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Public Procurement: Court Makes Landmark Ineffectiveness Order – Government Contracts, Procurement & PPP

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At the end of July, the High Court handed down a landmark
procurement decision in the case of Consultant Connect Limited v NHS Bath ICB and
[2022] EWHC 2037 (TCC).

The Defendants were three NHS clinical commissioning groups
(CCGs) in the southwest who ran a joint procurement for a contract
to provide electronic communications services for GPs. The
Defendant CCGs
asked the Claimant and another provider, Cinapsis, to present their
products at a demonstration event, however, the Claimant
(Consultant Connect) was unaware that it was being marked, or that
there was a scoring system in place.

It was evident that information had been provided to Cinapsis
that would help Cinapsis win the contract. Following respective
presentations by the bidders, the Defendants decided to award the
contract under a previously tendered NHS-wide framework agreement
to which Cinapsis was a party, whereas the Claimant was not. The
Defendant CCGs
then held a “mini competition” in which Cinapsis was the
only party invited to tender and which excluded the Claimant as a
non-framework supplier. The contract was subsequently awarded to
Cinapsis with the Claimant being scored in second place.

In this article, we explore the issues raised by this landmark
case, which sees the first-ever use of a shortening order in the UK
to allow the Defendants to proceed with a lawful procurement. The
ruling that a non-framework supplier can challenge the award of a
call-off contract will have wider implications for public
procurements and there are some key learning points that can be
taken on board.

The issues at hand

The Claimant challenged the Defendant’s decision based on
alleged non-compliance when awarding a call-off contract under a
framework agreement.

Contracting authorities must comply with both Regulations 18 and
33 of the Public Contracts Regulations 2015 (PCR) when awarding
call-off contracts and the Claimant alleged that the
Defendant’s decision was unlawful due to breach of these

Regulation 18 sets out the key principles of any procurement
process, including:

  1. the obligation to treat all economic operators equally and
    without discrimination;

  2. not designing a procurement exercise with the intention of
    excluding it from the application of the PCR or of artificially
    narrowing competition; and

  3. competition being considered to be artificially narrowed where
    the design of the procurement is intended to unduly favour or
    disadvantage certain economic operators.

Regulation 33 sets out specific rules governing the procedures
to be followed when awarding call-off contracts under a framework
agreement. These include, under Regulation 33(11), a requirement
for any mini competitions to be based upon the same terms as
applied to the award of the framework agreement.

In its defence, the Defendant argued that a challenge to a
call-off could not be brought by a non-member of the relevant
framework, as the non-member is typically unable to satisfy the
“causation of loss test” under Regulation 91(11).


Kerr J found wide-ranging breaches of the Regulations, including

  1. the Defendants used the framework to effect the direct award of
    the contract to the Interested Party in breach of the equal
    treatment requirements under Regulation 18;

  2. the mini competition did not comply with Regulation 33, because
    (a) only one bidder was invited to tender; (b) the Defendants had
    tailored their requirements to that bidder; and (c) the pricing
    arrangement did not remotely resemble the pricing set out in the
    framework agreement; and

  3. two employees had conflicts of interest and, in breach of
    Regulation 24, no appropriate measures were taken by the Defendants
    to prevent them from being involved in the procurement.

The judge rejected the Defendants’ argument that non-parties
should be unable to challenge the award of a call-off contract
under the relevant framework agreement. On the facts of the case,
the Court found that the contract award breached a relevant duty
owed to the non-member and the non-member suffered, or risked
suffering, loss in consequence.

The judge made a contract shortening order – the first of its
kind in the UK – to avoid impacting patient care and to allow the
Defendants an opportunity to conduct a lawful procurement. The
judge also ordered the Defendant CCGs to pay civil
financial penalties (of £10,000, £8,000 and
£4,000 respectively) and further found that the
Defendant’s breaches were sufficiently serious to award
damages. Damages were assessed on the basis of loss of opportunity
to the Claimant had the procurement been carried out in accordance
with the PCR.

What can we learn?

The judgment provides a range of important lessons for
contracting authorities, including:

  1. using a call-off contract under a framework agreement to
    appoint a preferred bidder;

  2. the legal obligations that apply to pre-procurement market

  3. the rules that govern mini competitions under framework
    agreements; and

  4. the extent to which contracting authorities are required to
    actively avoid conflicts of interest.

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