Law November 12, 2018
Automatic suspension remains for Surrey Downs CCG over integration contract

By Daniel Male - Accountable Care Journal

On 17 October 2018, the High Court refused to lift the automatic suspension which has precluded NHS Surrey Downs CCG from awarding an Integration Contract to its preferred provider following a legal challenge under the Public Contracts Regulations 2015, writes Rachel Whitaker, Associate at Browne Jacobson.

Waksman J, sitting in the High Court Queen’s Bench Division (Technology & Construction Court), refused the application made by NHS Surrey Downs CCG to have the automatic suspension lifted following Central Surrey Health Ltd’s (CSHL) challenge to the award of its integrated contract for adult services.


Background

The CCG undertook a procurement exercise to appoint a provider for a £100 million adult community services contract. The CCG’s vision was for a comprehensive health and care service for its resident population delivering locality-based models of care supported by a range of specialised services. CSHL, a not-for-profit social enterprise, was the incumbent provider for the existing service, which it had run since 2006.

The only bidder for the contract was the Integrated Dorking, Epsom and East Elmbridge Alliance (the Consortium), a provider alliance led by Epsom and St Helier University Hospitals Trust (the Trust) and of which CSHL was a part. CSHL alleges that the CCG had discouraged it from bidding in its own right and, instead, encouraged it to join the Consortium.

In February 2018 the Consortium’s bid was accepted subject to a number of pre-conditions, including that the Consortium members had to enter into a binding joint venture agreement as between themselves. The Consortium members were subsequently unable to agree the terms of a joint venture agreement and CSHL was removed from the Consortium by the other members. Following this development, the Consortium (minus CSHL) entered into a lengthy period of discussions with the CCG and asserted that CSHL’s staff would transfer to the Consortium. The CCG then proceeded to award the contract to the Consortium.

While the case is at present unreported and the detail of the parties’ arguments is not known, it is understood that the claimant, CSHL’s, claim relates to whether its removal from the Consortium amounted to a material change which should have led to a new procurement process and whether there was a breach of the principle of equal treatment. The challenge from CSHL triggered the automatic suspension meaning the new service would not be able to go live in October 2018 forcing the CCG to extend the current contract (with CSHL) until February 2019 to allow this matter to be dealt with.


The decision

The decision as to whether to lift the Automatic Suspension was considered on the basis of the principles established in the American Cyanamid case:

  • Whether there is a serious issue to be tried,
  • where the balance of convenience lies,
  • whether there are any special factors,
  • whether an award of damages would be an adequate remedy,
  • and the burden of showing the suspension ought to remain in place lay with CSHL.

Serious issue to be tried

In considering whether there was a serious issue to be tried, Waksman J found that CSHL’s case was strongly arguable. Waksman J considered that CSHL had a real prospect of success as to whether there had been a breach of the equal treatment principle, whether there had been a material change in the tender and whether the CCG should have undertaken a new procurement exercise.

Adequacy of damages

Waksman J also considered whether damages would be an adequate remedy and held that they would not be. While the CCG argued the continuation of the automatic suspension would lead to an unquantifiable loss, Waksman J was not persuaded that there would be patient deaths and that furthermore the CCG’s investment in the new services would not be lost but merely delayed. Whereas the impact of the loss on CSHL was difficult to quantify there were also knock-on effects to both the community and the other contracts serviced by CSHL.

CSHL also argued that given its size and reliance on its track record, the principles in Bristol Missing Link Ltd v Bristol City Council [2015] EWHC876 (TCC) also applied (here the court in deciding to maintain an automatic suspension found that lifting it would have had catastrophic consequences for the incumbent challenger which was a not for profit organisation and that damages would not be an adequate remedy for the reputational damage it would have suffered). Overall, Waksman J found it was less just for CSHL to be confined to a remedy in damages than the CCG.

Balance of convenience

The balance of convenience strongly favoured maintaining the status quo until trial, which was very likely to be in 3 months' time, so in early 2019. There was no suggestion that this was a case where the decision on suspension would decide the whole case.


Where does this leave us?

The outcome of the trial will need to be carefully considered by all those undertaking procurements in the public sector, as well as procurement lawyers and practitioners. However, the more interesting and potentially concerning developments might be the impact the decision may have on NHS commissioners and local authorities seeking to procure integrated care contracts.

Subject to the outcome of the appeal being brought by the campaign group’ 999 Call for the NHS’ (which is listed for November 2018) and NHS England’s consultation on the draft Integrated Care Provider contract, we can expect to see further procurements for integrated care contracts as the NHS seeks to deliver on the Five Year Forward View.

These contracts are often high-value lengthy contracts covering multiple service lines and as such, they will be coveted contracts. The complicated market for health and care services where NHS statutory providers, local authorities, voluntary, third sector and private providers all compete for contracts may now become more complicated as consortium arrangements come under further scrutiny.

These are issues Browne Jacobson are regularly supporting clients with across the country. Contact Rachel Whitaker for a discussion on your procurement.


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