Refusal to lift automatic suspension on award of contract for substance misuse services

Dervla Broderick

In Counted4 Community Interest Company v Sunderland City Council, the High Court has refused an application brought by Sunderland City Council (the “Council”) to lift the automatic suspension of the award of a contract to The Northumberland Tyne and Wear NHS Foundation Trust (“NTW”) (see here). The High Court concluded that the balance of convenience lay in favour of maintaining the suspension, in particular because damages would not be an adequate remedy for the claimant, who is the incumbent provider of the services.

As far as we are aware, this is the first case that an application to lift an automatic suspension has been considered under the Public Contract Regulations 2015 (“PCR 2015”), rather than under the previous 2006 Regulations. The substance of the new provision is the same, although we now refer to Regulation 96 rather than Regulation 47H. Under Regulation 96(2), in deciding whether to lift the automatic suspension, the Court must consider (a) whether, if regulation 95(1) were not applicable (that is, there was no automatic suspension), it would be appropriate to make an interim order requiring the contracting authority to refrain from entering into the contract; and (b) only if the Court considers that it would not be appropriate to make such an interim order may it lift the automatic suspension.

The High Court noted that American Cyanamid principles should be applied in determining whether to lift the automatic suspension. The judgment refers to the overview of the principles set out by Stuart Smith J in Open View Security Solutions Limited v London Borough of Merton Council [2015] EWHC 2694 (TCC) (see our previous post here).

Serious issue to be tried

The claimant, Counted4 Community Interest Company (“CICC”), has challenged the Council’s decision to award the contract to NTW on the basis that the Council failed effectively to prevent, identify and remedy conflicts of interest in allowing the existing manager of the CICC contract to be on the evaluation panel. CICC’s concerns centre in particular on past complaints made by CICC to the Council in relation to the manager’s performance. CICC claimed that allowing the manager to participate in the evaluation panel was contrary to Regulation 24 of the PCR 2015, which provides that “other personal interests” should be considered in assessing conflicts of interest. The High Court noted that this provision is relatively new and as yet there is no relevant authority on it. However, it considered that it was arguable that the manager’s personal interest in protecting his professional reputation and/or role at the Council by awarding a new contract to someone other than the Claimant might be perceived to compromise the manager’s impartiality and independence.

CICC has also challenged the award on the basis of alleged errors or unfairness in scoring its tender. The High Court did not consider that the claims could be considered to be hopeless or vexatious, despite the careful and detailed analysis provided by the Council to demonstrate that CICC’s allegations were groundless. It therefore concluded that there were serious issues to be tried.

Balance of convenience

In considering where the balance of convenience lay, the High Court placed particular weight on the fact that CICC would cease to exist without the Council’s contract and therefore damages could not be an adequate remedy. In addition, the Court looked closely at whether it would be in the public interest to lift the suspension, examining the Council’s claim that lives were at risk if the current contract were to subsist. The High Court found this to be an overstatement on the part of the Council and concluded that the public interest considerations did not outweigh the serious harm that would be caused to CICC if the suspension were lifted.

Counted4 Community Interest Company v Sunderland City Council [2015] EWHC 3898 (TCC)

Post By Dervla Broderick (16 Posts)


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