What is an application to lift the contract suspension?

The commencement of legal proceedings by an unsuccessful bidder in a public procurement process triggers an automatic suspension of the contract award. Not only does this carry costs and litigation risk for the commissioner, it prevents it from mobilising the new contract which could have adverse clinical, operational and/or financial consequences.

A commissioner can apply to the court to lift the contract suspension. If the application is successful, the commissioner is free to contract with its preferred bidder, thereby realising any benefits of the new service. Lifting the contract suspension means, however, that the commissioner may need to “pay twice” for the service if it is subsequently found at trial to have breached procurement law and is ordered by the court to pay the provider damages.

Current trend in applications to lift

Recent judgments have indicated that the suspension of the contract should only be maintained where losing it would cause “catastrophic” consequences to the challenger, such as causing business operations to fail, the loss of the entire workforce or damage to reputation in a way that could not be remedied. This includes where the challenger was a non-profit making public sector body delivering other services that could be negatively impacted by the loss of the contract (see Kent Community Health NHS FT v NHS Swale CCG and others [2016] EWHC 1393 (Capsticks represented the successful Claimant CCGs).

How is the Lancashire Care case different?

For the first time the court found that certain non-catastrophic consequences for the provider from losing the contract could still not be adequately compensated for by damages. These consequences were the impact (cost and disruption) on the provision of healthcare to the catchment areas of the two Trusts and the resulting need to restructure healthcare delivery. 

What does this mean for commissioners and providers?

It could make it easier for provider bidders to show that certain consequences from losing a contract are not able to be adequately compensated by money, such that the possible remedy of being awarded the contract should be preserved until a full trial.

Conversely, it may now be more difficult for commissioners to successfully apply to lift the suspension of the procurement in order to award the contract to its preferred bidder. A delay to the award of the contract could have adverse clinical, operational and/or financial consequences for commissioners.

How Capsticks can help

Capsticks regularly acts on behalf of healthcare commissioners and providers in handling complex and high-value procurement disputes, including making and defending applications to the High Court to lift the contract suspension. In the recent case of Sysmex (UK) Limited v Imperial College Healthcare NHS Trust [2017] we successfully applied on behalf of a large London healthcare provider to lift the suspension of a contract, which enabled our client to enter into a contract with its preferred bidder to derive its operational, clinical and financial benefits for our client and its service users.

If you would like to discuss this topic in more detail please contact Dylan Young or Hugh Wooster.