Case Summary: Judgment Good Law Project Challenge: Pestfix

The Queen on the application of Good Law Project Limited, Everydoctor v The Secretary of State for Health and Social Care v Crisp Websites Limited (t/a Pestfix), Clandeboye Agencies Limited, Ayanda Capital Limited [2022] EWHC 46 (TCC)

The Technology and Construction Court has handed down judgment in a high profile judicial review challenge against the Government's award of Personal Protective Equipment ("PPE") contracts at the height of the pandemic in Spring 2020. 

The contracts together were worth more than £700m, and were awarded in reliance on Regulation 32(2)(c) of the Public Contracts Regulations 2015 ("PCR 2015").

Regulation 32(2)(c) provides that a public body can forgo the normal requirement to run a full procurement process in compliance with the PCR 2015 and award a contract "without prior publication" (i.e. without giving notice to the market), "insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with". 

The claimant, a campaigning organisation, was granted permission to challenge the award of the contracts on three grounds: 

• Breach of the EU principles of equal treatment and transparency by failure to allow competition between suppliers and the use of a "high priority" or "VIP" lane ("High Priority Lane") for suppliers. 
• Failure to provide proper reasons for the decisions to award the contracts. 
• The decision to award the contracts was irrational as a matter of public law in that no, or no sufficient, financial or technical verification was carried out, and by operation of the High Priority Lane. 

The Secretary of State opposed all of these grounds, pleaded that the claimant did not have standing, and that any relief should be refused.

The judgment provides clarification of the application of Regulation 32(2)(c) in times of urgency.   The court accepted on the evidence at permission stage that there were circumstances of exceptional urgency in Spring 2020 that justified departure from the normal rules. This meant that the contracts did not have to be advertised in the usual way. 

However, the court clarified (upholding some earlier case law) that even where this is the case, and a derogation from the usual rules is permitted, the principles of transparency and equal treatment (and potentially non-discrimination) can still apply where they are "related and proportionate to the subject matter of the contract" (para. 337). 

DHSE had implemented a 'High Priority Lane' to manage proposals from PPE suppliers referred by ministers and other senior officials.  The DHSE's evidence made the case that those suppliers were not prioritised, but rather that a team was in charge of updating ministers or other high-ranking officials who had recommended them. Despite this, the court still found that the mere creation of such a team and  separate system for managing those suppliers was in breach of the principle of equal treatment. 

The DHSE had argued that when derogation from the rules is possible because of urgency (under Regulation 32(2)(c)), the principles of equal treatment and transparency simply do not apply, but the court found that in the absence of express exclusion the principles contained in the regulations themselves (including in Regulations 18, 56, 57, 58, 67 and 84) still apply, where "related and proportionate".  Mrs Justice O'Farrell stated at para. 341 that: 

Where the contracting authority considers bids from more than one economic operator, whether at the same or at different times, there is no obvious rationale for disregarding the principle of equal treatment in terms of the criteria used to decide which bidders should be awarded a contract. Dispensing with competition does not justify arbitrary or unfair selection criteria where more than one economic operator could satisfy the demand.

Therefore, the core principles contained in the PCR 2015 can apply even where the procurement in question falls within the express derogations in Regulation 32. This part of the judgment is unaffected by Brexit, given that the court does not address the question of the application of underlying treaty principles under the European Union (Withdrawal) Act 2018 in a public procurement context post-Brexit, but rather looks at those treaty principles as written into the regulations in force in the UK (notably in Regulation 18). 

The court also:

• decided that the DHSE had complied with its duty to give clear and sufficient reasons for awarding the contracts, and that the DHSE's decision to award the contracts to the interested parties was 'rational' in public law terms.  
• found that DHSC hadn't relied on referral to the High Priority Lane in awarding the contracts, and sufficient financial and technical due diligence was carried out. 
• emphasised the high bar that a claimant has to overcome in the challenge on grounds of rationality, and place the bar even higher in these circumstances applying earlier case law stating that margin of appreciation accorded to the decision-maker may be "particularly wide in the context of a national emergency, such as the Covid-19 pandemic". 

The judgment provides helpful guidance that any public (or utility) procurement conducted under an exemption on the basis of urgency is not necessarily free from the overarching principles of procurement law.

The government is likely to take the judgment into account in its current work redesigning the PCR 2015 following Brexit.  In its response to the Green Paper 'Transforming Public Procurement', published before Christmas, the government reiterated its aim of including a new "limited tendering procedure" to replace regulation 32, for use in "certain circumstances, such as extreme urgency" (although it has "moved away from the term 'crisis'").  While the newly proposed provisions (which have not yet been published in draft) would include a power for a Minister to declare a state of urgency where the regulations didn't have to be complied with, that would only be exceptional, and the government stated that it otherwise intends to largely retain regulation 32 in its current form. 

Following this judgment, the design of the 'limited tendering procedure' may be revisited and the new legislation may seek to definitively exclude some of the principles listed by Mrs Justice O'Farrell in a situation of urgency, or clarify the scope of their application to allow the government more flexibility in times of uncertainty.

Osborne Clarke acted for PestFix as an interested party in this case.