A recent case which involved two NHS bodies, Newcastle Upon Tyne Hospital NHS Foundation Trust v Newcastle Primary Care Trust & Others, demonstrates that when bidding for contracts NHS providers will seek a legal remedy (in this case, suspension of the procurement process) if a provider is of the view that the procurement is flawed. This is an important case on suspension of contract conclusion. Once proceedings are issued during the standstill period a contracting authority cannot enter into the contract. In this case, the court set out the issues to take into account an application to lift the automatic suspension.

Stockton on Tees Teaching Primary Care Trust (the PCT) had invited tenders on behalf of itself and three other Primary Care Trusts for a contract to provide diabetic retinopathy screening services (DRS services). Newcastle Upon Tyne Hospital NHS Foundation Trust (the Trust) had been partly providing the existing DRS services. Northumbria Healthcare NHS Foundation Trust (NHCFT) was the other provider. The Trust’s bid was unsuccessful and the PCT awarded the contract to another bidder. The Trust challenged the decision in March 2012, claiming that the PCT had breached its duties under regulation 4(3) of the Public Contracts Regulations 2006 (the regulations) which requires contracting authorities to treat all economic operators equally, in a non-discriminatory way and to act transparently. The procurement process was therefore automatically suspended under regulation 47G of the regulations.

The invitation to tender and the template which bidders were required to complete specified that the minimum required screening activity was to be 80 per cent of the total North of Tyne diabetic population. The Trust submitted that the PCT had confused the “total diabetic population”, and the diabetic population which was “eligible” for screening and adduced expert evidence to show that it was impossible to screen 80 per cent of the total population.  

Whilst the automatic suspension was in place, the PCT was informed that the other existing provider, NHCFT, which, along with the Trust provided the current DRS services, could not extend the contract after 1 October 2012. This would mean that whilst the automatic suspension was in place and with the possibility that the dispute could last a year or more, the PCT would be forced to enter into a short term contract with the Trust. The Trust offered to provide the entirety of the services after October but the PCT did not think adequate systems were in place for this. The PCT therefore applied for the automatic suspension to be lifted to allow them to award the contract to the successful bidder.  

The court had to look at three issues in order to decide whether or not to lift the suspension using its powers under regulation 47H (note that these three issues reflect those considered when issuing interim injunctions).  

  • Firstly, does the claimant’s claim (ie, the Trust’s claim) raise a serious question to be tried?
  • Secondly, if there is a serious question to be tried, when it came to trial, would damages be an adequate remedy for either party in relation to the lifting or non-lifting of the current suspension?
  • Lastly, if damages were not adequate where does the balance of convenience lie? In looking at this last point, the court must have regard to the public interest and how it may be affected. 

In relation to the first issue, whilst the court favoured the PCT’s arguments, it stated that the threshold for deciding whether there was a serious question to try was low and therefore it would reach its decision based on the other two issues.

As to the adequacy of damages, the court found that the Trust had not shown that damages would be an inadequate remedy for any losses it was likely to suffer. On the other hand, the court took the view that damages would not be an adequate remedy for the PCT as it would be left with a short term interim solution possibly involving the transfer of staff between numerous contracts. The court also made clear that damages are not a substitute for the procurement process being implemented according to the regulations and that this was in the public interest.

On the balance of convenience issue, the court found that it would not be just to either the PCT or the successful bidder to put the PCT in the position where they had no choice but to enter into a short-term contract with the Trust which had bid unsuccessfully. The court held that the balance of convenience favoured lifting the suspension because it would not be just to put the defendant PCT in a position where it had no choice but to award an interim contract to an unsuccessful bidder, who was the existing service provider, when the PCT did not consider that to be the correct course of action.