We recently acted for NRS Healthcare who had been successful in winning the largest community equipment services (CES) contract in the UK, only to find that commissioners could not let the contract because the incumbent provider had issued a procurement challenge at court.
The effect of this was to impose an automatic suspension, preventing commissioners from letting the contract until the challenge had been resolved, or until the automatic suspension was lifted by the court. The difficulty faced by both commissioners and NRS Healthcare was that mobilisation could not proceed and the benefits of the new service could not be introduced for the foreseeable future.
As a consequence, commissioners decided that an urgent application to lift the automatic suspension should be made to the court. The application was issued on 8 November 2022 and the hearing took place on 15 December 2022. Normally it takes a very long time for hearings to take place, but the court agreed that this was an urgent situation which justified the application being expedited. The legal proceedings were between Medequip (the incumbent provider who was challenging the award) and Royal Borough of Kensington and Chelsea, as commissioner of the framework. We represented NRS Healthcare who joined into the legal process as an interested party and were given permission to be heard by the court on the application.
You can read the judgment from the court here.
The judge reviewed all the principles that apply when considering whether to lift the automatic suspension and the case is a good summary and confirmation of the law and principles that apply. Essentially, the court must consider three factors: whether there is a serious case to be tried, whether damages would be an adequate remedy if the suspension were lifted and the consideration of where the balance of convenience should sit in ensuring justice between the parties.
The judge addressed issues such as the reputational harm that the loss of the contract may cause the incumbent challenger, the impact on the size and structure of their business, the concern around the potential loss of specialised staff and possible uncertainty in determining damages at trial. Taking all relevant matters into account, the court decided that the balance of convenience very much sat with commissioners and NRS Healthcare. It commented that commissioners should be able to acquire the delivery of services on the terms and in the way it wants, and therefore immediately lifted the automatic suspension so that the contract could be let and service users could benefit from the new contract.
What are the takeaways from this case?
Often if an incumbent provider issues legal proceedings to challenge an unsuccessful bid, commissioners will be concerned about what can be done to avoid protracted litigation and may consider that the only option is to give in to the challenge and agree to re-run the process. However, this case is a reminder that there is another option to uphold the award in the original procurement process and apply to lift the automatic suspension. Although the outcome of such an application will be fact specific, it is frequently the position that the courts will favour lifting the automatic suspension. This is therefore something that should always be considered by commissioners, with support where appropriate, from any interested parties.
Commissioners and winning bidders should take detailed advice about the options open to them and commissioners should not necessarily go down the path of re-running the process, which will usually only be to the benefit of the incumbent provider and will delay or negate any improvements in service and price offered by the winning bidder.
Finally, the case offers some comfort to successful bidders that a challenge doesn’t necessarily mean they will be left in limbo for many months pending trial, or re-running the process.
For more information
If you would like to find out more information or advice on the issues involved in procurement challenges, please contact Andrew Lancaster or Amy Callahan-Page.