£104m Lancashire healthcare contract award collapses

The High Court has blocked Lancashire County Council from awarding a £104m healthcare contract to Virgin Care after the incumbent suppliers, Lancashire Care NHS Foundation Trust (LCFT) and Blackpool Teaching Hospitals Trust, sucessfully challenged the Council’s conduct of the public procurement exercise.

Mr Justice Stuart-Smith ruled that while the bulk of the process had been carried out correctly, the Council’s records of the moderation stage fell short of the standards required. As such “the decision of the council to award the contract to Virgin must be set aside.”

Cabinet member for health and well being, Cllr Shaun Turner, said that while the council was “disappointed” at the ruling, it was “reassured” that the rest of the procurement process was found to be “appropriate”. “However, following this judgement, we accept that we cannot award the contract at this time.

“We will not be re-running the procurement or inviting new bids as only the moderation, the final step in the procurement process, was considered to be flawed. We are now considering our options about the next steps.”

LCFT and Blackpool Teaching Hospitals NHS Trust said the ruling “vindicated” their decision to take the Council to court. A spokesperson added:

“As public bodies, the trusts are always reluctant to resort to legal action, in particular against other public bodies. However, we felt that we had submitted a strong bid and wanted to gain clarity on why we had not been successful.”

It is not exactly clear how the Council intends to proceed but given that it has ruled out re-tendering the contract, the most likely option would seem to be re-running the moderation phase, potentially with a new panel or an independent chair to mitigate against further legal challenge. This may, of course, result in Virgin Care being awarded the contract again.

Regardless of the final outcome, this case is a salutory reminder to all public authorities to keep meticulous records of all phases of the public procurement process to avoid contract award decisions being set aside by the Courts.