Andrew Daly of Hempsons – Public Procurement Legal Update at HCSA Event

At the recent HCSA conference we heard from Andrew Daly, a partner at law firm Hempsons and an expert in public procurement regulations. He talked about procurement challenges and the lessons that can be learnt from recent cases.

One was the battle between two NHS Trusts against Lancashire County Council (Daly represented the Trusts).  The result was announced the day after the event, and the Trusts won in their challenge. As Daly said, if we have got to the point where local health bodies are taking their “own” local council to court, then anyone can get challenged! As the Guardian reported:

“A decision by Lancashire county council to award a £104m contract for children’s healthcare services to Virgin Care has been thrown out after a legal challenge by NHS trusts. A high court judge found the local authority’s process was flawed and the contract for services for children aged 0-19 should not have been awarded to the private provider late last year.  The case hinged on the scoring system used by the council when it reviewed rival bids for the deal, which the trusts claimed had been applied incorrectly”.

Daly explained that we are seeing more and more legal challenges to procurement decisions. “I became a procurement lawyer because I didn’t like litigation – that’s gone badly wrong. Now I spend 75% of my time on challenges”, he said. So here are some of his key points.

Buying organisations (and suppliers) must understand the consequences of being challenged – it takes a lot of time, it is not cheap, and you are no longer in control once you are in court. You have to do what the court tells you. It will take management time, legal costs, and you may need to backfill roles. Also, there can be reputational risk.

In terms of remedies, damages for suppliers are rarely worth it. Most NHS suppliers aren’t in it to make a lot of profit – and that financial award will be discounted by the court to take account of the chance of the bidder winning the contract. So even if you win, may not get your costs back. Also, you have to show a serious breach of regulations.

What you really want as a challenger is that the buyer is forced to set aside the contract – but even if you should have won, the court won’t insist that buyer awards you the contract. So automatic suspension of award is the key now. The contracting authority can’t sign the contract, so incumbents are bringing challenges because it means they continue delivering the contract, for a while longer at least.

So, the standstill period (after the decision is announced but pre formal contract award) is key. You have to get that right now. While there aren’t many court cases in the UK compared to some countries, suppliers are now more aware of issues, and some are examining the whole procurement process “brick by brick” hoping to find the week spot and make the whole tower tumble!

And the fear of reprisals for bidders who challenge has gone – in fact, suppliers now feel that they might see better processes if they have a reputation for challenging! But suppliers generally challenge because of fairness – they want to understand why they lost, more than they want to make some money.

In this world of challenges, what can buyers and contracting authorities do to minimise the risk of challenge and the risk of losing if you are challenged? We’ll let you know what Daly suggests in part 2 tomorrow.

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