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NPFIT TENDERING PROCESS Guiding Principles The Local Service Provider (LSP) procurement was conducted under The Public Services Contracts Regulations 1993 and Council Directive 92/50/EC as amended in each case. The Authority* followed the competitive form of the negotiated procedure which is provided for under that legislation. As outlined in the OJEC Notice, the Authority conducted the procurement process on behalf of itself and other participating bodies in the healthcare sector, including, inter alia: (a) all health authorities, National Health Service Trusts and Primary Care Trusts, social care organizations and any other person(s) or body established or financed under the National Health Service Act 1977 as amended; and (b) the Northern Ireland Department of Health and Social Services, and any other health and social services body in Northern Ireland. However, at this stage, the Authority conducted the procurement process on behalf of itself and such other participating bodies in England only. This procurement adhered to the principles of procurement as identified in "Delivering 21st Century IT Support for the NHS". A set of Key Commercial Principles (see Appendix to Annex 1) were developed by the Authority to form the basis for the LSP Contract. The procurement of LSPs was subject to the formal approval process of the Department, HM Treasury and others. OJEC The tendering competition for the procurement of the LSPs was commenced by publication on 7 February 2003 of the OJEC Notice, together with Supplementary Notices on 12 February 2003 and 19 February 2003. Candidates were invited to express an interest in appointment as a LSP. Candidates also had the opportunity to express an interest in their appointment as a NASP and were entitled to express an interest in either one or both appointments. Following evaluation of 99 Expressions of Interest for both NASP and LSP opportunities, the Authority selected twenty-two candidates (Longlist) to be invited to submit Outline Proposals for their appointment as LSPs. Preliminary Invitation To Negotiate (PITN) An Output Based Specification (OBS 1), divided into four sections, was issued to all LSP Longlisted Bidders on 16 May 2003, and represented an overall statement of the Authority’s requirements. Following this release, the PITN relating exclusively to the appointment of the LSPs was circulated to Longlisted Bidders on 1st June 2003, and invited LSP Longlisted Bidders to submit their Outline Proposal for the appointment as LSP by 30th June 2003. Page 1 of 12 NPFIT TENDERING PROCESS The Authority arranged clarification meetings with LSP Longlisted Bidders prior to Bidder submittal of their Outline Proposal. Following evaluation of Bidders responses against pre-determined evaluation criteria the Authority elected to shortlist a minimum of three LSP Bidders for each LSP Cluster. As a result of this process, the Authority Shortlisted 9 organisations to compete for the 5 available LSP contracts. Final Invitation To Negotiate (FITN) The Final ITN was issued on 1st August 2003 and included the following components: • A detailed indication of the Authority's requirements for the Final Negotiation Stage; • OBS 2, with each LSP Cluster having different content. LSP Shortlisted Bidders only received that part of OBS 2 which related to the LSP Cluster for which they had been Shortlisted. OBS 2 also included additional information in certain modules to provide detailed requirements where this has not been previously stated. After the issue of the Final ITN, the Authority negotiated a comprehensive LSP Contract with each of the LSP Shortlisted Bidders. These negotiations were intensive and detailed in nature, and each LSP Shortlisted Bidders was offered equal contact time with the Authority. Throughout the negotiation process the Authority reserved the right to reduce the number of LSP Shortlisted Bidders at any time up to the issue of invitations to BAFO. Invitation For Best And Final Offer (BAFO or IBAFO) The BAFO invitation was distributed to Shortlisted Bidders for Wave 1 Clusters (London & North East) on 6th November 2003, and to Shortlisted Bidders for Wave 2 (Southern, Eastern and North West) Clusters on 21st November 2003. Bidders were required to submit – • Mandatory Reference Bid • Mandatory Variant Bid • Optional Variant Bid The BAFO evaluation process comprised two phases: 1. Evaluation of Responses to BAFO ("IBAFO Phase"); and 2. Confirmation and clarification with Shortlisted Bidders ("Confirmation and Clarification Phase"), together the "Evaluation Process". Upon receipt, the Responses were formally evaluated on the basis of the criteria declared in the original PITN and in accordance with the Evaluation Methodology developed by the Authority. The Evaluation Methodology was consistent with the evaluation process used across NPfIT. Page 2 of 12 NPFIT TENDERING PROCESS On completion of the IBAFO Phase, the Shortlisted Bidders were invited to participate in the Confirmation and Clarification Phase to clarify issues that were not clear in the Response or in other information submitted to the Authority. The Confirmation and Clarification Phase consisted