Procurement in a Nutshell – Court rules that automatic suspension should be lifted
1st August, 2019
A number of our previous Nutshells have examined instances in which the Court has refused to lift the automatic suspension period which enters into force following proceedings being issued in respect of a Contracting Authority's decision to award a contract. However, a recent decision of the High Court is a useful example of where the Court was of the opposite opinion, holding that the suspension should in fact be lifted.
Click here to read the decision in full.
The facts
NHS Rushcliffe Clinical Commissioning Group (the “Defendant”) carried out a procurement for a contract for the provision of medical services at the Nottingham Treatment Centre. Circle Nottingham Limited (the “Claimant”), the incumbent provider of the services since 2008, was unsuccessful with its tender and, as a consequence, issued a claim form which had the effect of triggering the automatic suspension period under Regulation 95 of the Public Contracts Regulations.
Somewhat unusually, following the Claimant issuing the claim form, the successful tenderer then informed the Defendant that there had been a material change to its financial circumstances. Consequently, the Defendant re-evaluated the other bids and issued fresh standstill letters but once again the Claimant was unsuccessful.
Shortly afterwards, the Defendant wrote to the Claimant asking that it agree to the lifting of the suspension period but this request was refused. As such, the Defendant applied to the Court to lift the suspension.
Contrary to this, the Claimant sought to argue that if the suspension were to be lifted it would result in a disorderly and unsafe contract handover which would adversely affect patient safety in addition to damaging the reputation of its group companies as well as causing them financial loss.
The judgment
In arriving at its decision, the Court noted that its duty was to cause the least “irremediable prejudice” possible to both parties.
With this in mind, and taking into account the potential 15 month delay to the new contract being entered into which would be caused by a decision to uphold the suspension period and allow the matter to proceed to trial, the Court was of the opinion that the balance of convenience lay in favour of lifting the automatic suspension.
Interestingly, the Court also dismissed the Claimant’s argument that the loss of the contract could cause a “serious and largely unquantifiable impact” on its wider group structure noting that “no other Circle Group company is a party to this litigation”.
Furthermore, and irrespective of this fact, the Court indicated that if a later Court were to subsequently hold that the contract should have been awarded to the Claimant “any damage to the reputation of the Claimant (or, indeed, to that of the Circle Group) will be largely swept away”.
Why is this important?
The case is a useful reminder of the relevant requirements which must be satisfied by a party seeking to ensure that the automatic suspension period is lifted in instances of challenge.
Likewise, the Court’s dismissal of the argument that potential damage to associated group companies was justification for allowing the suspension period to remain in place is also enlightening.
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 0330 137 3451.
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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