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Council sees suspension on contract award lifted after NHS trust challenge

A county council has successfully applied to the High Court to have lifted the automatic suspension of a £40m contract triggered by a legal challenge by an NHS trust.

The case of Solent NHS Trust v Hampshire County Council [2015] EWHC 457 (TCC) relates to a contract for the provision of county-wide integrated adult substance misuse recovery services.

Solent NHS Trust was the incumbent provider of comparable services and came second in the tender competition. It sought to have set aside the local authority’s decision to award the contract to another organisation, Inclusion.

Mr Justice Akenhead concluded that there was a serious issue to be tried. He added that the claim in relation to breach in the marking of six questions in the Particulars of Claim was “neither obviously weak nor obviously strong”.

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The High Court judge said there were two real issues in relation to whether damages would be an adequate remedy:

  • Solent provided community services to Southampton City Council and community and mental health services to Portsmouth City Council; if the suspension were lifted, there would have to be TUPE transfers of personnel to the new provider, Inclusion, and a number of the employees to be transferred also worked on and in connection with the Southampton and Portsmouth City contracts. The economies of scale were such that, following the TUPE transfers, in effect those transferred employees would not be able, readily or at all, to work on those two projects and therefore the staffing and indeed viability of those two projects would be seriously undermined, particularly given the difficulties of finding alternative staff.
  • The possible closure of the Baytrees Unit. (It was common ground that the new contract would involve the bringing to an end of guaranteed provision to the new provider or to Solent of the placement of 50% of the beds at this unit).

Mr Justice Akenhead described these grounds as “at the very least, unconvincing” and concluded that damages would be an adequate remedy in the case.

The judge was very concerned, on the evidence, about the ‘service users’ and the impact of a delayed contract on the services to be provided for their benefit.

“Whilst, decently, Solent has agreed in principle to continue to provide the current level of services for as long as is reasonably necessary, what is not going to be provided is the new, improved and integrated service which this proposed contract was intended to provide,” he said.

Mr Justice Akenhead added that the whole tendering process for the new contract had been predicated on there being substantial and important improvements in the county-wide provision of services for service users.

“At 3,200 people, this is not a small and insignificant number of people,” he noted. “The effect of a significantly delayed contract which plans to bring greater integration and improvements to the services for these people will, I assess, be harmful and detrimental to them.”

The judge pointed out that on one scenario, there would be a delay of over some 10 months and on the other scenario a delay of five months.

“It would be unfortunate not to say tragic if even one person died or suffered unavoidable serious physical or mental deterioration as a result of unavoidable delays in the provision of the improvements planned by the new contract,” he argued.

“The introduction of the improvements will be delayed and services in the interim continue to be provided from those premises which had been considered unfit for purpose and which need to be replaced….I do not think that the Court should take risks with people’s lives and health; by this I do not infer that Solent, if it continued under the existing regime would put ‘service users’ lives at risk but I do infer that the integrated and improved service to be provided under the new contract has a better chance of better outcomes and it would be wrong to risk ‘service users’ not having the benefit of those improvements as soon as possible.”

The judge said the court could, should and indeed did take into account the public interest in seeing that there was compliance with the Public Contract Regulations, but added that this factor was not a conclusive one.

“Taking into account all the arguments and evidence in this case, and in particular the factors set out above, I am satisfied that the balance of convenience rests firmly in favour of the suspension being lifted immediately,” he found.

“That provides the best or at least better opportunity for the ‘service users’, namely the not insignificant number of drug and alcohol addicts with particular medical and mental problems in Hampshire, to have the more fully integrated and improved services provided sooner than if the suspension remains in place.”

Lifting the statutory suspension, Mr Justice Akenhead considered that an expedited trial in June 2015 would “overcome any lingering feelings on the part of Solent that its reputation might suffer”.

“Such a trial is certainly manageable, although both parties might wish seriously to consider settling their remaining differences, through mediation or otherwise, sooner rather than later,” he added.

Joseph Barrett of 11KBW acted for Hampshire. “The judgment includes an important discussion of the approach the Court should adopt when considering applications for interim relief that would disrupt the implementation of contracts for health and social welfare related services,” the set said.

Sarah Hannaford QC of Keating Chambers appeared for Solent.

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