The CCGs selected Virgin Care Limited (Virgin) as their preferred provider. Legal proceedings were issued by the incumbent provider, Kent Community Health NHS Foundation Trust (the Trust), challenging the procurement process and outcome. The commencement of a claim under the Public Contracts Regulations 2006 Trust triggered an “automatic suspension” of the CCGs’ right to award a contract to Virgin.

The CCGs made a successful application to the court to lift the automatic suspension so that they could proceed to enter into the contract with Virgin.

Why is this case important?

The automatic suspension preserves the possibility of the tender process being altered or re-run if the challenge succeeds. If the automatic suspension is lifted, and a contract entered between the contracting authority and its preferred bidder, the court does not have the power to set that contract aside at the end of trial (other than if the strict conditions for “ineffectiveness” are met). Any remedy for a successful challenge is limited to damages.

In deciding whether to lift the automatic suspension, the court must examine (among other factors) whether damages would adequately compensate the challenger if its claim is successful at trial.

The Trust argued that, as a not for profit organisation, damages would not be adequate, and therefore the automatic suspension should remain in place.

The court rejected this argument, and found that the Trust’s “losses”, if its challenge succeeded, could be quantified and made the subject of an appropriate award of damages. Further, the court did not find that any other factors, such as a threat to the Trust’s ongoing viability, justified keeping the suspension in place.

The Court considered whether the “balance of convenience” favoured lifting the suspension. The Court considered that it could not determine which arrangement would be in the best interests of patients, where two branches of the NHS took opposing views. However, the uncertainty and delay caused by the suspension, and the CCGs’ wish to avoid mobilisation during winter favoured the lifting of the suspension. 

The Court therefore ordered that the automatic suspension should be lifted in order to allow the CCGs to enter into a contract with Virgin.

What does the case mean for clinical commissioning challenges?

This case has endorsed and developed the approach taken by the courts in similar recent cases, and provides a strong indication that it will be difficult for NHS and other large providers of healthcare services to maintain the automatic suspension when challenging a commissioning decision under the procurement regime.  The Court is likely to find that the loss to those organisations can be compensated in damages, and (unlike, for example, smaller community interest companies) the loss of individual contracts is unlikely to pose a threat to their ongoing viability. The Court is unlikely to hold an enquiry into the relative quality of providers when considering the public interest in mobilisation of a new contract.

How can Capsticks help you?

Capsticks’ public procurement team is experienced in advising on all aspects of procurement disputes, including acting for claimants, defendants and interested parties in High Court proceedings. We can utilise our expertise to advise you on the most effective strategies for pursuing or defending procurement claims. 

If you would like more information on this case or our expertise please contact Daniel PurcellJane Barker and Dylan Young.