Time limits for procurement challenges

Tread with care

Mr Justice Stuart-Smith’s decision in Royal Cornwall Hospitals NHS Trust v Cornwall Council [2019] EWHC 2211, reinforces the fact that if aggrieved bidders want to challenge a procurement decision it needs to be done quickly and in any event within the 30 day period (extendable to up to 3 months where there is a good reason for doing so) specified in the Public Contracts Regulations 2015 (“PCR 2015”).

Rather unusually, this decision relates to a public body v public body challenge, rather than a private sector entity challenging a public body. By way of background, Royal Cornwall Hospitals NHS Trust (the “Trust”) was the incumbent provider of sexual health services to Cornwall Council (the “Council”). The Council undertook soft market testing prior to launching its new procurement and discussed with the soft market testing participants the possibility of the inclusion of a financial cap of £2.5m in the new contract. Despite strong objection from the Trust, the Council included this financial cap in the contract documents for the new procurement.

The Trust reviewed the invitation to tender documents on 25 February 2019 and confirmed that it knew about the £2.5m financial cap from that date, although it undertook a significant amount of work between that date and 18 March 2019 to ascertain whether it would be able to submit a compliant bid. The Trust concluded it could not deliver the services under the financial cap without a material deterioration in quality in terms of patient safety, clinical effectiveness, patient experience and safe staffing so it ultimately informed the Council on 18 March 2019 that it would not submit a bid for the new contract.

On 9 May 2019, the Council announced the winner of the new contract, which resulted in a claim being brought against the Council by the Trust claiming (amongst other things) that the Council should be prevented from entering into contract and that the Council should be required to recommence the procurement with a higher financial cap and/or a different service specification.

Mr Justice Stuart-Smith held that the Trust’s claim should be struck out and made an order for summary judgment in favour of the Council. There were three factors in his reasoning which will be of interest to contracting bodies and aggrieved bidders alike:

The timing of the challenge

The Council argued that the claim was time barred, as time began to run on 25 February 2019 and ended on 26 March 2019. The Trust accepted that time began to run on 25 February 2019 but argued that there was good reason for the court to extend the 30 day period to 3 months, in which case the claim was not time barred. Mr Justice Stuart-Smith disagreed that there were any good reasons to extend the 30 day period and the claim were therefore struck out.

The need to specify in the Particulars of Claim what is being challenged

Mr Justice Stuart-Smith found that the Particulars of Claim were not specific enough to found a clear and arguable case, although they appeared to relate to the Trust’s assessment of the wining tender and that it could not be performed on the basis of the financial cap and to the Council’s required specification. The Court held that this claim was an attempt to reformulate the challenge which was time barred above and as it was not drafted in the Particulars of Claim as particulars of a breach of duty, the Particulars of Claim were struck out.

Information to be provided to economic operators (i.e. a bidder who hasn’t bid)

Contracting authorities owe certain duties, one of which is the duty to act transparently, to all economic operators not just the bidders in any given procurement process. However, in advancing its claim, the Trust sought information from the Council which the Public Contracts Regulations 2015 stated only needs to be provided to those who have actually participated in the procurement. Mr Justice Stuart-Smith found that the Council owed no duty of transparency to the Trust after 18 March 2019 (when it announced it was not going to submit a tender).

Mr Justice Stuart-Smith then went to consider two further issues, namely that if he was wrong and a duty of transparency was owed then he considered it was only owed to those who participated in the procurement and if that was wrong then he considered that the Trust could not show it had suffered loss or risked suffering loss in consequence of a breach of any duty by the Council because the cause of that loss or risk of loss was the Trust’s decision not to submit a tender. All of which pointed to the fact that the claim brought by the Trust was actually a claim as to the lawfulness of the financial cap and specification, which was already time-barred and had been struck out under PCR 2015.

This case serves as a stark warning that the courts will not readily extend the time limits for challenge to the maximum three month period. This case also shows the court’s willingness to strike out applications which they consider to have little or no merit, meaning that aggrieved bidders should think twice before paying a substantial court fee to lodge a challenge.