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	England and Wales High Court (Technology and Construction Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> Counted4 Community Interest Company v Sunderland City Council [2015] EWHC 3898 (TCC) (18 December 2015) URL: http://www.bailii.org/ew/cases/EWHC/TCC/2015/3898.html Cite as: [2015] EWHC 3898 (TCC)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY & CONSTRUCTION COURT

		Rolls Building Fetter Lane London EC4A 1NL
		18th December 2015

MRS. JUSTICE CARR:

Introduction

1. This is an application by the Defendant for an order lifting the automatic suspension imposed pursuant to regulation 95 of the Public Contracts Regulations 2015 ("the Regulations"). The court has the power to make an order bringing the suspension to an end pursuant to regulation 96(1)(a) of the Regulations.
2. The claim arises out of a procurement conducted by the Defendant, a local authority, and a contracting authority for the purpose of the Regulations. The procurement was for the provision of substance misuse treatment and harm reduction services for substance users in Sunderland. The Claimant is a not-for-profit community interest company which provides substance misuse services to facilitate the recovery of those suffering from substance misuse in and around Sunderland. It was indeed established for the sole purpose of providing these services to the Defendant, something which it has been doing since 2008. It is the incumbent provider to the Defendant of the clinical aspect of the substance misuse services, working alongside Turning Point and Lifeline, pursuant to the current contract between the parties dated 1st August 2013 ("the existing contract"). The Claimant participated, but was unsuccessful, in the procurement process carried out this year. The successful party was Northumberland Tyne and Wear NHS Foundation Trust ("NTW") which was in fact the immediate previous provider to the Defendant before August 2008.
3. On its application, by reference to the well known principles laid down in American Cyanamid v Ethicon Limited [1975] AC 396 ("American Cynamid"), the Defendant submits that the claim raises no serious issue, alternatively, is very weak. Damages would be an adequate remedy for the Claimant and would not be an adequate remedy for the Defendant. Further, the Defendant's evidence shows that there is an urgent need to lift the suspension in order to protect the interests of vulnerable service users in Sunderland. The Claimant, on the other hand, submits that on any view there is a serious issue to be tried and that the balance of convenience lies squarely in favour of maintaining the suspension until expedited trial early next year. The parties are agreed that an expedited trial can (and should) take place then and there appears to be agreement that such a trial could take place in the spring of 2016.

Summary of relevant facts

4. The relevant timeline of the procurement is as follows:

(a) the procurement was advertised by the issue of a notice in the Official Journal of the EU on 20^th June 2015. The services in question are social care services and thus fall within s.7 of the Regulations which provides for flexibility over the manner in which authorities go out to tender. In particular, regulation 76 provides:

"Principles of awarding contracts

76(1) Contracting authorities shall determine the procedures that are to be applied in connection with the award of contracts subject to this section, and may take into account the specificities of the services in question.

(2) Those procedures shall be at least sufficient to ensure compliance with the principles of transparency and equal treatment of economic operators….".

(b) the Defendant issued an invitation to tender on 22^nd June 2015;

(c) responses to the invitation to tender had to be submitted by 24^th July 2015, the deadline having been pushed back. The Claimant submitted a bid by that revised deadline, doing so with three other consortia members through a special purpose vehicle company. Each member of the consortium committed to be liable under the proposed contract jointly and separately and thus underwrote the Claimant's financial standing, which was assessed as part of the overall bit evaluation;

(d) by letter dated 19^th October 2015, the Claimant was informed by the Defendant that its bid had been unsuccessful and that the Defendant intended to award the new contract to NTW. The Claimant received a score of 78.14 and came fifth out of six. NTW had a total score of 87.50. There was a delay of some six eeks in the tender process, the Defendant submits as a result of the thoroughness and robustness of the exercise.

5. The proposed new contract is for a period of three years. A three month mobilisation period is required. The existing contract, which terminates in January 2016, will thus need to be extended. In practical terms, were the suspension to be lifted now, NTW would be up and running in March 2016. If the suspension is not lifted now and maintained to trial, and the claim fails, NTW would not be up and running until perhaps the summer of 2016.
6. Proceedings were issued and served on 17^th November 2015, thus bringing into effect the automatic suspension under regulation 95(1) of the Regulations. Particulars of Claim were served on 26^th November 2015 and have since been amended by consent. A full Defence was served on the eve of the hearing.

The Claimant's case

7. It is the Claimant's case that the procurement was conducted unlawfully in breach of the Regulations and/or general principles of European law and/or in breach of an implied tender contract. By way of summary only, the Claimant alleges that the Defendant breached those obligations:

(a) in particular, by breaching regulation 24.1 of the Regulations and failing to take any measures to effectively prevent, identify and remedy the conflict of interest of a Mr. Seale, a member of the Defendant's evaluation panel. Mr. Seale was the Defendant's employee with responsibility for managing the existing contract at all times and whose competency in that role had repeatedly been challenged by the Claimant and indeed, as a result of those challenges and complaints, investigated internally by the Defendant;

(b) by failing in its scoring to follow the published award criteria and/or applying undisclosed criteria or methodologies and/or acting in a discriminatory manner and/or committing manifest errors in respect of the method statement questions. In particular, it is alleged that -

(i) the bid was marked inconsistently against the method statement questions;

(ii) the bid was marked inconsistently against the references to the specification;

(iii) the Defendant misunderstood or misinterpreted the bid; and

(iv) the Defendant ignored aspects of the bid.

