First judgment under the Procurement Act 2023: High Court considers the new test for lifting the automatic suspension.

Background

Parkingeye, the incumbent provider of car park management services at certain NHS sites in Wales, challenged the decision to award a re-procured contract to an alternative supplier, National Parking Control Group Limited. Parkingeye’s claim raised a range of alleged breaches of the 2023 Act, including that the tender documentation materially understated the value of the contract, incorrectly described its legal characterisation, and that the technical evaluation had not been conducted properly or independently. The defendants, Velindre University NHS Trust and Cardiff and Vale University Health Board, applied to the court to lift the automatic suspension that arose upon issue of the proceedings, in order to proceed with the contract pending trial.

The Decision

Prior to the 2023 Act, applications of this kind were determined by reference to the American Cyanamid test, pursuant to which a finding that the challenging party could be adequately compensated in damages would typically be decisive in favour of lifting the suspension. The court held that section 102(2) of the 2023 Act represents a deliberate and substantive departure from that approach. The adequacy of damages for the claimant is no longer determinative, and the public interest in ensuring that public contracts are awarded lawfully is treated as a primary consideration, generally weighing in favour of maintaining the suspension pending resolution of a genuine dispute as to lawfulness.

The court also confirmed that the public interest in avoiding delay to the supply of services is directed at the risk of genuine service interruption, rather than a contracting authority’s preference for the enhanced features of a new arrangement. On the facts, the benefits said to arise from the new contract were found to be modest, and largely capable of being achieved through interim measures whilst the suspension remained in place. The application to lift the suspension was accordingly refused.

Implications for Contracting Authorities

Contracting authorities should anticipate that applications to lift the automatic suspension will be materially more difficult to sustain than under the previous regime. Where a challenge raises credible allegations as to the lawfulness of an award, authorities should not assume that the availability of damages as a remedy for the claimant will be sufficient to secure early progress with the contract. Careful consideration should be given, at an early stage, as to whether interim arrangements with the incumbent supplier may mitigate any operational impact of the suspension pending resolution of the dispute.

Implications for Suppliers

For suppliers considering a challenge to a contract award, this decision confirms that the rebalancing intended by the 2023 Act is being given effect by the courts. The automatic suspension is likely to offer more robust protection than under the previous statutory regime. However, claimants should be mindful that the court retains a broad discretion, and that arguments as to reputational harm, in particular, will continue to require cogent and specific evidence.

Conclusion

As the first substantive judicial consideration of section 102(2) of the 2023 Act, this decision is likely to be regarded as an important point of reference for parties involved in procurement disputes. Our team at Acuity Law are well-placed to advise on the implications of this decision. Please contact a member of our team should you wish to discuss this further.