Procurement Alert: Court refuses to lift automatic suspension where other health services could be affected

Published 8 March 2018

Recently, the Court refused to lift an automatic suspension in a procurement challenge brought by two NHS Trusts against a Council on the basis that damages would not be an adequate remedy for the NHS Trusts concerned and that the balance of convenience lay in maintaining the automatic suspension.

The Judgement is very interesting in that it highlights a new issue to consider in the NHS procurement litigation landscape: the need to take into account the potential impact of a procurement decision on incumbent NHS providers – and how that decision may affect that NHS provider’s ability to deliver other services in their portfolio.

Background

This was an application to lift an automatic suspension which is applied where a claimant challenges a procurement process before the contract is awarded. The subject of this challenge was a procurement process under the "light touch regime" in the Public Contracts Regulations 2015 (the "PCR"), run by Lancashire County Council (the "Council") for 0-19 Public Health and Nursing Services. The contract in question has an estimated value of approximately £104 million over 5 years.

Two bids were received by the Council – a combined bid from Lancashire Care NHS Foundation Trust and Blackpool Teaching Hospitals NHS Foundation Trust (together the "Trusts") and a bid from Virgin Care Services Limited ("Virgin").

The final scores were very close and the Trusts challenged the decision to award to Virgin on the basis of an alleged manifest error in scoring.

Perhaps surprisingly, the Court refused to lift the automatic suspension and ruled that the case should proceed to full trial before the contract is awarded. It said that, in applying the usual “American Cyanamid” tests:

• there was a serious issue to be tried;
• damages would not be an adequate remedy; and
• the balance of convenience lay in maintaining the suspension.

The crux of the decision not to lift the suspension lay in the Court’s view that damages would not be an adequate remedy for the Trusts.

The impact the loss of the contract would have on other services

It seems that the main reason for the Court deciding that damages would not be adequate was the fact it would not just be the 0-19 services that would be affected. As a consequence of losing the contract, the Trusts would have to restructure their pathways, making it more difficult for the Trusts to deliver other similar public services which they are contracted to deliver, staff and resources would need to be reorganised, and there was evidence that there may be a loss of senior staff which could impact on other public services provided by the Trusts. The Court expressed that the fact the incumbent providers of the services are NHS Trusts, which are publicly funded and are providing other important public services, was an important factor.

Balance of Convenience

The Court further considered the public interest and the balance of convenience in maintaining the suspension and found that the “least risk of injustice” was to maintain the suspension and not allow the award of the contract to Virgin. 

Significantly, the Court noted that the Council had the option to extend its current contracts with the Trusts for the relevant services to cover the interim period leading to the full trial, which could be arranged on an expedited basis and so there was no urgency to get the new contract in place. 

Analysis

This case is interesting as the Court has focused on the nature of the services provided and the impact of lifting the suspension on the specific type of organisation that is delivering the services at present. It may be that an incumbent private sector provider of NHS services could make the same argument in relation to continuity of services. The position may well also have been different if there had been no option to extend the contract with the incumbent providers and/or they were unwilling to do so.

Note that this was not the result of a full trial and the substantive issues relative to evaluation were not interrogated by the Court. The fact that the Court will expedite the trial means that we should see the outcome of that trial within the next few months, providing it goes ahead.  So for now, watch this space.