SRCL Ltd v The National Health Service Commissioning Board (also known as NHS England)

JurisdictionEngland & Wales
JudgeMr Justice Fraser
Judgment Date27 July 2018
Neutral Citation[2018] EWHC 1985 (TCC)
CourtQueen's Bench Division (Technology and Construction Court)
Docket NumberCase No. HT-2017-000169
Date27 July 2018
Between
SRCL Limited
Claimant
and
The National Health Service Commissioning Board (also known as NHS England)
Defendant

[2018] EWHC 1985 (TCC)

Before

The Honourable Mr Justice Fraser

Case No. HT-2017-000169

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (QB)

Royal Courts of Justice

Strand, London, WC2A 2LL

Jason Coppel QC (instructed by Bevan Brittan LLP) for the Claimant

Rhodri Williams QC (instructed by Hill Dickinson LLP) for the Defendant

Hearing dates: 11, 12, 13, 18 and 25 June, and 27 July 2018

Judgment Approved

Mr Justice Fraser

I Introduction

1

. This Introduction is an outline summary. The Claimant, SRCL Ltd (“SRCL”) is a provider of healthcare waste and compliance services within the United Kingdom. It provides a variety of services to a number of different customers, but relevant to these proceedings is the provision of clinical waste disposal services to the National Health Service (“the NHS”). The National Health Service Commissioning Board (which is also known as NHS England) is a non-departmental Government body, which was established by the National Health Service Act 2006. It is responsible for allocating funding to Clinical Commissioning Groups so as to enable those groups to commission health-related services, and for funding contracts. These include those the subject matter of these proceedings, namely for the collection and disposal of clinical waste produced by General Practitioners (or GPs) and pharmacies across England. I shall refer to the Defendant as NHSE, as that is how it was referred to in these proceedings.

2

. NHSE is a “contracting authority” for the purposes of the Public Contracts Regulations 2015 (SI 2015/102) (“PCR 2015”). These regulations implement Directive 2014/24/EU on public procurement (“the Directive”), which also repealed the earlier relevant Directive 2004/18/EC. NHSE is obliged by law to observe the requirements upon such authorities in the PCR 2015 in terms of how it places these contracts with different economic operators. In general terms, this means observing the principles of EU law, and open competitions must be held prior to entering into such contracts. Those competitions must be conducted in accordance with the principles of transparency, fairness and equality of treatment between the different bidders. These particular proceedings concern a procurement dispute whereby SRCL challenges the outcome of an auction held in April 2017 by NHSE for the provision of clinical waste services to GPs and pharmacies in Cumbria and the North East of England. This was a competition for what is called a “Call-Off” contract for services that were covered by a Framework Agreement. SRCL was one of five commercial operators that had been appointed by NHSE under the tender process for the Framework Agreement. However, that appointment merely entitled them to enter into what are called “mini-competitions” for Call Off contracts for services.

3

. The Framework Agreement covered the whole of England, and different Call Off competitions (or as they were sometimes called in the evidence, mini-competitions) covered different parts of the country. Each was designated with a different Wave number, starting with Wave 1. Within each Wave there were different lots. The auction for the contract the subject of these proceedings was for Wave 6 and was held on 26 April 2017, for Cumbria and the North East of England. The purpose of the auctions held for the different Waves was for NHSE to obtain lower prices through more effective competition. SRCL was the main incumbent provider of these services, but was unsuccessful in the auction for Wave 6 and did not bid anywhere nearly low enough to win the auction. This was for reasons that are explained in more detail below. The index to this judgment is as follows:

Paragraph No.

