The claimant, Ryhurst Ltd, was awarded a contract for a ten-year strategic estates partnership by the respondent, the Whittington Health NHS Trust, following a procurement exercise. Ryhurst was part of a group which included a company that had been responsible for the supply and installation of cladding at Grenfell Tower.
The Trust later abandoned the procurement, claiming it had an improved financial position and strengthened relations with partnership organisations. It also cited the risk of insufficient stakeholder engagement and the need for approval from the regulator.
The claimant, however, claimed that the procurement was abandoned because of political pressure from local campaigner groups because of its, and in its view minimal, connection to Grenfell. It therefore argued that the Trust was in breach of the Public Contracts Regulations (PCR) 2015 and sought damages as a result.
In his judgment, HHJ Stephen Davies (sitting as a High Court Judge) applied both Embassy Limousines v European Parliament [1999] CMLR 667 and Croce Amica One Italia SrL v Azienda Regionale Emergenza Urgenza (AREU) [2015] PTSR 600. From these cases it was clear that:
“in principle a public authority may decide to abandon a procurement by reference to reasons connected with the individual circumstances of the tenderer concerned.”
That, however, was not the end of the matter and the general principles established in Amey v West Sussex CC [2019] EWHC 1291 (TCC) needed consideration:
- Discretion to abandon is not limited to exceptional cases nor does it have to be based on serious grounds;
- There is no implied obligation under the PCR 2015 to carry the award procedure to its conclusion;
- There are no specific regulatory provisions concerning “the substantive or formal conditions” of a decision to abandon; only that it is subject to fundamental principles of EU procurement law, those being;
- Transparency obligation;
- Equal treatment obligation;
- Non-discrimination principle;
- Proportionality principle; and
- No ‘manifest errors’ in decision-making,
- The statutory duty to notify reasons is to ensure a minimum level of transparency and therefore compliance with equal treatment principles;
- The courts of member states must be able to determine the legality of a decision to abandon; and
- EU law permits member states to provide for the possibility to withdraw an invitation to tender on various grounds.
The judgment therefore turned heavily on the third of the above points. The claimant’s arguments concerning the transparency obligation were easily dismissed; it could not prove that, if the transparency obligation had been breached, it had suffered any resulting loss.
The court held that the Trust was afforded a margin of appreciation in the equal treatment principle and that the Trust did not go beyond this margin in exercising its discretion to abandon. It was also noted that the non-discrimination principle was closely allied to equal treatment and was therefore not considered further.
The only grounds left for Ryhust, therefore, were to prove the Trust’s decision to abandon was not proportionate to the reasons for so deciding and/or that it had made a manifest error in abandoning. For both, the Trust was afforded a wide margin of appreciation in determining whether it had breached those obligations.
On the facts, the court held that the various reasons put forward by the Trust for abandonment were significant and of relevance to its decision to abandon. The Grenfell connection was, therefore, not the only reason for abandonment.
In any event, the court held that the Grenfell connection would have been a sufficient reason for the Trust to abandon as it was entitled to have a primary regard to its own interests. A lack of stakeholder support for the proposed partnership with Ryhurst, and the fact that the proposed partnership was opposed on the basis of residual public scepticism about public-private partnerships in the context of the NHS, were reasonable grounds for abandonment.
The challenge was accordingly dismissed.
Comment
This case does not establish any new principles for procurement law but is helpful application of existing principles on abandoning procurements, particularly in a politicised context.
Ultimately, this case provides some comfort to contracting authorities; there is a large degree of discretion afforded to them in deciding to abandon procurements. This includes consideration of political and public engagement issues.
Nonetheless, as Amey v West Sussex made clear, the discretion afforded to contracting authorities does not negate any enforceable breaches of the PCR made prior to the abandonment.
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This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.
