Lancashire Care NHS Foundation Trust & Anor v Lancashire County Council

On a challenge to a public procurement award, the court considering whether to lift an automatic suspension must ask whether an interim order restraining contract award would otherwise be appropriate. The inquiry follows the American Cyanamid principles. Adequacy of damages remains central, assessed in the round and in light of whether it is just to confine the claimant to damages. Significant operational restructuring, loss of skilled staff, reduced ability to deliver connected public services and effects on care quality may make damages inadequate, even where some loss is quantifiable. Financial loss capable of calculation may be adequate compensation for the authority. The balance of convenience includes public interest, continuity of essential services, the status quo and the least risk of injustice. Public funding may be relevant but is not determinative. An expedited trial may reinforce refusal to lift the suspension.

Two NHS foundation trusts, the incumbent providers of children’s public health and nursing services, challenged the decision of Lancashire County Council to award a new contract to Virgin Care Services Ltd. The claim triggered the automatic suspension under the Public Contracts Regulations 2015. The Council applied under regulation 96(1)(a) to bring the suspension to an end, arguing that damages were adequate and that continuity and mobilisation considerations favoured the successful bidder. The Trusts relied on the operational and healthcare consequences of losing the contract. The central issues were whether damages would provide an effective remedy and, if necessary, where the balance of convenience lay.

The Council’s application to lift the automatic suspension was refused.

1. Applicable framework. Under regulations 95 and 96(1)(a) of the Public Contracts Regulations 2015, the court had to consider whether, absent the suspension, it would grant an interim order requiring the Council to refrain from entering the contract. The applicable approach was analogous to an interim injunction application and incorporated the American Cyanamid principles stated in American Cyanamid Co (No 1) v Ethicon Ltd [1975] UKHL 1, as summarised in Covanta Energy Ltd v MWDA [2013] EWHC 2922 (TCC) and Fellowes & Son v Fisher [1976] 1 QB 122.
2. Damages. Adequacy of damages remained a central question, but had to be assessed in the round, including whether justice required the claimant to be confined to damages. Following Nuclear Decommissioning Agency v Energy Solutions EU Ltd [2017] UKSC 34, the sufficiently serious breach requirement was treated as an additional consideration in assessing the effectiveness of damages, although the point could not fairly be determined at this interlocutory stage. The Trusts’ evidence established harm extending beyond quantifiable loss: repeated operational restructuring, loss of skilled staff, reduced capacity to provide other public services and an effect on the quality of healthcare. Damages were therefore inadequate for the Trusts. They would be adequate for the Council because its potential loss was essentially financial and capable of calculation.
3. Balance of convenience. If necessary, the balance was overwhelmingly in the Trusts’ favour. The public interest, continuity of essential services, the status quo and the least risk of injustice supported maintaining the suspension. The fact that all parties were publicly funded was a relevant, though not determinative, circumstance. The Council’s unsupported view that continuation would be unlawful or inappropriate did not assist it. Continuing provision under an existing contractual extension mechanism while the statutory suspension remained in force was not shown to breach the Regulations. The availability of an expedited trial was an additional factor in favour of maintaining the suspension.
4. The suspension therefore remained in place. No order was made concerning the Trusts’ offer to continue services or the operation of the contractual extension clause.

High Court (Technology and Construction Court: The Council applied on 9 January 2018 to lift the automatic suspension triggered by the Trusts’ claim form. The application was heard on 25 January 2018 and refused. No appellate stage is stated.