First judgement under the Procurement Act 2023

Summary:

This judgement provides the first analysis of how the new test for lifting automatic suspensions under the Procurement Act 2023 (Act) is to be applied. In the first application to lift the suspension under the Act, the court maintained the suspension. This judgement suggests a significant change in approach, which may result in more suspensions being maintained.

Facts:

Parkingeye is the incumbent provider of hospital car parking management services for Cardiff and Vale University Health Board (Cardiff and Vale). Velindre’s functions include managing and providing shared services to the health service in Wales. Velindre carried out a procurement process for car park management services on behalf of Cardiff and Vale and National Parking Control Group Limited was identified as the successful supplier. Parkingeye issued proceedings (on various grounds) which resulted in an automatic suspension and Cardiff and Vale and Velindre applied to lift that suspension. The question for the court therefore was whether that suspension should be lifted.

Law:

Under the previous rules, the applicable test whether the suspension should be lifted was known as the “American Cyanamid” test, namely:

1. Is there a serious issue to be tried?

2. If so, would damages be an adequate remedy for the claimant(s) if the suspension were lifted and they succeeded at trial; is it just in all the circumstances that the claimant(s) should be confined to a remedy of damages?

3. If not, would damages be an adequate remedy for the defendant if the suspension remained in place and it succeeded at trial?

4. Where there is doubt as to the adequacy of damages for either of the parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong; that is, where does the balance of convenience lie?

Under the Act (specifically section 102), in deciding whether to lift the suspension, the court must have regard to:

1. The public interest in, among other things:

a. upholding the principle that public contracts should be awarded, and contracts should be modified, in accordance with the law;

b. avoiding delay in the supply of the goods, services or works provided for in the contract or modification (for example, in respect of defence or security interests or the continuing provision of public services)

2. The interests of suppliers, including whether damages are an adequate remedy for the claimant;

3. Any other matters that the court considers appropriate.

Decision:

As noted, the court maintained the suspension (even though the court considered that damages would likely have been an adequate remedy). In so doing, the court held as follows:

• At the heart of the new test is the balance between the public interest and the private interests of suppliers.
• The Act does not explain how that balance is to be struck or give priority of one factor over another – thus the weight to be afforded to each of the matters for consideration is one for the court to decide on the facts of the particular case.
• The new test is “intended to be substantively and not merely formally very different, in both its method and its effect, from the former test”
• Under the previous test, the conclusion that damages would be an adequate remedy for the claimant would result in the suspension being lifted – this was a major reason why it was relatively difficult for a claimant to successfully resist an application to lift the suspension. Now however, the adequacy of damages is only one factor to be taken into consideration. It no longer has the significance it did under the previous test.
• The public interest test will “generally tend in favour of keeping the suspension in place” (though it may be given different weighting by the court dependent on the precise facts of the case).
• The public interest test should be read as recognising a public interest that “where the lawfulness of an award of a contract is disputed, the contract should not be awarded until that dispute has been settled.”
• The reference to avoiding delay within the test should be read as focusing on “delay in achieving the supply of goods and services, not on the desirability of alternative sources of supply.” That is, the focus needs to be on the effect of a delay (or not) in maintaining the suspension and the interest in the continuing provision of goods and services, rather than a replacement contract or winning bidder’s proposals being particularly desirable.
• In each case, where the balance lies needs to be decided on the facts and there is no statutory presumption one way or another. However, the lifting of the suspension will generally require, on the particular facts of the case, the presence of either a very persuasive countervailing public interest or some overriding matter of private interest.
• The purpose of the suspension and new test for lifting is “clearly intended to ensure that proper weight is given to the public interest in ensuring that public contracts are awarded in accordance with the law and that, accordingly, the courts do not too lightly lift the suspensions.”

Comment:

The decision in this case will be of interest to contracting authorities and suppliers alike. Whilst each case will turn on its facts, this first judgement clearly indicates that the courts consider a substantially different test is to be applied and that the courts may be more willing than was the case previously to maintain the suspension in place, pending trial.

*This information is for guidance purposes only and does not constitute, nor should be regarded as, a substitute for taking legal advice that is tailored to your circumstances.

If you would like any further information or advice, please do not hesitate to get in touch with a member of our procurement team.