High Court judge explains £250k cost-capping order in PPE procurement proceedings

A High Court judge has given her reasons for making a costs capping order of £250,000 in respect of both the claimants, the Good Law Project and EveryDoctor, and the defendant, the Secretary of State for Health and Social Care, in the procurement challenge over the award of contracts for the supply of personal protective equipment (PPE).

In Good Law Project & Anor v Secretary of State for Health and Social Care [2021] EWHC 997 (TCC) – published this week – Mrs  Justice O’Farrell noted that the contracts were of high value with estimates ranging between £400m and £700m.

The claimants’ challenge is based on the following grounds:

1. The direct award without competition did not meet the principles of equal treatment and transparency;
2. No proper reasons were given for the contract awards; and
3. The awards were irrational in respect of the financial or technical verification and/or the use of a high priority lane to identify the relevant contracting suppliers.

There are nine contracts that form the subject matter of the legal challenge in relation to three interested parties.

Mrs Justice O’Farrell said she was satisfied that the public interest proceedings test was satisfied for the following reasons:

• The amount of public expenditure that had been made in relation to these contracts without an open competition or advance publication was, on any view, "very substantial indeed".
• The central issue in the case was whether there had been breaches of the obligations of transparency and equal treatment. Although those topics were the subject of a very substantial amount of authority, both in European jurisprudence and in English and Welsh case law, there was, she understood, no direct authority on the application of those principles in the context of regulation 32(2)(c) of the Public Contracts Regulations 2015 which was engaged in these proceedings.
• The issue of law that arose in the case concerned the nature and extent of the steps or measures that would be required to satisfy the obligations of transparency and equal treatment where the emergency procedure in regulation 32(2)(c) had been operated. “Given the absence of any direct authority on that particular issue, it seems to me that it clearly raises a point of law that is of general public importance.”
• She was satisfied that it would be appropriate for the courts to carry out the exercise of scrutinising the contracts to determine whether the awards were lawful in the circumstances of each case. Although there were a number of other investigations going on, there was a part for the courts to play in concerning itself with the legality of the procurement procedures used in these particular contracts, as opposed to the general efficacy and efficiency of the procurement exercises that were undertaken.
• She had had regard to the provisions of section 88(8) of the Criminal Justice Act 2015 which requires the court to consider the number of people likely to be directly affected if relief is granted to the applicant for judicial review, and (b) how significant the effect on those people is likely to be. “The reality is that there is no direct effect on the claimants by the relief, if any, that might be granted in these proceedings. However I accept Mr Coppel's [QC for the claimants] submission that there would be indirect effect. Potentially it could affect other suppliers for future public contracts. Although it has been stated by the defendant in its evidence that regulation 32 is no longer being used, regulation 32 remains part of the current regulations and it is not possible for any of us to say that the urgency that arose back in spring and summer of last year would not be repeated. The whole point is that regulation 32 only applies in circumstances where there is some unforeseen urgency.”
• It was not just taxpayers who might have an interest in the outcome of the case. “All citizens are likely to have an interest in whether or not procurement on the part of the Government is carried out using good governance procedures and integrity. Therefore, there is a real wider public interest that has been represented by the claimant group (which is a not for profit group) in bringing this challenge.”

Mrs Justice O’Farrell emphasised that the point of law she had identified was of general public importance and could be of significant effect. “If regulation 32 is used in the future, perhaps in very different circumstances, then it will be of value for everyone to have the court's guidance on the appropriate steps, if any, that need to be taken in order to ensure compliance with the obligations of transparency and equal treatment.”

Counsel for the Secretary of State made the point that no useful relief had been sought in the sense that there was no order to quash the decision and declare ineffectiveness or to undo the contracts that had in fact been ordered and in large part performed.

“That is clearly correct but there is still value to be had through a declaration,” the judge said. She added that it was simply unrealistic to have waited for an economic operator, as opposed to the claimants, to mount a challenge.

Mrs Justice O’Farrell said this would not be an appropriate case in which to have different caps applicable to different parties.

“The reason for that is really the matters that I have already identified which is that the costs are already very substantial,” she explained. “They are likely to be very substantial at the end of the case. That is partly the nature of the challenge but also includes the number of contracts that the court will be required to investigate.”

The claimants had estimated that their costs would be at least £250,000 with the possibility of an uplift if they are successful. The defendant’s costs were estimated to be £1m.

Mrs Justice O’Farrell considered that it would be appropriate to make a costs capping order in respect of the claimants and the defendant in the sum of £250,000.

She declined to make any order in relation to the interested parties, saying that their involvement would be limited. “The issue of costs is something that the court will concern itself with at the end of the case in general, and it certainly does not take this opportunity to tie its hands at this stage.”