When the outcomes of public contract tendering exercises are challenged, the award of contracts is automatically suspended. Such suspensions can seriously affect the provision of important public services and, as a High Court case showed, the question of how long they should last can pose a difficult conundrum.
A company lodged tenders with the NHS Commissioning Board for four contracts in respect of the provision of integrated healthcare services in prisons. It successfully bid for one of them, but the other three were awarded to a public sector provider. The award of the latter contracts was, however, suspended when the company challenged that outcome. It asserted that the Board had made a manifest error or acted irrationally, in breach of the Public Contracts Regulations 2015.
Such a suspension would ordinarily remain in place pending a judicial resolution of the dispute. However, the Board contended that it should be lifted straight away so as to enable the award of the contracts to proceed. It contended, amongst other things, that the delay in finalising the contract awards arising from the proceedings could have serious consequences for the performance of its public functions.
The company’s primary objective was to achieve a re-run of the tendering process or the award of the contracts to itself. It asserted that the loss of the contracts risked causing unquantifiable harm to its commercial reputation. Its substantial investment in innovation would be lost and specialist staff, who were much needed in the prison healthcare sector, would be placed at risk of redundancy.
In lifting the suspension, however, the Court found that, if the company succeeded in showing that the tendering process was flawed, it could be adequately compensated by an award of damages. It was unpersuaded that the suspension should remain in place because the successful bidder might otherwise enjoy an unfair advantage, as incumbent provider, in any future tendering exercises. Such a contention was, in the Court’s view, extremely speculative.