What do those commissioning and procuring health and social care services need to know?
Following a somewhat turbulent time for health and social care reform, the Care Reform (Scotland) Act 2025 received Royal Assent on 22 July 2025. This follows the scaling back of the plan to create a new National Care Service in Scotland under the National Care Service Bill.
Whilst the Care Reform (Scotland) Act 2025 (the Act) covers a number of care-related areas, this short briefing focuses on what the Act will mean for the commissioning and procurement of health and social care services in Scotland, once the relevant provisions come into force.
Reserving certain contracts to qualifying organisations
A new and potentially significant reform under the Act is the possibility for those purchasing health and social care services to reserve participation in procurement processes for certain contracts to particular types of qualifying organisations. This is along similar lines to the provisions under existing procurement laws, under which it is possible to limit participation in a procurement exercise to supported businesses.
To constitute a reservable contract, the contract must be for services which constitute or are connected with a function which it is possible to delegate in terms of the Public Bodies (Joint Working) (Scotland) Act 2014. Local authorities and health boards are required by law to work together to plan and deliver adult community health and social care services, including services for older people. This approach is known as ‘health and social care integration’. The 2014 Act also permitted local authorities and health boards to integrate other services, such as children’s services, homelessness, and criminal justice, if they wished to do so. Alternatively, the contract must be for services which constitute or are connected with a function exercisable by a health board or special health board constituted under the National Health Service (Scotland) Act 1978.
Secondly, the service must fall within certain identified health, social and related service codes set out in Schedule 3 of the Public Contracts (Scotland) Regulations 2015 (the "Procurement Regulations"). Scottish Ministers have the power to change these codes.
To qualify, an organisation must exist solely to provide benefits to society or the environment. The organisation can't be established by an enactment or be controlled by such organisation(s), nor can it be under the control of another that is controlled by such organisation(s). The profits of the organisation must be reinvested to meet its aims, being to benefit society or the environment. Alternatively, its profits must be distributed to the community it has been set up to provide benefit to. Broadly speaking, this definition will catch charities and wholly asset-locked third sector bodies set up to benefit society or the environment. Scottish Ministers have the power to vary this definition.
Power to amend the Light Touch Regime threshold
The Act sets out a power to amend the threshold for the application of Regulations 74-76 of the Procurement Regulations (otherwise known as "the Light Touch Regime (LTR)"). The LTR applies to the procurement of health and social care services which fall within the service codes referred to above. LTR provides for a more flexible procurement process, removing the need to follow the usual, more formulaic, and prescriptive processes set out in the Procurement Regulations. The LTR currently applies where the total contract value over the life of the contract is £663,540 inclusive of VAT or above. Below this figure, in terms of the Procurement Reform (Scotland) Act 2014 (the 2014 Act), it is possible to directly award these health and social care contracts up to the LTR threshold.
Requirement to issue Ethical Commissioning Guidance
In terms of the Act, Scottish Ministers must issue Ethical Commissioning Guidance following consultation with certain organisations connected with an Integration Joint Board and certain groups, for example health professionals and users of health care. The Guidance must also address the fair treatment of workers, including workers recruited from overseas. Such Guidance would require to be followed unless there was good reason not to do so.
Extension of procurement strategy requirements
Finally, the Act expands the existing requirements under the 2014 Act to produce a procurement strategy. Under the 2014 Act, a procurement strategy must be prepared by a contracting authority where the estimated value of its regulated procurements is £5m or more. In terms of the Act, if such an authority intends to carry out regulated procurements under the 2014 Act in connection with functions it has delegated to an Integration Joint Board, the authority must include a statement in its procurement strategy setting out how it intends to approach those procurements in a way which is consistent with the Integration Authority's strategic plan.
Initial observations
As noted, the Act has received Royal Assent; however, most of its provisions remain unenforced at this stage.
The ability to reserve contracts will provide purchasers of health and social care services with a route to conducting procurement processes, within the prescribed areas, with only those organisations that have been set up specifically to improve social, economic, and environmental well-being. As said above, this definition will catch charities and wholly asset-locked third sector bodies set up to benefit society or the environment.
Whilst the Act does not change thresholds, if the Light Touch Regime threshold is increased by Scottish Ministers off the back of this Act, public sector purchasers would be able to directly award health and social care services up to a higher level.
The changes will likely be welcomed, as additional tools potentially giving more flexibility when it comes to the way in which the public sector and third sector can work together in delivering health and care-related public functions. Whilst the changes do not provide wholesale delivery of the recommendations in the Feeley report, they nevertheless represent a step forward.