of a series of meetings with the Shortlisted Bidders at which their respective Responses were considered by the Authority. The Authority reserved the right to exclude any one or more Shortlisted Bidders at any time after 1 December 2003 should: • Such Bidder(s) fail in a material respect to meet one or more of the evaluation criteria; or • Any such Bidder's Response compare unfavourably with the economic value offered by other Shortlisted Bidders. Call Option Deed The purpose of the Call Option Deed was to protect the Authority's position between agreeing the form of the LSP Contract and completion of the evaluation and negotiation process. The Call Option Deed provided the Authority with the option (but no obligation) to call for a LSP Shortlisted Bidder to enter into the LSP Contract in the agreed form. The Call Option allowed the parties to negotiate in good faith so as to agree all unresolved issues and to agree all such amendments to the Project Agreement as a result of the negotiation. Summary Contract awards resulting from the processes used in the LSP procurement were made on the basis of which Shortlisted Bidder offered the most economically advantageous terms to the Authority. * the Authority’ is a term defined in NPfIT contracts, and throughout the above effectively means the Department of Health represented by the National Programme for IT. Page 3 of 12 NPFIT TENDERING PROCESS Appendix 1 Key Commercial Principles 30 May 2003 Any defined (capitalised) terms are taken from the LSP Contract. Key Commercial Authority Requirement Contractor Principle Bidder Response 1. Authority, The LSP Contract will be awarded on behalf of Contracting the Department and NHS bodies. Party and NHS Trusts 2. Parent The parent company of the Contractor will Company provide a full performance guarantee (including Guarantee financial obligations) for the Contractor's obligations under the LSP Contract. 3. Service The Contractor will perform the services in Obligations accordance with the Customer Requirements and the Contractor's Technical Solution. The Customer Requirements will take precedence in the event of conflict or inconsistency. The Authority will not provide a warranted environment. The Contractor will be expected to undertake due diligence prior to contract signature. 4. Implementation The Contractor shall implement the new ICRS of ICRS solution in accordance with the milestones in Solution the Implementation Plan. During the Implementation Phase, the Contractor shall continue participation in the National Programme for IT's testing environment as specified in the Implementation Plan. Failure to meet acceptance criteria by the interim or final milestones will result in liability to pay Liquidated Damages for the delay and non-payment of Service Payments until the relevant milestones are met. Failure to meet milestones will also be a material breach. 5. Service Levels The Contractor shall meet the Service Levels and Service for the Services, including, in the case of the Deductions LSP Contracts, inherited service levels where the Contractor is taking over existing services. Page 4 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response During the term of the LSP Contract, there will be specified continuous improvement obligations in relation to the Service Levels. Service Deductions will apply in relation to a failure to provide the Services in accordance with Service Levels. Service Deductions will be payable at a higher rate for Critical Service Levels or a persistent failure to meet Service Levels. Service Deductions are separate from and shall not erode the limitations of liability. Service Deductions may be re-allocated by the Authority once in every Contract Year in accordance with its strategic requirements. 6. Subcontractors The Contractor may not appoint, amend or terminate any material subcontract without the prior written consent of the Authority. Material subcontractors may be required to enter into collateral contracts directly with the Authority. 7. Novation of The Authority may at some stage novate legacy certain legacy contracts. Where legacy contracts and contracts are not novated, the Contractor shall Managed provide management services on behalf of the Services Authority in relation to the legacy contracts. This will include monitoring and reporting on the managed contractor performance and using all reasonable endeavours to ensure the managed contractor performs its obligations. 8. Change The Contractor shall have available designated Control resources to undertake changes. Certain categories of change may be called off from a pre-agreed catalogue. Other changes will be discussed by the parties through the change control procedure and the charges for these changes will be calculated in accordance with an agreed pricing model. Where the Authority proposes a change through the change control procedure, the Contractor will undertake the change if it is technically capable of doing so. Page 5 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response 9. Regulatory The parties shall comply with all regulatory Compliance requirements. The Contractor shall be and responsible for the costs of general changes in Regulatory law including NHS changes in law. Change. 