Procurement case update – Urgency does not negate transparency and equal treatment

The case of R (Good Law Project and EveryDoctor) v Secretary of State for Health and Social Care, looked at the DHSC’s decision to direct award a large number of Personal Protective Equipment (PPE) at the start of the Covid-19 pandemic.

In total, contracts awarded through the Government’s “High Priority Lane,” set up in response to the challenges faced in attempting to purchase PPE quickly, have been valued in the region of 14 billion pounds.

The system allowed government officials, MPs, Lords, Senior NHS staff (including other health professionals) to refer potential suppliers of PPE to a cross-functional team who would then review the referrals. They would then assess whether these should be passed onto a “Technical Assurance Team” who awarded direct contracts.

In short, the High Priority Lane appeared to have been used by senior members of the NHS, MP’s and government officials to refer their own contacts into a system/decision-making body, which was, in turn, awarding billions of pounds worth of contracts.

The case itself concerned two particular companies, PestFix and Ayanda, who both received contracts by way of direct award through the High Priority Lane. A judicial review claim was brought on a number of grounds, but the principal basis was that the use of the High Priority Lane was illegal as the direct award of contracts breached the principles of equality and transparency.

The judicial review was brought on three grounds:

1. DHSC had breached the principles of equal treatment and transparency in particular through the use of the High Priority Lane. This was regardless of the fact that Regulation 32(2)(c) had been used, allowing the DHSC to award a contract based on extreme urgency (Ground 2).
2. DHSC failed to provide any reason for its decision to award the contracts (Ground 3).
3. The contracts awarded to PestFix and Ayanda were awarded using the High Priority Lane without a proper technical and financial assessment being carried out (Ground 5).

Findings

Ground 2

The Court found that:

• DHSC was obliged to comply with the principles of equal treatment and transparency set out in Regulation 18 of the Public Contracts Regulations 2015 in relation to the decision chosen to award contracts under Regulation 32(2)(c), for reasons of extreme urgency.
• The use of an ‘open source’ procurement procedure, whereby the potential suppliers were invited to make an offer of what elements of the PPE that they could provide rather than bidding for specific contracts, did comply with the obligations of equal treatment.
• The operation of the High Priority Lane did breach the obligation of equal treatment.

Ground 3

The Court rejected the Claimant’s appeal that the DHSC failed to provide reasons for its decision to award the contracts. Whilst the Court acknowledged that there was specific evidence central to the Claimant’s case and that this evidence was not provided at the pre-action stage, the Court was satisfied that the Defendant had given enough reasons to satisfy the test; namely that there were sufficient reasons given for the decision to allow a realistic prospect of a challenge.

The Court reiterated the test that a contracting authority does not need to give every single bit of information that it has to disgruntled bidders. Still, it should be making sure questions are answered and that bidders are supplied with enough information to determine whether or not there is a realistic prospect of a challenge.

Ground 5

In making a determination on the Defendant’s actions for Ground 5 the Court, in particular, referred to the following legal principles:

• That decision-makers, such as the DHSC, are in times in crisis better placed to carry out an assessment of needs over the Court;
• The Court will only interfere in the decision of a public body if the decision is unreasonable or there is an obvious error in the reasons behind the decisions;
• “The decision-maker must take into account all legally relevant considerations and avoid taking into account those that are irrelevant”;
• “The decision-maker must be briefed on everything that is relevant” as the matter of fairness requires a decision to be made on a balanced basis;
• Whilst what is material or relevant in the decision is a question of law, the weight actually given to those factors is a matter for the decision-maker; and
• The Court must not substitute its own decision for that of the decision-maker.

The above decisions reinforced that a court will be mindful of the situation and will not lightly interfere with a decision made by a public body as “where a decision is made by a responsible decision-maker after consultation with those who have material knowledge and expertise, it is not lightly to be overridden.”

The Court ruled that there were no grounds for the Claimant to bring a challenge against DHSC for the contracts awarded to PestFix and Ayanda as sufficient due diligence had been carried out.

The Court also noted that despite the use of the ‘High Priority Lane’ it was likely that PestFix and Ayanda would have been awarded contracts in any event.

Summary

It is important to remember that in this case, permission to challenge the contract awards on the use of regulation 32(2)(c) Public Contracts Regulations 2015 – which is the ability for contracting authorities to award contracts without competition due to reasons of extreme urgency – had already been refused. The Court was therefore not looking at whether the DHSC was able to award the contracts under the Regulations; it was concerned with how it made those awards.

The main lesson to come from the Judgment is that, whilst it accepted the applicability and use of Regulation 32, a contracting authority cannot in itself ignore the requirements to comply with its obligations of transparency and equal treatment. The case was not concerned with the DHSC's actual decision to use its powers under Regulation 32, it was the way in which that decision was carried out that was deemed to be unlawful.

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