International SOS Assistance UK Limited v Secretary of State for Defence

On an application to lift an automatic suspension in a procurement challenge, the court must apply the interim-injunction approach required by regulation 96(2) of the Public Contracts Regulations 2015. The inquiry asks whether there is a serious issue to be tried, whether damages would be an adequate remedy for either party, and where the balance of convenience lies.

Damages may be inadequate where assessing loss would require a highly speculative counterfactual exercise, but commercial, reputational or business-operation effects require cogent evidence. A public authority’s asserted benefit from new contractual arrangements is relevant, although not conclusive, and the authority is generally better placed to assess that benefit. The suspension was lifted because the public interest in obtaining the perceived benefits of the new arrangements outweighed the claimant’s uncompensated-loss risk. Expedition was refused.

The Defendant conducted a procurement exercise for global medical support for Ministry of Defence personnel serving overseas. The Claimant, the incumbent provider, challenged the proposed award to Healix International Group Ltd, alleging lack of transparency, an abnormally low tender and an unlawful failure to follow procurement policy.

The proceedings triggered the automatic suspension under regulation 95 of the Public Contracts Regulations 2015. The Defendant applied under regulation 96 to lift the suspension. The Claimant resisted that application and sought expedition of the substantive claim. The principal questions were whether damages would adequately compensate the Claimant if the suspension were lifted, and where the balance of convenience lay.

1. Applicable approach. Regulation 96(2) required the court to consider whether it would have granted an interim injunction preventing entry into the contract if the automatic suspension did not apply. The relevant questions were whether there was a serious issue to be tried, whether damages would be adequate for either party, and which course carried the least risk of injustice.
2. The Defendant accepted that there was a serious issue to be tried. The Claimant established that damages might be inadequate. If the claim succeeded, assessment of loss would require counterfactual analysis of what would have happened if the tender documents had disclosed the true requirements or if Healix’s tender had been treated as abnormally low. That exercise would be difficult and speculative. The Claimant did not, however, establish inadequacy of damages through alleged reputational harm, loss of other contracts or loss of staff posts. Such matters required cogent evidence, and the evidence did not show a sufficiently substantial effect.
3. The pleaded argument that the breaches might be insufficiently serious to justify damages was not disregarded. Although success on that argument was unlikely, it was just to require the Defendant to abandon it if the suspension were lifted. The Defendant would suffer no real prejudice from doing so.
4. Damages would not necessarily be adequate for the Defendant if the suspension remained. The loss of an opportunity to introduce changes regarded by a public authority as beneficial is not ordinarily compensable in damages. The Claimant’s cross-undertaking adequately addressed financial loss caused by continuation of the existing arrangements.
5. In assessing the balance of convenience, the court considered expedition, the interests of Healix and the public interest. The Defendant was better placed to assess whether the new arrangements would be beneficial, although its assertion of public benefit was not conclusive. The Claimant established no proper basis for concern that Healix would provide inadequate medical support.
6. The public interest in obtaining the benefits of the new arrangements, and in introducing them outside a possible time of conflict, outweighed the risk that the Claimant would succeed but suffer loss inadequately compensable in damages. The automatic suspension was therefore lifted.
7. Expedition was refused. The importance of the services and seriousness of the allegations did not amount to the real and cogent urgency required for that exceptional course, particularly after the suspension had been lifted.