I Introduction

1

II The Public Contracts Regulations 2015

12

III The Agreed Issues

15

IV The New Allegations

17

V The SRCL witnesses

43

VI Witnesses within a Confidentiality Ring

65

VII The NHSE Witnesses

83

VIII The Relevant Facts

118

IX Limitation/The Regulatory Time Limit for Starting Proceedings

138

X Abnormally Low Tenders

163

XI How TUPE was dealt with

218

XII Answers to Agreed Issues

233

XIII Conclusion

243

4

. Proceedings were issued by SRCL on 30 June 2017. There are three broad areas of contention between the parties in this litigation. SRCL maintains that the winning bid, and the under-bid (which means the next lowest bid), were both abnormally low tenders. SRCL also maintains that the way that the costs of complying with the Transfer of Undertakings and Protection of Employment Regulations 2006 (“TUPE”) were dealt with by NHSE in the competition for Wave 6, notified to the bidders prior to the auction itself, was unlawful. NHSE take issues with both of those grounds of challenge, and also relies upon limitation, as the proceedings were issued by SRCL outside of the 30 day period imposed by Regulation 92(1) of the PCR 2015. There is also a dispute about when time in this case should start to run for the purposes of Regulation 92(1), but SRCL maintains that there are good grounds present for the necessary extension of time under Regulation 92(4) of the PCR 2015 in any event.

5

. On 27 October 2017 Jefford J ordered a split trial, with liability and causation to be determined first, and that trial was set down to take place on 30 April 2018. The circumstances in which that trial did not take place were rather ironic, given the Defendant is effectively part of the NHS, and delay to the trial would inevitably cause delay to resolution of the issue of whether the automatic suspension preventing NHSE from entering into what is supposed to be a money-saving contract should be lifted. The main witness for SRCL was given, by the NHS, a date for an operation, having been on an NHS waiting list. That date fell during the trial. Accordingly the parties agreed to delay the trial so that this appointment could be kept, and associated time for recovery could occur. The trial was not therefore conducted until 11 June 2018, which was the first available date after the original trial date.

6

. The auction process was administered by the Crown Commercial Service, and was conducted online and is therefore also called an e-auction. It was also what is called a reverse auction, which is one where the bidders reduce their price in turn with the aim of being the lowest bid, and winning both the auction and thereby the contract. This particular auction was for Cumbria and the North East, and was called Wave 6. The issue of proceedings acted automatically to suspend the auction process for this particular Wave, but NHSE suspended the whole auction process for all remaining Waves after the claim form was issued. Therefore only Waves 1 to 5 have led to the award of Call Off contracts. SRCL had won some of those other lots in Waves 1 to 5. The winning bidder in the auction for Wave 6 was Healthcare Environmental Services Ltd (“HES”). The next lowest bid was from Sharpsmart Ltd (“Sharpsmart”).

7

. SRCL took only a very limited part in the auction for Wave 6, choosing no longer to bid after its own particular pre-determined level had been reached. This was a decision that had been taken by SRCL prior to the auction, and is explained further below. Immediately following the auction itself, SRCL set out its objections to NHSE in a letter from its solicitors dated 27 April 2017. The thrust of the complaint was that the winning bid was an abnormally low tender, but the decision makers at SRCL appeared to have decided in advance of knowing what the winning bid was, that this was the complaint that was going to be made in respect of the outcome of the auction. NHSE did not accept the winning bid was abnormally low, but agreed (after some pressure had been applied by SRCL in correspondence) to conduct an investigation. This was undertaken (by Mr Smith, who gave evidence before me) and this concluded that there were no grounds for considering that the winning bid was an abnormally low tender. There was a substantial amount of correspondence between the solicitors acting for the parties during this period, and their contents are relied upon by both parties as justifying their respective cases on limitation. Proceedings were issued by SRCL on 30 June 2017.

8

. One further point about the auctions both for this Wave, and the previous five Waves, is that they were for what was called a “basket” of representative services. This was set out in what was called (during proceedings) the closing FRT. The procurement for the Framework Agreement itself had required the different bidders to bid both on price, and quality. Both parts of those bids were evaluated, and had a different percentage attributed to them in the evaluation stage. If successful the bidders were added to the Framework and were entitled to participate in the auctions. The price aspect of the Framework tender bids included the attribution of different rates, or prices, by each bidder for the disposal of a vast number of different types of clinical waste. Disposal of clinical waste is governed by strict regulations and not all different types require the same method of disposal; some are more hazardous than others. Such waste would be collected by the GP surgeries and pharmacies in different sized containers, and bags, and accordingly collected from there by the successful bidders in those containers, and then disposed of. Different colours are used for different levels of hazard. The most hazardous waste requires incineration. For each Wave, NHSE chose a representative selection of different types and quantities of waste. However, the underlying data concerning the existing services that were...

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