10. Technology The Contractor shall undertake a programme Refresh and of technology refresh and continuous Continuous improvement. The Contractor shall ensure that Improvement at all times it is using supported versions of software and hardware to enable the Authority to continue to receive services post termination. 11. Non The Contractor is not the exclusive supplier of Exclusivity services to the Authority. The Contractor and other IT suppliers will not enter into exclusive or restrictive arrangements which prevent IT suppliers providing software and/or hardware to any other supplier of services to government bodies providing health or social care. 12. Interoperability The Contractor will comply with the Interoperability Requirements for ICRS Contractors, NASPs and NISPs, including the requirement for applications to exchange data. This will include obligations to integrate local services and systems with NASP services such as ebookings and NISP services such as N3. ICRS Contractors, NISPs and NASPs will participate in a Technology Forum to ensure effective service delivery and the development and implementation of innovation for the National Programme for IT. All disputes between ICRS Contractors, NISPs and NASPs regarding the delivery of service to the National Programme for IT will be subject to the authority of the National Programme for IT and the dispute resolution procedure. 13. Authority The Authority's obligations and Contractor Responsibilitie dependencies will be clearly set out in the LSP s and Contracts. Excusing The Contractor will be relieved of its Page 6 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response Causes obligations to provide the Services in so far as it is unable to do so as a direct result of the Authority's failure to perform its obligations which cannot be mitigated by the Contractor. This shall be the Contractor's sole remedy for the Authority's failure to perform its obligations other than non payment of fees. 14. General The Authority will require cost transparency Pricing and menu pricing. More details on the pricing Principles requirements will be set out in the separate pricing paper. 15. Key Personnel The contract will identify the Contractor's Key Personnel. Any replacement Key Personnel must be appointed in agreement with the Authority. The Authority may require the removal of Key Personnel. 16. Intellectual The Contractor shall grant the Authority an Property assignment or a non-exclusive perpetual, irrevocable and royalty-free licence to use Specially Written Software for any purpose and to use all other Contractor IPR and Software for the purposes of the LSP Contract. The Contractor shall also procure a perpetual sub- licence or direct licence for the Authority to use Third Party Software that the Contractor uses in the provision of the Services (including the right to obtain maintenance and support from subcontractors post termination and the right to use for a replacement Contractor). Where appropriate, the IPR licences for the Authority set out above may include certain rights for all government bodies, including those providing health or social care. In the case of certain Specially Written Software, the Contractor shall also provide the Authority with access to and the right to amend source code upon termination or expiry of the contract. All source code for Specifically Written Software will be held in escrow. Where the Contractor exploits Specifically Written Software with third parties, this shall result in a reduction in Service Payments Page 7 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response payable by the Authority to reflect the benefit realised by the Contractor or other benefit sharing mechanism. The Contractor shall not acquire any Intellectual Property Rights in Data relating to the NHS or patients. 17. Contract The parties will establish a Liaison Committee Governance for joint review of performance issues, strategic developments and dispute resolution. Bidders are encouraged to propose additional governance structures and processes to facilitate effective communication and value generation for both parties and to manage any project issues as they arise. 18. Benchmarking Benchmarking shall apply to service performance, service levels and Service Payments, and shall apply to individual service elements and not just the Service as a whole. The Contractor shall implement any reduction in Service Payments specified in the Benchmarking Report immediately, and shall implement any required improvements in service performance and service levels within a specified period. Benchmarking may include the use of data from one or all of the other four LSP Contracts and, subject to the appropriate maintenance of commercial confidentiality, may be used to determine whether the Service Payments to the Contractor and service performance constitute value for money. 