At the end of July, the High Court handed down a landmark procurement decision in the case of Consultant Connect Limited v NHS Bath ICB and Others  EWHC 2037 (TCC).
The Defendants were three NHS clinical commissioning groups (CCGs) in the southwest who ran a joint procurement for a contract to provide electronic communications services for GPs. The Defendant CCGs asked the Claimant and another provider, Cinapsis, to present their products at a demonstration event, however, the Claimant (Consultant Connect) was unaware that it was being marked, or that there was a scoring system in place.
It was evident that information had been provided to Cinapsis that would help Cinapsis win the contract. Following respective presentations by the bidders, the Defendants decided to award the contract under a previously tendered NHS-wide framework agreement to which Cinapsis was a party, whereas the Claimant was not. The Defendant CCGs then held a "mini competition" in which Cinapsis was the only party invited to tender and which excluded the Claimant as a non-framework supplier. The contract was subsequently awarded to Cinapsis with the Claimant being scored in second place.
In this article, we explore the issues raised by this landmark case, which sees the first-ever use of a shortening order in the UK to allow the Defendants to proceed with a lawful procurement. The ruling that a non-framework supplier can challenge the award of a call-off contract will have wider implications for public procurements and there are some key learning points that can be taken on board.
The issues at hand
The Claimant challenged the Defendant's decision based on alleged non-compliance when awarding a call-off contract under a framework agreement.
Contracting authorities must comply with both Regulations 18 and 33 of the Public Contracts Regulations 2015 (PCR) when awarding call-off contracts and the Claimant alleged that the Defendant's decision was unlawful due to breach of these provisions.
Regulation 18 sets out the key principles of any procurement process, including:
- the obligation to treat all economic operators equally and without discrimination;
- not designing a procurement exercise with the intention of excluding it from the application of the PCR or of artificially narrowing competition; and
- competition being considered to be artificially narrowed where the design of the procurement is intended to unduly favour or disadvantage certain economic operators.
Regulation 33 sets out specific rules governing the procedures to be followed when awarding call-off contracts under a framework agreement. These include, under Regulation 33(11), a requirement for any mini competitions to be based upon the same terms as applied to the award of the framework agreement.
In its defence, the Defendant argued that a challenge to a call-off could not be brought by a non-member of the relevant framework, as the non-member is typically unable to satisfy the "causation of loss test" under Regulation 91(11).
Kerr J found wide-ranging breaches of the Regulations, including that:
- the Defendants used the framework to effect the direct award of the contract to the Interested Party in breach of the equal treatment requirements under Regulation 18;
- the mini competition did not comply with Regulation 33, because (a) only one bidder was invited to tender; (b) the Defendants had tailored their requirements to that bidder; and (c) the pricing arrangement did not remotely resemble the pricing set out in the framework agreement; and
- two employees had conflicts of interest and, in breach of Regulation 24, no appropriate measures were taken by the Defendants to prevent them from being involved in the procurement.
The judge rejected the Defendants' argument that non-parties should be unable to challenge the award of a call-off contract under the relevant framework agreement. On the facts of the case, the Court found that the contract award breached a relevant duty owed to the non-member and the non-member suffered, or risked suffering, loss in consequence.
The judge made a contract shortening order – the first of its kind in the UK – to avoid impacting patient care and to allow the Defendants an opportunity to conduct a lawful procurement. The judge also ordered the Defendant CCGs to pay civil financial penalties (of £10,000, £8,000 and £4,000 respectively) and further found that the Defendant's breaches were sufficiently serious to award damages. Damages were assessed on the basis of loss of opportunity to the Claimant had the procurement been carried out in accordance with the PCR.
What can we learn?
The judgment provides a range of important lessons for contracting authorities, including:
- using a call-off contract under a framework agreement to appoint a preferred bidder;
- the legal obligations that apply to pre-procurement market testing;
- the rules that govern mini competitions under framework agreements; and
- the extent to which contracting authorities are required to actively avoid conflicts of interest.
To discuss any of the issues raised in this case or the key pointers in our summary, please contact Christopher Brennan or Alison Richards.