Procurement in a nutshell – automatic suspension
17th April, 2015
In this Procurement in a Nutshell update we will be looking at two recent decisions on automatic suspension under the Public Contracts Regulations 2006.
Regulation 47G(1) of the 2006 Regulations imposes an automatic suspension on the award of a contract where a claim is brought under the Public Contracts Regulations.
Contracting Authorities can apply to have the suspension lifted under regulation 47(H) and the court will apply the test in American Cyanamid in determining the application, namely whether there is a serious issue to be tried and where the balance of convenience lies.
These provisions are replicated under regulations 95 and 96 of the Public Contracts Regulations 2015.
What’s New?
Two recent cases illustrate how the courts view the issue of automatic suspension.
Solent NHS Trust v Hampshire County Council [2015]
Solent NHS Trust (Solent) was the incumbent provider of adult substance misuse recovery services to Hampshire County Council (the Council). The Council wanted to improve services through greater integration and therefore began a procurement process for a new services contract.
Solent were unsuccessful in their tender and challenged the decision, alleging that there were errors in the Council’s scoring procedure and that they had failed to follow the published criteria and scoring methodology in their procurement documents. As a result, the award of the contract was automatically suspended and the Council applied to lift the suspension.
The Court granted the application. It held that damages would be an adequate remedy for Solent because its loss of profit would not be difficult to quantify and there would be little damage to its reputation as there was no suggestion it was not awarded the contract due to poor performance.
In looking at the balance of convenience, the Court looked at the effect the delay would have on users, citing precedents suggesting it could look at public interest factors.
Although there was evidence that the existing services could be provided in the meantime, the whole point of the Council’s procurement process was to secure substantial and important improvements to those services for users through greater integration.
Further, the delay was likely to be harmful to a number of vulnerable people and the Court concluded it should not take risks with people’s lives.
The benefits of the integrated services should be achieved as soon as possible and therefore the suspension should be lifted.
Please click here for the case.
Bristol Missing Link Ltd v Bristol City Council [2015]
Bristol City Council (the Council) applied to lift an automatic suspension in place in respect of an award of a contract for domestic violence and support services. Bristol Missing Link (BMLL), a non-profit making organisation and the incumbent provider of the services, challenged the procurement, claiming that the scoring and moderation process was flawed and after being refused disclosure of the successful tender and evaluation documents by the Council.
In this case, the application was refused. The Court held that there was a serious issue to be tried in respect of the scoring and moderation of the tenders and the balance of convenience lay in favour of maintain the suspension.
This was because damages would not be an adequate remedy for Bristol Missing Link’s due to their non-profit status, the harm caused to them by the loss of the contract and the knock-on effect this might have on their provision of services in other locations and as a consequence, damage to their reputation.
In contrast, the Court held that damages would be an adequate remedy for the Council were the claim to be held to be unfounded.
The Court also said that it was unfair to allow the Council to rely on evidence regarding the relative advantages of the successful tender to suggest they and service users would be prejudiced by the delay in awarding the contract when it would not disclose the tender to BMLL voluntarily.
In such circumstances, the Court found that the evidence provided by the Council did not demonstrate that the new contract would provide services to the users which were significantly better than the existing ones provided by BMLL.
Please click here for the case.
Why is it important?
Both cases provide some useful guidance on how the Court will apply the various legal tests in considering whether to lift automatic suspensions in procurement challenges.
Whilst Solent suggested that the Court may look at public interest factors and decide to lift the suspension in the case of urgent social / healthcare contracts, Bristol suggests that, even in these circumstances, the suspension can be maintained in the interests of justice.
Bristol is also significant because of the way that disclosure was dealt with – Contracting Authorities may not be able to rely on relevant material that they disclose for the first time in their application to lift the suspension.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
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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