Integrated Care Board secures lifting of automatic suspension in procurement dispute over provision of urgent treatment centre

The High Court has agreed an application from NHS Northamptonshire Integrated Care Board to lift the automatic suspension imposed when a dispute began over a contract award.

Mrs Justice Jefford said in her judgment the absence of the offer of a standard cross-undertaking in damages from One Primary Care to either the board or DHU Health Care - to which it wished to award the contract concerned - was “the strongest reason, if not the sole reason, to grant the application to lift the suspension”.

The automatic suspension was imposed by regulation 95 of the Public Contracts Regulations 2015 after the court heard the board issued an invitation to tender in 2023 to provide an Urgent Care Centre in Corby.

One Primary Care was the incumbent contractor and submitted a bid along with four other firms all of which were assessed on price, then a quality evaluation accounting for 90% of the final score and 10% for a social value evaluation,

In January 2024, the board announced DHU Healthcare was the most economically advantageous bid and it won the contract.

Later that month, OPC issued a claim concerning transparency, scoring and conflict of interest challenges and the board agreed to extend OPC’s contract on an interim basis until the dispute was resolved.

The board told the court this was an unexceptional contract for urgent care services and damages were an adequate remedy for OPC because, if its claim succeeded, the loss would be one of profit which is readily calculable.

But the board said it would suffer unquantifiable loss should the suspension be maintained.

Service benefits from the new contract would have been delayed and the interim contract was failing to reach performance targets in relation to triage times.

OPC argued damages would not be an adequate remedy because of the cumulative effect of various business impacts including loss of a skilled workforce and reputational damage.

The board argued OPC had made profits from the existing contract and made large payments to shareholders and four significant loans to a shareholder property company,

OPC has structured its business so the Corby contract subsidises other loss-making contracts which would otherwise be financially unsustainable, but the board said OPC has chosen to do this despite knowing there was no guarantee it would be re-awarded the Corby contract, or any other.

The board said OPC’s claim that its business could cease to exist were the suspension lifted was wrong as numerous ways existed to improve its financial position including by the injection of funds from shareholders.

OPC said it would not be commercially rational for the shareholders to plough in further funds when the future of the OPC business was uncertain.

It suggested that if the suspension was lifted, “serious consideration would be given to winding down the healthcare business with OPC becoming a shell company because ‘its ability to operate as a healthcare business would be fatally undermined through cost cutting and the inability to win new work’”

Jefford J said: “These are very much self-fulfilling prophecies. The issue is whether the shareholders would support OPC so that it was not in that position.

“Shareholders' funds are intended to be made available to [property company] OMPH for its developments which are themselves in part funded by a loan from OPC which the shareholders know will be repaid over the course of 2026.

“In those circumstances, despite the protests of OPC, in my view, there is every reason to consider it rational for the shareholders to support OPC.”

Jefford J concluded evidence existed that lifting the suspension could disrupt OPC's business such that it could not be adequately compensated in damages.

“However, I am not at all satisfied that that amounts to an arguable case that there will, in fact, be such disruption because of the more realistic likelihood that OPC will be financially supported,” she said.

“I would certainly not accept that there is a real risk that OPC will cease to exist by the date of trial.”

The judge added: “Similarly, the fact that the financial position of OPC is one generated by its apparent decision not to make any provision for the possibility that it would not retain the Corby UCC contract is material.”

She was “not persuaded that there is anything like a sufficient basis for me to conclude that this is a market leading contract such that there would be, or is even the potential for there to be, damage to OPC's reputation that cannot be remedied in damages”.

A claim by OPC that profit from Corby funded innovation work that would be lost was “entirely speculative”.

Looking at the balance of convenience, Jefford J said: “The probability that the [board] will suffer loss which cannot be compensated in damages is far greater [than for OPC] as it will be unable to provide what it considers the better services during the suspension and they are services which are intended to improve patient care.

“The balance of convenience is firmly in favour of lifting the suspension.”

Jefford J also refused OPC’s application for expedition, which was made more than five months from the issue of proceedings

“It is suggested by the ICB that it is a late tactical application. I agree,” the judge said.

“In any case, there are no features of this case which point to the need for expedition. Once the decision to lift the suspension has been made, the only reason to expedite the hearing would be the risk that the claimant would fail financially and cease to exist before trial, a risk which is unrealistic.”

Mark Smulian