Public procurement exercises must be conducted in accordance with strict rules and, where their fairness is challenged, the award of contracts is instantly suspended. That, however, can have a grave impact on essential public services and, as a High Court case showed, that factor is always uppermost in judges’ minds.
A private company had for a decade run a treatment centre under a contract with an NHS clinical commissioning group (CCG). Following a tendering process, it was stripped of that contract, which was awarded to an NHS trust. After the company challenged that outcome, the award of the new contract was suspended by operation of the Public Contracts Regulations 2015 (the PCR).
The company argued that the tendering process was infected by numerous breaches of the PCR. Amongst other things, it pointed to the alleged financial frailty of the NHS trust and argued that its bid was unsustainable and abnormally low. There were also said to have been manifest errors in the marking of the rival bids. The CCG denied that there was any substance in the company’s criticisms and applied to the Court to lift the suspension, enabling the contract award to proceed as planned.
The company argued that the termination of its contract posed an existential threat to its business. Quite apart from lost profits and redundancy costs, it would suffer acute reputational damage. In lifting the suspension, however, the Court found that, if the company’s criticisms of the procurement exercise proved justified, it could be adequately compensated for any losses arising by an award of damages.
Such an award would effectively result in the CCG paying twice for the same public services. However, the Court observed that such an outcome was envisaged by the PCR and that Parliament had clearly considered that it was a price worth paying to achieve proper compliance with public procurement legislation.
Observing that the interests of patients are paramount, the Court expressed concern about the timing, feasibility and robustness of the CCG’s plans for the handover of the treatment centre to its new management. However, the decision whether or not to extend the company’s contract in order to facilitate a smooth transition was entirely a matter for the CCG’s consideration.
