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Caselaw Update: Solent NHS Trust v Hampshire CC [2015] EWHC 457 (TCC)

Background

In this recent case, Hampshire County Council ("HCC") sought to procure an enhanced provision for adult substance misuse recovery services, with emphasis placed on greater levels of integration.  HCC's previous contract for these services included the provision of an inpatient drug and alcohol detoxification service and a specialist carers support service. 

Upon coming second in the tender competition, Solent NHS Trust ("Solent") (the incumbent service provider) claimed that HCC had incorrectly applied the scoring methodology and had been untransparent in the inclusion of undisclosed selection criteria.  Solent issued proceedings against HCC for breach of the Public Contracts Regulations 2006i. 

Statutory suspension

A key feature of this claim, is that Solent commenced proceedings during the standstill period. 

In the event that proceedings are issued during the standstill period, the Public Contract Regulations require a contracting authority to refrain from entering into any new contract until the proceedings at first instance are determined, discontinued or otherwise disposed of.

In response to the statutory suspension, HCC applied to the Court under Regulation 47H to have the suspension lifted. 

3-stage hurdle

In deciding whether or not to lift the suspension, the Court had to decide whether there was:

(i) a serious question to be tried;

(ii) whether Solent would be adequately compensated by an award of damages; and

(iii) whether on the balance of convenience the suspension should or should not remain in place.

In relation to the first issue, the Court felt that it was not in a position to assess the relative strengths and weaknesses of Solent's claim for breach because of the limited written evidence it had before it.  However, the Court concluded that there was a serious issue to be tried.

In assessing whether damages were held to be a sufficient remedy, the High Court found that lost profits, costs of TUPE transfers, the closure of a residential unit and wasted tender costs could all be readily quantified.  The Court also found that lifting the suspension would have an immaterial effect on Solent's reputation, especially given that Solent had pre-qualified to tender for the new contract.  As such, damages were deemed an adequate remedy in this case.

Finally, the High Court decided that the balance of convenience lay in immediately lifting the suspension.  It was found that any delay would have a severe consequence for the 3,200 drug and alcohol addicts who were in need of these life-saving services and the Court considered that there was a precedent for taking into account public interest factors from a previous NHS case over and above the public interest in seeing that there is compliance with the Law.

In light of the above, HCC's application was granted and the statutory suspension was lifted.

Relevance for the Public Sector

This case provides a clear illustration of how a contracting authority may apply to the Court to have a statutory suspension lifted.  The public interest dimension to the balance of convenience test will be most pertinent to contracting authorities who find themselves in this situation, particularly where there is an issue of public health.

Although there were queries as to the strength of Solent's claim, this case further underscores the urgency for contracting authorities to be vigilant in adhering to the published criteria and scoring methodology during the evaluation of tenders and transparent in all criteria used.