In Consultant Connect Limited v NHS Bath and North East Somerset, Swindon and Wiltshire Integrated Care Board & Ors the High Court of England and Wales confirmed that an operator that is not on a framework can challenge the unlawful use of the framework if, as in this case, it lost out as a result.

The case relates to a joint procurement exercise run in 2020 and 2021 by three NHS Care Boards (the "Boards") for a contract to supply communications services within the NHS. These services were to take the form of an app through which GPs could obtain advice from hospital consultants. Consultant Connect ("CC") already had a contract to supply these kind of services at three hospitals in the area.

CC and two other companies were invited to make a product presentation to the Boards in November 2020. These presentations were marked against criteria that had been set by the Boards but not disclosed to the companies (which did not even know that the presentations, which were portrayed as purely for pre-market testing purposes, were to be evaluated at all).

CC achieved the second highest score (another company that presented, Cinapsis, scored the highest) but rather than proceeding with the process that had started with the presentation the Boards then instead proceeded to use a framework (the "Framework") on which Cinapsis was a provider but CC wasn't. After consulting with three other suppliers also on that framework (which had 24 suppliers in all), the Boards held a "mini-competition" but only invited Cinapsis to tender. They subsequently negotiated terms directly with Cinapsis and awarded them the contract.

CC challenged this as an unlawful direct award to Cinapsis under the Public Contracts Regulations 2015 (the "PCRs").

Judgment

The main issue in this case was whether the Boards had a duty to CC under the PCRs at all, since it was not itself a supplier on the Framework and so would not in any event have been eligible for a contract that the Boards had decided to award under the Framework.

The court rejected the proposition that not being on the Framework was an absolute bar to a challenge. Generally speaking, a non-member of a framework will not be able to show that it risked suffering a loss as a result of a breach of the PCRs by a contracting authority, but that is a question of fact in all of the circumstances of the case, not a legal bar. If, as the court found had been the case here, the framework was used inappropriately to appoint a preferred supplier in the full knowledge that a competitive process could be run outside the framework but not inside it, then those outside the framework may have suffered loss as a result. Regulation 18 of the PCRs prohibits a contracting authority from designing a procurement with the intention of artificially narrowing competition or excluding the application of the procedures otherwise mandated by the PCRs.

The court ultimately concluded that the use of the Framework was a breach of the PCRs because:

  • the requirements of the mini-competition had been modified in order to ensure that Cinapsis could meet them, rather than being based on an objective assessment of what the Boards needed,
  • the pricing negotiated with Cinapsis did not follow the mechanism in the framework, and
  • only one bidder was invited to compete in the mini-competition (with the result that there was no competition).

The court also found a breach of regulation 24, which requires appropriate measures to be put in place to prevent, identify and remedy conflicts of interest arising in the course of procurement exercises. Conflicts will arise where "relevant staff members" have a direct or indirect interest which could be seen to compromise their impartiality and independence in the procurement context. The court noted that two such relevant staff members had shown bias in favour of Cinapsis but the Boards had taken no appropriate measures to prevent, identify or remedy these conflicts, in breach of regulation 24.

Since, had the Boards not made unlawful use of the Framework, a competitive process may have allowed for the award of the contract to CC, a risk of loss or damage was found to have been caused by the breaches of PCR 2015.

The breach of the requirements for a contract to be awarded under a framework meant that the "third ground of ineffectiveness" applied and the court had the power to set aside a contract that had already been entered into (unless one of the three ineffectiveness grounds applies, once a contract is in place only damages are available to a challenger).

A court may decline to set the contract aside on the basis of overriding public interest grounds, but if it does so it must impose an "effective, proportionate and dissuasive" penalty on the contracting authority, or make an order shortening the contract, or both.

In this case the court declined to declare the contracts ineffective on the basis that this would adversely affect patient care, but made a contract shortening order bringing forward the end of the contract (and therefore CC's next opportunity to bid for it) by 14 months, from 31 March 2024 to 31 January 2023. It also imposed civil penalties on each of the Care Boards, ranging from £4,000-£10,000, depending on the seriousness of their conduct, and made an award of damages.

Key takeaways

The case is a valuable warning of the risks to contracting authorities of trying to "game" public procurement rules in order to reach a desired result. A contracting authority will generally have a variety of options open to it – including competitive procedures, its own frameworks and third party frameworks – and can exercise a great deal of discretion in determining what it wants to buy. However, when making procurement decisions it is important for contracting authorities to bear in mind that they may find themselves asked to justify those decisions to a court.

Brodies is well placed to assist contracting authorities with ensuring compliance with their obligations under procurement law. For more information please contact Jamie Dunne or Charles Livingstone.

Contributor

Jamie Dunne

Senior Associate