Court refuses to keep Circle in suspense...

A bidder in a procurement process can “automatically suspend” the award of a contract to the winning bidder, by issuing a claim in the High Court during the standstill period or otherwise prior to award. The Court then holds a special hearing, not on the main claim, but on the question of whether the authority should be allowed to go ahead and award the contract, or not.

In deciding whether to lift the suspension the Court asks (1) is there a serious case to answer? (2) would financial damages be a fair remedy to the party who is disadvantaged by the outcome of the decision about whether to lift the suspension or not? and (3) where does the balance of convenience/the public interest lie?

The contract was for five years, for the provision of non-emergency medical services at a treatment centre in Nottingham. The contracting authority here was the local CCG, NHS Rushcliffe Clinical Commissioning Group. The claimant was the incumbent provider, Circle Nottingham Ltd, who had lost the contract to Nottingham University Hospital Trust (NUHT). The substance of Circle Nottingham’s claim was that NUHT had reported a material deterioration in its financial circumstances which meant that the evaluation was no longer accurate nor valid.

Circle Nottingham argued that the suspension should be maintained as otherwise NUHT would take over provision of the services at short order, in a disorderly and unsafe manner, with consequences for patient safety and continuity of treatment. It also argued that Circle group of companies as a whole would suffer reputational loss if the award to NUHT went ahead and it was subsequently determined at full trial that Circle Nottingham ought rightly to have been awarded the contract due to NUHT’s financial status.

The Court decided that it was only the position of Circle Nottingham which should be considered and not that of the whole Circle brand. It was not persuaded that a potential loss of reputation meant that financial damages would not be an adequate remedy; after all, said the Court, if Circle Nottingham was successful at full trial, there would be public acknowledgement that its bid had been wrongly rejected and that it should have won the contract, not NUHT.

On the balance of convenience point, Circle had argued the need for a smooth and orderly handover and that this could not be achieved if the suspension were lifted. The court decided that there was evidence on both sides; from Circle Nottingham that the handover would have a detrimental effect on patient safety, and from the CCG that the handover could be achieved safely within the relatively short timeframe. As this weighed equally in the balance, the Court opted to preserve the status quo, i.e. that the suspension should be lifted and Circle Nottingham’s contract allowed to expire.

The Court having lifted the suspension, the CCG is now free to go ahead and sign the contract with NUHT. The case confirms that arguments about reputational loss are not likely to succeed in these types of hearings, and, unhappily for bidders, that the general trend remains for these suspensions to be lifted, there having been relatively few instances where the claimant has managed to persuade the Court to maintain the suspension until the full trial is held.

Circle Nottingham Ltd v NHS Rushcliffe Clinical Commissioning Group [2019] EHWC 1315 (TCC)

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