NHS procurement agency granted court order to conclude framework agreement after supplier challenge to tender

The agency responsible for the procurement of medical equipment for the NHS in Scotland has secured a court order to conclude a framework agreement with its suppliers after a rival tenderer challenged its award of a contract.

A judge in the Court of Session granted the interim order after ruling that the pursuer’s case was “weak” and that the “public interest” in minimising the cost to the defender favoured the ending of the prohibition on the agency entering into the agreement with the successful tenderers.

Lord Tyre heard that in about January 2016, the Common Service Agency issued a contract notice for the purpose of establishing a framework agreement for the supply of cardiac resynchronisation therapy devices and systems, and implantable cardiac defibrillator devices and systems and delivery kits.

The defender’s procurement exercise was divided into 11 lots and an invitation to tender (ITT) was issued.

The pursuer, Boston Scientific Limited, submitted a tender for lots 1 to 10, but in May the agency informed the company that their tender in respect of three lots (1, 2 and 10) had been successful but that their tender in respect of the remaining lots (3 to 9) had been unsuccessful.

The pursuer raised proceedings seeking an order to set aside the defender’s decision to select three other tenderers for lots 3 to 9, which it claimed was made in “breach of its obligations” under the Public Contracts (Scotland) Regulations 2012; alternatively, damages in the sum of £3 million.

The effect of the raising of the proceedings, in terms of regulation 47(9), was that the defender could not conclude the framework agreement unless the proceedings came to an end or the court, by interim order, brought an end to the prohibition.

The defender applied for such an order, but on behalf of the pursuer it was submitted that the court should refuse to grant an interim order.

Firstly, it was argued that the agency breached its obligation to provide the pursuer with reasons why its tender for lots 3 to 9 was unsuccessful, as the reasons given in the letter of 9 May 2016 and subsequent correspondence were “inadequate”.

In the second place, it was submitted that the procedure adopted by the defender had caused “a breach of its obligations of transparency and equal treatment”.

The pursuer maintained that it was the “market leader” with regard to longevity of devices, and it was argued that something must have gone wrong to produce the scoring that had been produced in relation to longevity.

As regards the balance of convenience, including the public interest, the pursuer emphasised “patient safety” considerations.

However, the defender argued that “adequate reasons” for the decision had been given, as the ITT, its decision letter and subsequent correspondence made clear that the scoring methodology was a straightforward “purely arithmetic exercise”.

It was further submitted that there was “no merit” in the pursuer’s argument based on breach of obligations of transparency and equal treatment, as the ITT made clear what weight would be attached to longevity.

On the balance of convenience, it was argued that significant extra cost, of the order of £20,000 per week, would be expended by the defender until the framework agreement could be concluded and implemented.

The issue of longevity was not, as the pursuer had represented it, a question of “life and death”, and damages would be an “adequate and appropriate remedy” if the pursuer were ultimately to succeed.

On behalf of the interested party – one of the successful bidders for lots 3 to 9 – it was argued that the effect of the prohibition on them was a “relevant consideration”.

Granting the interim order, the judge described the pursuer’s prima facie case as “very weak”.

In a written opinion, Lord Tyre said: “As regards the adequacy of the reasons given by the defender for the pursuer’s tender having been unsuccessful in respect of lots 3 to 9, the critical point to bear in mind is that the tender scoring system as explained in the ITT was a purely arithmetic exercise. No provision was made in the ITT for the application of any quality appraisal or for the conducting of any verification process in relation to the tenders received.

“By supplying the pursuer with the information contained in Appendix A to its letter of 9 May 2016, the defender, in my view, gave proper, adequate and intelligible reasons as to why the pursuer’s tender had been unsuccessful to the extent that it was.”

The judge added that the pursuer’s case founded upon lack of transparency and equal treatment was also “weak”.

He explained: “Scoring of all of the tenders proceeded according to the methodology set out in the guidance in the ITT. It was accordingly transparent and treated all tenderers equally. I reject the proposition that the defender was bound, or even entitled, to conduct some form of post-submission verification process in relation to the longevity figures supplied by tenderers for each of their products.”

The judge further held that the patient safety was not a factor affecting the balance of convenience “one way or the other”.

Lord Tyre said: “On the basis of the information presented to me at the hearing, I am unable to make any confident assessment of the pursuer’s assertion that its products have a battery life so much longer than those of the successful tenderers as to render a need for surgery for implantation of a replacement device materially less likely.”

He concluded: “On the whole I conclude that the balance of convenience, including the public interest in minimising cost to the defender, favours the granting of an interim order.”

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