Limitation and Striking Out a Procurement Claim

We examine a case where a procurement claim was struck out by the Technology and Construction Court.

The Case

Royal Cornwall Hospitals NHS Trust v Cornwall Council [2019] EWHC 2211 (TCC)

The Technology and Construction Court accepted Cornwall Council’s (“the Council’s”) application that a procurement claim made against it by the Royal Cornwall Hospitals NHS Trust (“the Trust”) should be struck out.

Law

The claim was brought under the Public Contracts Regulations 2015 (“the PCR 2015”).

Regulation 92 of the PCR 2015 provides that a claim for a breach of the PCR 2015 must commence within 30 days of the date when the economic operator first knew or should have known that the grounds for starting proceedings arose. Where it considers there is good reason to do so, the Court may extend the 30 day limitation period.

Facts

The Trust was the incumbent provider of open access reproductive and sexual health services in Cornwall under a contract worth £2.88m a year. The Trust said that the costs of providing the services meant it made annual losses on the contract totalling £120,000.

The Council published a Contract Notice in the Official Journal European Union in February 2019 inviting tenders for three separate contracts to provide sexual health services in Cornwall, including one contract similar to the Trust’s current contract (“the New Contract”). The New Contract would be worth only £2.5m a year for a term of seven years with an additional £100,000 available for the implementation of a new digital platform in year one.

After analysing whether it would be able to submit a compliant bid for the New Contract, the Trust informed the Council on 18 March 2019 that the services to be provided were materially the same as those it provided under the existing contract. The Trust’s position was that the financial envelope imposed by the Council was insufficient to ensure the required level of service provision.

The Trust was notified of the Council’s decision to award the New Contract to a third-party bidder (Brook) on 9 May 2019. The Trust issued proceedings on 24 May 2019 setting out in the Particulars of Claim that the Council had

(i) breached the principle of proportionality and good administration because the the requirements that tenderers comply with the Service Specification within the Financial Envelope were impossible to satisfy:

(ii) breached the principle of transparency by refusing to provide the Trust with the information necessary to understand whether the Council had properly followed its published process; and

(iii) accepted an abnormally low bid from Brook, in breach of the principles of transparency and equal treatment and was therefore manifestly erroneous.

Decision

Following a full contested hearing, Stuart-Smith J held that the claim was subject to the statutory time-bar and/or lacked a realistic prospect of success. The Trust’s claim was therefore struck out in its entirety.

In responding to the Trust’s argument that there was a good reason to extend the 30-day time limit for bringing proceedings Stuart-Smith J said:

“There are two answers to this submission, both of which are fatal to it.”

“First, on the claimant’s own evidence it had completed its investigations and consultations by 18 March 2019 when it informed the defendant that it would not be submitting a tender. Even if time were extended to start running on 18 March 2019, these proceedings were still brought out of time.”

“Second, even when the claimant had finished its investigations on 18 March 2019, it had over a week in which to issue proceedings within the 30-day time limit and no reason has been shown why they were not able to do so within that time.”

The Court also struck out the Trust’s claim that it was entitled to be provided with information about the conduct of the procurement after it decided not to participate. The Court accepted the Council’s submissions that there was no real prospect of successfully arguing that the EU general principle of transparency could give rise to an enforceable legal obligation to provide information and documents regarding the evaluation process to a wider class of persons than those identified by the PCR 2015.

Stuart-Smith J held that the Trust’s argument, if successful, would allow anyone who was an ‘economic operator’ to claim they were owed duties under the PCR 2015. The Judge stated

“This submission seems to me to be extreme and contrary to the structure of the PCR which, to my mind, provide for the regulation of procurements in relation to those who wish to participate in them.”

The Court also accepted the Council’s submissions that the challenge to the evaluation process should be struck out if in substance it was a reformulation and development of the Trust’s statute-barred challenge, which, it concluded was the case. .

The Council is accordingly now able to proceed to award the contracts.

The full judgment can be found here.

For expert advice, speak to our team of specialist of public procurement litigation solicitors.