High Court Slams 'Indefensible' NHS Contract Tendering Exercise

Public contract tendering exercises are meant to ensure fairness, transparency and, not least, value for taxpayers' money. However, as a case concerning the award of an NHS contract all too clearly showed, they can sometimes go horribly wrong.

A provider of communications services was invited, along with two other companies, to make a presentation to three NHS authorities. It already had contracts with some hospitals in the relevant area and was unaware that its offering was being marked by one of the authorities. The company that scored highest was an appointed supplier under an NHS-wide framework agreement, whereas the provider was not.

After consulting three other framework suppliers, one of the authorities concluded that the company was the only suitable candidate for the award of a contract. The authorities, acting together, went on to conduct what was referred to as a mini-competition under the framework.

The company was the sole competitor in that process in that only it was invited to tender. As a non-framework supplier, the provider was excluded. The authorities subsequently negotiated directly with the company before agreeing terms and awarding it the contract.

After the provider launched proceedings, the High Court found that the procedure employed involved multiple breaches of the Public Contracts Regulations 2015. Far from enabling fair and open competition, the authorities had entertained only one formal bid, having already informally eliminated all potential opposition.

It was not unfair to describe the broad character of what happened as a manipulation of the process to ensure that the company would win the contract unless it sought to charge too much for its services. In contending that the procedure was lawful, the authorities had sought to defend the indefensible.

Their obligations of objectivity and fairness had, in varying degrees, been treated with disdain and cynicism and the framework had been used as an instrument for excluding the provider from the tendering process. The principle breached was nothing less than that of fair competition, which could not be more important.

With a view to enabling the provider to engage in a fresh and fair tendering exercise in the near future, the Court directed that the term of the company's contract should be shortened by 14 months. The authorities bore varying levels of responsibility for the breaches but, between them, they were ordered to pay civil penalties totalling £22,000. The Court had no difficulty in finding that the breaches were sufficiently serious to justify an award of damages to the provider. The amount of any such award would be assessed at a further hearing, if not agreed.