Lancashire Care NHSFT and Blackpool Teaching Hospitals NHSFT v Lancashire County Council  EWHC 200
The Technology and Construction Court has just handed down its latest decision in the chain of applications by contracting authorities in procurement challenges to lift the automatic suspension. Bucking the recent trend, this time Mr Justice Fraser found in favour of the Claimants, and ordered that the suspension should remain in place until trial, finding that damages would not be an adequate remedy for the Claimants should they succeed at trial.
The claim had been issued by two NHS Trusts (Lancashire Care NHS Foundation Trust and Blackpool Teaching Hospitals NHS Foundation Trust) against a local authority (Lancashire County Council). It related to a procurement run by the Council for county-wide children's public health and nursing services, currently delivered by the Claimants, which was won by Virgin Care Services Ltd following a short procurement process.
As we have previously reported, the Court, when deciding whether to lift the automatic suspension, will apply the test laid down in American Cyanamid v Ethicon  AC 396 which requires it to look at (a) whether there is a serious issue to be tried, (b) whether damages would be an adequate remedy for the Claimant and (c) where the balance of convenience lies. In the majority of recent applications decided under American Cyanamid in procurement cases, the Defendant has conceded that there is a serious issue to be tried, recognising that the Court cannot conduct a detailed exercise of considering the merits at such an early interim stage, which has meant that these applications have generally proceeded via a consideration of whether damages for the Claimant would be an adequate remedy.
Recent judgments have sent the message that a Claimant will only be likely to succeed in maintaining the automatic suspension in cases where:
Even the public sector nature of a Claimant, in terms of the fact that it is non-profit making and often delivers other closely-related services that are in some way interlinked to the services in dispute and which would be negatively impacted, has previously not been enough, with the Court finding that even such apparently unquantifiable impacts can be remedied via a payment in damages (as per, for example, Kent Community Health NHS Foundation Trust v NHS Swale CCG and others  EWHC 1393).
Fraser J noted that in this case that the loss of the contract by the Trusts would result in the Trusts having "significantly to restructure their operations" making it "more difficult for the Trusts to deliver similar public services which they are contracted to deliver, and these will require new pathways to care to be developed". Further, the loss of some 160 staff members would result in a reduction in the Trusts' ability "to maintain other contracts for other children's health services". He concluded that there would be a "significant impact on the operational activities of the two Trusts, and as a result, upon the quality of healthcare generally which they provide".
The Court concluded therefore that damages would not be an adequate remedy for the Claimants if the claim succeeded at trial, and ordered that the automatic suspension should be upheld. This may indicate a welcome softening of the Court's position in applications to lift, potentially indicating a willingness to recognise the difficulties in quantifying non-monetary losses. There has been much talk in procurement law circles about the inappropriateness of American Cyanamid in questions about the award of public contracts given the ease with which damages can be shown to be an adequate remedy and the obvious unattractiveness of a contracting authority having to pay for the same contract twice (and for a Claimant being limited to damages when the real prize is the contract). It is possible that this case represents at least a slight recognition by the Court of this issue.
Other points to note:
The Court also considered some other points of interest:
If you would like to discuss this topic in more detail please contact Fran Mussellwhite.