Procurement in a Nutshell – The abandonment of a public procurement exercise
25th March, 2020
This was a dispute between Ryhurst Ltd (the "Claimant") and Whittington Health NHS Trust ("the Defendant") following the Defendant choosing to abandon a public procurement exercise that had been awarded to the Claimant nine months earlier.
The Claimant is a specialist provider of health estate management services and is part of a group that includes a company that had been responsible for the supply and installation of the cladding for London tower block, Grenfell.
The Defendant decided to commence a procurement exercise back in June 2016 for a 10 year strategic estates partnership (SEP) contract.
At the end of the procurement exercise, the contract was awarded to the Claimant in October 2017.
Following this, the Defendant decided to abandon the procurement due to their financial situation improving, it’s strengthened relations with other partner organisations, the risk of insufficient stakeholder engagement, and the need for approval from the Trust’s regulator NHS Improvements.
The Claimant brought a claim forward on the basis that the real reason why the Defendant abandoned the procurement exercise was due to pressure placed on the Defendant by local campaign groups, MPs and others due to the connection with the Grenfell. The basis of the claim was that the Defendant had breached its duties owed under the Public Contracts Regulations 2015 and therefore sought damages for losses alleged to have been suffered as a result of those breaches.
HHJ Stephen Davies concluded:
“Having considered the evidence and the arguments my decision is that Ryhurst has not succeeded in making out its case on liability so that its claim must fail. Had I found for Ryhurst on its primary case in relation to liability it would have succeeded in establishing causation and sufficiently serious breach.”
The following three points were the focus of the judgment:
1. Reason for abandonment
It had been established that the financial position of the Trust had changed significantly between June 2016 and June 2018. This reason alone was genuine and significant enough to warrant the abandonment of the procurement exercise.
Although the connection to Grenfell was a key factor for the political opposition against the claimant, it was not the only reason for their opposition.
It was therefore decided that the Trust had behaved in a reasonable manner and had genuine reasons for abandoning the procurement exercise.
2. Claim for Breach
The Defendant’s decision to abandon the procurement had not breached its obligations of equal treatment, proportionality or avoiding manifest error. Therefore, it was decided that there had been no breach to its duties under the Public Contracts Regulations.
Why is this important?
This case demonstrates the ability to abandon a procurement exercise should there be reasonable and sufficient reasons in doing so. In this case, the Claimant had failed to in its core case that the reason for the abandonment was political pressure based solely or primarily on the Grenfell connection. There were in fact a number of reasons as to why the Defendant came to the decision to abandon the procurement exercise.
Furthermore, this case also makes it clear that should the duty of transparency be breached, this could change the outcome of a case. In this case, the Judge confirmed that the Defendant had not been in breach as there had been no change of real significance until the Trust Board decided to abandon the procurement at the June 2018 meeting. Any changes prior to this were not required to be notified under the transparency obligation.
How can I find out more?
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Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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