19. Management The Contractor shall monitor and audit its own Information performance of the Services and shall provide and Audit the Authority's Representatives and designated bodies with access to all reports from such internal audits and monitoring. The Contractor shall also provide the Authority's Representatives and designated bodies with specified management information and an annual Certificate of Costs at the end of Page 8 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response each year. The Authority's Representatives and designated bodies shall have rights of access to the Contractor's premises to monitor performance of the Services and to verify the Service Payments. The Contractor shall ensure that subcontractors grant the same audit and monitoring rights. 20. Confidentiality The Contractor will not have any access to & Security patient specific information. The Contractor shall comply with the Authority's Confidentiality and Security Requirements and shall notify the Authority of any breach or potential breach of the Confidentiality and Security Requirements. 21. Business The Contractor shall comply with the provisions Continuity of the Disaster Recovery Plan and shall ensure that the Disaster Recovery Plan is capable of implementation at all times. The Contractor shall make regular risk assessments in relation to the Services. 22. Remedies for The Authority's remedies for breach by the breach Contractor may include: Re-performance by the Contractor of its obligations; the service by the Authority of a Warning Notice providing for increased monitoring, including monitoring of subcontractors where appropriate; a survey by the Authority of the Contractor's asset maintenance; withholding of Service Payments; payment of Liquidated Damages for failure to achieve milestones, or Service Deductions, as appropriate; exercise of step in rights; Page 9 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response partial termination or full termination; (viii) requiring the Contractor to work with another Supplier/Contractor in a designated capacity; and (ix) general damages. 23. Step in Rights The Authority may step in, or appoint a third party to do so, in certain circumstances, including where: (i) a Contractor act or omission (i) creates an immediate and serious health or safety risk, (ii) creates a material interruption or delay in the provision of the Services or any other service to the Authority or (iii) is prejudicial to the Authority's ability to provide Clinical Services to a material degree; (ii) a fixed level of Service Deductions or Liquidated Damages is accrued in a specified period; (iii) the Authority needs to step in to discharge a statutory duty or satisfy the requirements of a Regulator; (iv) the Authority considers the circumstances to be an emergency; or (v) a benchmarking exercise reveals unsatisfactory performance in comparison to other Contractors. 24. Termination The Authority may terminate the LSP Contract Rights for Contractor Events of Default including: (i) insolvency; (ii) failure to meet the Commencement Date or the key milestones in the Implementation Plan (iii) material breach of the LSP Contract, failure to perform Critical Service Levels, or the award of a specified amount of Page 10 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response Service Deductions in any contract year; (iv) change of control of the Contractor, guarantor or a material subcontractor to a Restricted Person or where, in the Authority's reasonable opinion, the change of control results in a material reduction in the performance of the Service Levels; and (v) material breach by the Contractor of any other contract with the DoH or NHS. The Authority shall have the right to require termination of a subcontract on the occurrence of any of the above Events of Default by a subcontractor. The Authority may also terminate for convenience or on the occurrence of Force Majeure Event. Where the Authority can terminate the Agreement, it may also exercise a right to partial termination of service elements. (i) The Contractor may only terminate the contract for non-payment of undisputed Service Payments which has been notified to a designated person. 25. Consequences Following notice of termination, the Contractor of Termination may be required to continue to perform the Services for the Termination Period. The Contractor shall also provide termination assistance during the Termination Period and shall transfer assets to the Authority to ensure a smooth transition of the Services back to the Authority or a replacement Contractor. The detailed requirements for termination assistance will be set out in the Exit Plan, which shall be capable of implementation at all times. The costs of providing termination assistance shall be calculated in accordance with the pricing model. Page 11 of 12 NPFIT TENDERING PROCESS Key Commercial Authority Requirement Contractor Principle Bidder Response 26. Liability The parties shall agree a general cap of liability for the LSP Contract. In addition, separate caps may apply to specific categories of loss. Service Deductions and Liquidated Damages paid or payable under the LSP Contract shall not reduce the Contractor's limitation of liability. Neither party shall be liable for indirect/consequential loss although certain categories of foreseeable loss relating specifically to the provision of the Services shall be recoverable. Page 12 of 12
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