Ryhurst Ltd v Whittington Health NHS Trust

A contracting authority may abandon a procurement exercise at any stage unless contract, statute or procurement law imposes a restriction. The decision remains subject to the principles of equal treatment, non-discrimination, transparency, proportionality and avoidance of manifest error.

The court reviews the lawfulness of the decision, not whether abandonment was expedient in the public interest. The authority retains a margin of appreciation in matters of judgment and assessment. It may take account of reasons connected with the individual tenderer, provided the decision complies with the fundamental procurement principles.

The transparency duty requires notification of significant procurement decisions and sufficient reasons. It does not require a running commentary on the authority’s internal deliberations.

Ryhurst was the preferred bidder for a proposed ten-year strategic estates partnership with Whittington Health NHS Trust. Following the Grenfell Tower fire, opposition arose because of Ryhurst’s connection with the Rydon group, together with wider opposition to private-sector involvement in NHS estates and concerns about the proposed disposal and development of NHS land.

The Trust initially proceeded towards contract formation, but later reconsidered the procurement in light of improved finances, strengthened public-sector relationships, continuing stakeholder opposition and the need for NHS Improvement approval for all projects. The Trust Board decided in June 2018 to abandon the procurement and pursue a more traditional route.

Ryhurst claimed damages for breach of the Public Contracts Regulations 2015, alleging that the stated reasons were pretexts and that the real reason was impermissible political pressure connected with Grenfell.

1. Claim dismissed. The Trust’s decision to abandon the procurement was made by the Trust Board in June 2018 and was not a mere rubber-stamping of an earlier executive decision.
2. A contracting authority has a broad discretion to abandon a procurement at any stage. That right is subject to contractual and statutory restrictions and to the fundamental procurement obligations in regulations 18 and 89 of the Public Contracts Regulations 2015.
3. The court’s task was to determine lawfulness, rather than whether abandonment was expedient in the public interest. In matters of judgment and assessment the Trust had a margin of appreciation. Ryhurst therefore had to establish that the decision fell outside the range of reasonable decisions available to the Trust, because it was manifestly erroneous, irrational, disproportionate or objectively unjustified.
4. The Trust was entitled in principle to consider matters connected with Ryhurst’s individual circumstances. The fact that stakeholder opposition was partly connected with Ryhurst’s association with the Rydon group did not itself make the decision unlawful. The relevant consideration was the absence of sufficient stakeholder support and the resulting risk to the SEP, not the correctness of every belief underlying that opposition.
5. The Trust had genuine and rational reasons for abandonment: its substantially improved financial position; stronger relationships with public-sector partners; the requirement for NHS Improvement approval of all projects undertaken through the SEP; and the continuing risk that stakeholders would not support the SEP. Those reasons were not mere smokescreens.
6. Transparency was a hard-edged obligation, but it did not require the Trust to provide a running commentary on its internal deliberations. The reasons notified to Ryhurst sufficiently identified the material grounds for abandonment. The Trust was also entitled to take a cautious approach to NHS Improvement’s letter of 5 February 2018 and was not required immediately to announce a final decision which had not yet been made.
7. Had liability been established, causation and sufficiently serious breach would also have been established. However, the claim failed on liability. The court made no final award of damages.

First-instance decision. No earlier judgment in the same proceedings was stated.