R (on the application of RB) v Devon County Council and Devon Primary Care Trust

On 19 October 2012 HHJ Vosper QC handed down judgment in the case of R (on the application of RB) v (1) Devon County Council and (2) Devon Primary Care Trust.  The case highlights the difficulty public bodies face in avoiding legal challenge, but shows that the courts will adopt a pragmatic approach where it is in the interests of good public administration to do so. 

The challenge concerned the Defendants’ decision of 11 July 2012 to appoint Virgin Care Limited (“Virgin Care”) as the preferred bidder for a contract to provide integrated children’s services (“ICS”) across Devon.  ICS cover a range of specialist children’s health and social care services covering mental health services, physical, sensory and learning disability services and public health nursing.  The Council had assumed responsibility for the management of ICS following the previous government’s Transforming Community Services programme under which all PCTs had to divest themselves of the provision of clinical services.  Recognising that integration worked well and was what users wanted, in April 2011 a joint re-commissioning process began to find a single provider of ICS prior to the demise of the PCT under the Health and Social Care Act 2012. 

The Claimant, a mother whose children had used similar services in the past, asked the Court to quash the decision to appoint Virgin Care as preferred bidder.  The claim was issued on the grounds that the Defendants had failed to follow their own equality policies and that they were in breach of the public sector equality duty under Section 149 of the Equality Act 2010 (“the Act”) when reaching the 11 July decision to appoint Virgin Care as preferred bidder.  Allegations made in pre-action correspondence regarding the adequacy of the consultation process and the assessment of bidders’ prior experience were not pursued. 

The re-commissioning process commenced in April 2011 when a lengthy and thorough consultation process was started.  This involved engagement sessions with children and young people, parents, stakeholders and staff, who were asked their views on what worked well about the service currently provided, how it could be improved, and how bidders’ tenders should be evaluated.  Their views were directly fed into the overarching service specification and evaluation criteria used in the procurement. 

A key aim of the procurement was to improve outcomes for children and young people, and questions to test bidders’ understanding of their equalities obligations were incorporated into the invitation to negotiate.  The procurement phase of the process ran from September 2011, when the contract was advertised in the Official Journal of the European Union, and remains ongoing now, with no final contract with Virgin Care expected to be entered into until Spring 2013.  The 11 July decision did not result in standstill letters being sent to other bidders as the decision of intent to award a contract to Virgin Care was not made until 12 September 2012.  The 11 July decision was therefore a single step in a long procurement process.

The commissioners had prepared two EIAs during the process.  The first was dated 22 March 2012.  Because there will be no change to the services following the transfer (and simply a change of provider), that assessment recorded that there would be no impact on people with protected characteristics.  This EIA was not presented to the Council’s Cabinet and the PCT’s Board on 11 July 2012 when the identification of Virgin Care as preferred bidder was approved.  A second, more detailed, EIA was prepared in September 2012 and presented to the Cabinet and the Board at the meetings on 12 September when the decision of intent to award the contract to Virgin Care was made.  That decision was not subject to challenge under the judicial review.  The claim therefore concerned an earlier decision to appoint Virgin Care as preferred bidder, despite the fact that a subsequent decision had been taken (and was unchallenged) of intent to award the contract to Virgin Care.

The Defendants argued that:

• Case law has shown that the public sector equality duty is a duty of substance and not form.  There is no legal requirement to carry out an EIA and having due regard to the aims set out in the Act could in this case be demonstrated by the efforts the commissioners had made to engage with children and young people from the outset, to test bidders on their equalities processes and in the fact that the aim of improving services for children and young people in Devon, many of whom have protected characteristics, was integral to the process.  Further, even if the 11 July decision had been made in breach of the Act, this breach had been remedied by the preparation of the September EIA.
• The “decision” of 11 July 2012 was not a formal decision in the same way the 12 September decision was.  The purpose of the Board and Cabinet meetings on 11 July was to note and approve the outcome of the procurement process.  Virgin’s bid had been evaluated as the most economically advantageous tender following a procurement process carried out in accordance with the Public Contracts Regulations 2006 and, save for abandoning or rewinding the procurement (which would, of course, itself likely have been the subject of challenge) no alternative decision could have been made.
• Recent case law (R (Greenwich Community Law Centre) v Greenwich London Borough Council [2012] EWCA Civ 496) had established the principle that a change from one provider to another without more will not usually engage equality considerations.
• The “future changes” proposed by Virgin are currently only proposals for potential changes in the future.  At the point Virgin takes over, the services will be identical to those provided today.  Future changes cannot be made by Virgin unilaterally, would be subject to close control by the commissioners and would likely be subject to public consultation.  As part of this process, the commissioners and Virgin would have due regard to the equalities implications of the proposed change.

The court found that the 11 July decision had engaged the public sector equality duty and that, by failing to present an EIA to the decision-makers, the Defendants were in breach of that duty.  In arriving at its judgment, the court distinguished the facts from the facts in Greenwich on the basis that the ICS structure, whereby children’s health and social care services are integrated, is unique to England such that there are no alternative providers with experience of running ICS.  As such, the court found, the transfer of the services to the new provider was a far more fundamental change than the change contemplated in Greenwich with the potential to affect the supply of services to vulnerable users in Devon, many of whom have protected characteristics.

The court disagreed with the Claimant that the Defendants had breached the public sector equality duty by not assessing the equalities impact of future changes on the basis that these changes were not at a sufficiently formative stage and that an assessment could only realistically be made at that point. 

Importantly, the court refused to quash the decision in the interests of good public administration and reduced the Claimant’s cost award, commenting that “this was a case in which it was always unlikely that a quashing order would be made”.  The court noted that the Claimant had been unable to show that she or her children would suffer any detriment as a result of the transfer to Virgin Care, and indeed commented that she might even benefit under the arrangement.  In contrast the court noted that if a quashing order were made, the detriment to the children of Devon was obvious.

The aims of the Equality Act 2010 are core to public bodies' responsibilities and the concept of an EIA is clearly a sound one and ensures that decision-makers are directed to their duties and that appropriate analysis of equalities issues takes place.  This judgment is, however, yet another reminder that public bodies are facing an almost impossible task to make robust decisions while fully discharging all of the various duties to which they are subject.  It should be recognised that the costs involved in responding to a judicial review, the diversion of public money to deal with it and the delay in being able to make decisions/achieve savings together exacerbate the position of the public bodies and force even more difficult decisions.

In this instance the care with which the Defendants had approached the entire procurement process meant that initial attempts to challenge on grounds of lack of consultation or failure to consider all relevant factors were dropped.  Further, the court noted that the September EIA carried out by the Defendants demonstrated that the minds of decision-makers were directed to the duty at that point and that it could safely be inferred that the Defendants would focus on it in the remainder of the procurement process.

Bevan Brittan is the largest provider of legal services to the public sector and has extensive experience in conducting complex public law litigation and advising on public authorities’ duties under the Equality Act 2010.