Use of High Priority Lane unlawful


25th January 2022

The High Court has ruled that the Government's use of a High Priority Lane to award contracts for the supply of PPE to the NHS in the early stages of the COVID-19 pandemic was unlawful.

In Good Law Project Limited & EveryDoctor Limited v The Secretary of State for Health and Social Care [2022] EWHC 46 (TCC), Mrs Justice O'Farrell considered a claim for judicial review made in respect of contracts awarded to three companies for the supply of PPE to the NHS.

Background

The outbreak of the COVID-19 pandemic and its spread in the UK caused unprecedented need for PPE in the NHS, at a time where global demand, disruption to supply chains and increased prices caused worldwide shortages.

To deal with depleting stock, the Cabinet Office published “Procurement Policy Note – Responding to COVID-19: Information Note PPN 01/20” to provide guidance on how to award contracts during the pandemic. One suggestion was to make use of Regulation 32(2)(c) of the Public Contracts Regulations 2015 (‘PCR’) which allows contracting authorities to make a direct award of a contract, without the need for a full procurement process, in certain prescribed circumstances.

A Portal was set up on the Government website, where information was provided on the items required and their specifications. Businesses could make offers to supply goods by completing a questionnaire. This would trigger a process, whereby those making credible offers were allocated a case worker and contacted for further information. Technical assurance and financial due diligence was carried out and contractual terms and pricing were negotiated. The file was then passed to an Accounting Officer for approval.

An alternate route was also established in late March 2020, known as the High Priority Lane. This was reserved for referrals made outside the Portal by MPs, ministers and senior officials. They were provided with a dedicated email address, which they could use to flag offers from their contacts. The suppliers were contacted for further information and passed to the technical assurance team to follow the remainder of the usual procedure. The Government argued the High Priority Lane helped manage the large number of offers made in the Portal and the number of referrals being made by senior officials.

The claim

The Claimants were granted permission to bring the claim on three grounds:

  • i) Equal treatment and transparency – that the award of all the contracts was in breach of the principles of equal treatment and transparency pursuant to Regulation 18 of the PCR, thereby making them unlawful. The Claimants’ position was that use of Regulation 32(2)(c) did not permit an award to be made without any steps to distinguish between suitable suppliers. Further, offers referred through the High Priority Lane were given an unfair advantage and prioritised above offers made through the Portal. The criteria for admittance to this route, that the suppliers had contacts with minsters and senior officials, was also against the principles under Regulation 18.
  • ii) Failure to give sufficient reasons – despite requests in pre-action correspondence, the Claimants argued that the Government failed to comply with its obligations to provide reasons for its decisions. It was their view that the Government failed to provide sufficient information to enable them to understand the basis of the decision to make the awards and to make a determination on whether to challenge it, and later allow the court to make a determination as to its lawfulness.
  • iii) Irrationality – the Claimants argued that the award of the contracts was irrational, on the basis that the Defendant failed to conduct sufficient financial and technical checks on the businesses and their offers, and by their reliance on the High Priority Lane.

The decision

The claim was successful on ground (i). The court held that the use of open source procurement was compliant with the principles of equal treatment and transparency, but it was unlawful for the Government to give preferential treatment to suppliers by virtue of their allocation to the High Priority Lane. The criteria used to allocate offers to this track did not treat comparable offers in the same manner and merely relied on the fact the supplier had contacts who could refer them through the High Priority Lane. Offers made by this route were dealt with more quickly, as the team was better resourced to deal with the offers made. Despite this, the court held that had the contracts been awarded through the Portal, it is highly likely they would have been awarded in any event.

The clam was unsuccessful on grounds (ii) and (iii).

In respect of ground (ii), being the failure by the Government to give sufficient reasons, the court held that the Defendant needed to provide no more than the reasons for its decisions. Its responses had satisfied the test that sufficient reasons must be given to allow a realistic prospect of a challenge. The evidence requested in the pre-action correspondence went beyond this, and the Defendant therefore had no obligation to provide it.

In considering ground (iii), being that the decisions were irrational, the court was satisfied that the contracts awarded in the High Priority Lane would have been treated as high priority had they come through the Portal. The court was also satisfied that no reliance was placed on allocation to the lane at the technical assessment or final decision-making stage. In terms of financial due diligence, this was limited due to an absence of time and resources, but the court was satisfied that the Government was entitled to assume a greater degree of risk in the circumstances and to proceed was reasonable. Considering each item complained of in turn, the court ruled that the technical verification carried out was also sufficient.

Comments

The decision demonstrates that even in urgent situations, any decision to treat one set of bidders more favourably than another, simply due to the connections they had, is likely to be unlawful, given that the aim of the PCR is to ensure fairness and transparency to all potential suppliers.

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