct Award Process C or Most Suitable Provider notice of intention as your moment to act: once that 8-working-day standstill period starts, a written representation is the statutory route to raise a concern before the contract is signed, not afterwards.
Can a supplier challenge a PSR award decision?
The PSR's own mechanism is the standstill period under regulation 12: once an authority publishes its notice of intention to award, a provider that objects can submit a written representation, which the authority must consider before the standstill ends and the contract is signed. This is a lighter, faster process than the general procurement remedies available under the Procurement Act 2023, reflecting the PSR's non-competitive default for many contracts. Suppliers who believe an authority has misapplied the regulations — for example, by using Direct Award Process A where a genuine alternative provider existed — retain the underlying option of a public law challenge, but the regime is built around resolving concerns during the standstill window rather than through litigation.
Read alongside our guide to what changed under the Procurement Act 2023, the PSR is best understood as the NHS's parallel track: the same transparency instincts, applied through a different set of processes built for a sector where continuity of clinical care often matters as much as competitive tension.