On 29 July 2022, the High Court handed down a landmark judgement in Consultant Connect Limited v NHS Bath and North East Somerset and others [2022] EWHC 2037 (TCC) to make the first ever contract shortening order of its kind in the UK
The case highlights the importance of complying with Regulations 18 and 33 of the Public Contracts Regulations 2015 when awarding call-off contracts under a framework agreement.
Background
The challenge was brought by Consultant Connect Limited ("CC") against three NHS Care Boards ("Boards") in relation to the procurement of a contract for the supply of electronic communications services within the NHS. CC, along with two companies including Cinapsis, were invited to present to the Boards as part of a product demonstration day. However, unbeknown to CC and the other companies, the Boards were assessing the presentations against set criteria and had provided Cinapsis with further information prior to the day. The Boards were to award the contract under a Framework Agreement on which Cinapsis was already one of 24 appointed providers. Following the presentations, the Boards held a "mini competition" under the Framework but only invited Cinapsis to enter. The contract was subsequently awarded to Cinapsis.
CC claimed that awarding the contract to Cinapsis breached Regulations 18 and 33 of the Public Contracts Regulations 2015 and the principles of equal treatment and transparency. The Boards argued that a call-off could not be challenged by a member that is not part of the Framework (which CC was not).
Relevant legal provisions
Regulation 18 highlights the key principles of any procurement process including:
- the obligation to treat all economic operators equally and without discrimination;
- designing a fair procurement exercise that does not artificially narrow competition; and
- having a fairly designed process that does not unduly favour or disadvantage certain economic operators.
Regulation 33(11) sets out the rules to be followed when awarding call-off contracts under a Framework and requires that any mini-competitions must be based upon the same terms as applied for the award of the Framework.
Judgement
The judge found that CC were entitled to challenge the procurement despite not being a member of the Framework. This conclusion was on the basis that the contract was awarded without complying with the requirements of the Framework. This in turn breached a duty owed to CC as a non-member who had been prejudiced as a result.
It was ultimately decided that the Boards breached both Regulations 18 and 33(11) on the following grounds:
- Regulation 18 – the Boards did not treat the parties equally and did not act in a transparent manner. They used a procurement exercise with the intention of artificially narrowing competition and unduly favoured Cinapsis by only inviting them to tender in the mini-competition;
- Regulation 33(11) – the pricing agreed with Cinapsis had little resemblance to the pricing mechanism agreed in the Framework.
CC had sought that the court declare the contract ineffective but this was declined on the basis that abruptly stopping the contract would have an adverse impact of patient care. Instead, the court issued its first contract shortening order under Regulation 102(3)(a) to reduce the term by 14 months.
The judge also imposed civil penalties on each of the Boards ranging from £4,000 to £10,000.
Key takeaway
The judgement sends a warning to contracting authorities to comply with the rules of any framework being used and, more generally, not to use framework agreements to manipulate the outcome of a tender process by circumventing the Public Contracts Regulations 2015.
