Procurement update: Grenfell Tower prejudice allegations fall flat in the High Court
A recent case on abandoning a completed tender exercise prior to entering into a contract has provided an important reminder to contracting authorities that in a procurement challenge the Court will look at internal emails, draft meeting notes, and other contemporaneous correspondence in additional to Board minutes and other official correspondence between the contracting authority and the bidders.
It is widely accepted that it is open to a contracting authority to abandon a procurement exercise at any stage of the procurement, although this right is subject to certain restrictions which were recently looked at in the case of Amey v West Sussex CC .
The Grenfell Tower connection
In Ryhurst Limited v Whittington Health NHS Trust  EWHC 448 (TCC), Whittington Health NHS Trust abandoned a contract award for a 10 year strategic estates partnership, where Ryhurst had been identified as the preferred bidder. Ryhurst claimed the decision to abandon was based on political pressure because it was part of the Rydon group of companies, one of which was responsible for the cladding at Grenfell Tower. The Trust said the Grenfell connection was part of the reason for the abandonment but not the sole or primary reason.
Ryhurst alleged that the decision to abandon the procurement was in breach of the Trust’s obligations of equal treatment, non-discrimination, and proportionality. Ryhurst also argued that the Trust had failed to act transparently in various circumstances including by failing to disclose that the decision for the abandonment was because of political pressure due to the Grenfell connection.
What was decided?
His Honour Judge Stephen Davies held that Ryhurst failed to demonstrate that the reason for the abandonment was based solely or primarily on the Grenfell connection. In his reasoning, HHJ Stephen Davies made a number of points which contracting authorities should have regard to:
- The obligation to act transparency is “hard edged”, meaning that it is for a Court to decide whether the contracting authority has complied or not with its obligation, with no margin of appreciation to be afforded to the contracting authority;
- In order to succeed, Ryhurst needed to show that the decision to abandon was manifestly erroneous, irrational, disproportionate or not objectively justified. The onus of proof is therefore on a challenger to show that the contracting authority’s decision was outside the range of reasonable decisions a contracting authority could have arrived at in compliance with law;
- Notwithstanding the finding on liability, HHJ Stephen Davies also briefly considered issues around causation and sufficiently serious breach (which is necessary in order to recover damages). The Trust had argued that the relationship with Ryhurst was non-exclusive but HHJ Stephen Davies said whilst this would be a significant problem for Ryhurst in any subsequent trial, it was not a complete defence on causation;
- HHJ Stephen Davies said that if he had found for Ryhurst on the basis that the Trust had breached its obligations of equal treatment, non-discrimination, proportionality and avoiding manifest error then he would also have found that the breach was sufficiently serious to justify an award of damages. It would not have been sufficient in such circumstances for the Trust to say that it was only guilty of a good faith error of judgment.
Emails: easily written, easily read
Numerous internal emails were scrutinised during the hearing and much scrutiny given to what would otherwise have been throwaway comments between colleagues. The Ryhurst audit trail showed that it was aware that there were several hurdles to overcome before the Trust could commit to entering into the arrangements with them.
At the same time, the Trust’s internal audit trail was particularly helpful in demonstrating that the Grenfell connection was not the main reason for the abandonment, which was based on a number of considerations including concern for a public-private initiative and the possibility of collaborating with the public sector instead. Further, the Trust’s audit trail helped HHJ Stephen Davies conclude that it was not irrational for the Trust to consider the lack of stakeholder support and the concerns of its regulator when making its decision to abandon the award of the contract.