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NHS Trusts Fight to Keep £100 Million Council Contract

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

Private companies are used to competing fiercely for public contracts but, as a High Court case concerning proposed privatisation of services provided by two NHS trusts showed, public authorities also increasingly find themselves in the bear pit.

With a view to cutting the cost of meeting public health and nursing duties that it owed to children and young people in its area under the Health and Social Care Act 2012, a local authority decided to put those services out to competitive tender. The trusts were the incumbent providers under a contract with the council but were very narrowly defeated by a private company in the tendering process.

The trusts launched proceedings against the council on the basis that the process was defective. It was alleged that the rival bids had been evaluated unequally and that there were manifest errors in the application of scoring criteria. By virtue of the Public Contracts Regulations 2015, the service of proceedings had the effect of automatically suspending the proposed award of the contract which was worth more than £100 million over five years to the private company.

In rejecting the council’s application to lift that suspension, the Court noted that it was conceded that the trusts had raised a serious issue to be tried. Losing the contract would require very extensive reorganisation of the trusts affairs and would inevitably lead to the loss of many senior and skilled staff. Damages would thus not be an adequate remedy if the trusts complaints were justified. The balance of convenience also fell in favour of the suspension being maintained. The Court directed a speedy trial of the trusts challenge to the tendering process.

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