Supreme Court to rule next week on high-profile procurement dispute

The Supreme Court will next week (1 July) hand down a key ruling in the procurement field in a case involving the allocation of £132.8m in services to a pre-existing outsourcing contract.

The case of Edenred (UK Group) Limited and another (Appellants) v Her Majesty's Treasury and others (Respondents)– UKSC 2015/0080 relates to the delivery of childcare accounts and services under the Tax Free Childcare (TFC) Scheme.

Following a consultation process, the Government allocated provision to National Savings & Investments (NS&I), to be delivered under a pre-existing outsourcing contract with Atos.

The appellants – Edenred and the Childcare Voucher Providers Association – delivered services under the original Employer Supported Childcare scheme.

They challenged the new arrangements as being incompatible with the requirement under EU law that new public services contracts be subject to a tender procedure.

The appellants lost in both the High Court and the Court of Appeal. The Chancellor of the High Court, Lord Justice Etherton, agreed with Mrs Justice Andrews that a memorandum of understanding between HMRC and NS&I was not a public contract within the Public Contracts Regulations 2006.

Lord Justice Etherton also said he did not accept that proposed amendments to the Atos contract for the provision of services relating to the TFC scheme engaged the 2006 Regulations.

The issue before the Supreme Court therefore was whether the addition of £132.8m worth of tax free childcare services to NS&I’s contract with Atos amounted to a material variation of the contract, which is prohibited in the absence of a tender competition for the right to provide such services.

The Supreme Court further considered if domestic law entitled either of the appellants to relief so as to prevent a direct award of work to Atos without any advertisement or tender, in breach of the EU procurement regime.

The case was heard by Lord Neuberger, Lord Mance, Lord Sumption, Lord Carnwath and Lord Hodge on 13-14 May.