The Claimant seeks, amongst other things, declarations that the Defendant acted unlawfully and an order that the new contract should be awarded to the Claimant and/or damages.

Application to lift the suspension

The Legal Framework

8. The suspensory effect of the issue of proceedings is to be found in regulation 95 which provides materially:

"Contract-making suspended by challenge to award decision

95....1) Where -

(a) a claim form has been issued in respect of a contracting authority's decision to award the contract,

(b) the contracting authority has become aware that the claim form has been issued and that it relates to that decision, and

(c) the contract has not been entered into,

the contracting authority is required to refrain from entering into the contract."

9. Regulation 96 empowers the court to lift the suspension:

"Interim Orders

96. (1) In proceedings, the Court may, where relevant, make an interim order -

(a) bringing to an end the requirement imposed by

regulation 95(1);

(b) restoring or modifying that requirement;

(c) suspending the procedure leading to -

(i) the award of the contract, or

(ii) the determination of the design contest,

in relation to which the breach of the duty owed in accordance with regulation 89 or 90 is alleged;

(d) suspending the implementation of any decision or action taken by the contracting authority in the course of following such a procedure.

(2) When deciding whether to make an order under paragraph (1)(a) -

(a) the Court must consider whether, if regulation 95(1) were not applicable, it would be appropriate to make an interim order requiring the contracting authority to refrain from entering into the contract; and

(b) only if the Court considers that it would not be appropriate to make such an interim order may it make an order under paragraph (1)(a)."

10. The effect of regulation 96 is that the court will determine an application to lift a suspension according to the same American Cyanamid principles that the court applies in determining applications for interim relief. This approach has been confirmed by the courts, and notably in this particular jurisdiction, on numerous occasions. It is important to note that the exercise is not weighted in some way in favour of maintaining the suspension. The court will lift the suspension unless it would have been appropriate to grant an injunction under American Cyanamid principles: see, for example, the judgment of Akenhead J. in Exel Europe Limited v University Hospitals Coventry and Warwickshire NHS Trust [2010] EWHC 3332 (TCC) at paragraph 28.
11. In recent cases the approach has tended to be expressed as a two-stage test: that is, (i) to identify whether or not there is a serious issue to be tried; and if so (ii) then to assess the balance of convenience. Matters relating to the adequacy of damages are to be considered as part of that balancing exercise in the second stage: for example, see NATS (Services) Limited v Gatwick Airport Limited [2014] BLR 697 at paragraphs 25 to 30, and Bristol Missing Link Limited v Bristol City Council [2015] EWHC 876 (TCC) ("Bristol Missing Link") at paragraphs 31 to 34 and 48.
12. The American Cyanamid test was considered by the Privy Council in National Commercial Bank Jamaica Limited v Olint Corporation Limited [2009] 1 WLR 1405, where at paragraph 17, the court said this:

"….. The basic principle is that the court should take whichever course seems likely to cause the least irremediable prejudice to one party or the other. This is an assessment in which, as Lord Diplock said in the American Cyanamid case [I975] AC 396, 408:

'It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them'.

Among the matters which the court may take into account are the prejudice which the plaintiff may suffer if no injunction is granted or the defendant may suffer if it is; the likelihood of such prejudice occurring; the extent to which it may be compensated by an award of damages or enforcement of the cross-undertaking; the likelihood of either party being able to satisfy such an award; and the likelihood that the injunction will turn out to have been wrongly granted or withheld, that is to say, the court's opinion of the relative strength of the parties' cases."

13. That common law approach has been held to be consistent with the approach envisaged in art.2.5 of Directive 2007/661. In Group M UK Limited v Cabinet Office [2015] BLR 258, Akenhead J. said, at paragraph 16:

"…It must be legitimate, in considering "all interests likely to be harmed", to have regard to whether, if the lifting of the suspension is ordered, the complaining claimant tenderer is still left with a remedy and that must include an effective remedy. Article 2(1)c) does require that review procedures provide a power to award damages. If there is no ready or easily proved entitlement to damages, that must be a factor which the Court should take into account."

14. Finally, a helpful recent overview of the principles in play can also be found in the judgment of Stuart Smith J. in Open View Security Solutions Limited v London Borough of Merton Council [2015] EWHC 2694 (TCC) at paragraphs 6 to 40.

Evidence on the application

15. A theme on this application has been either the lack of defence evidence, rather reliance on submission by counsel, or the service of late material by the defence, particularly the Defence itself and a second witness statement from the Defendant's only witness on this application, a Miss Gillian Gibson, the Acting Director of Public Health of the Defendant. Her second statement was served very shortly before the hearing. Such complications can be inevitable on urgent applications such as this. At the same time, this is a serious application which the Defendant has chosen to bring and which it is for the Defendant to make good. Procedural fairness is of the utmost importance. In the event, I was not taken to the Defence itself which the Claimant clearly had not had a proper opportunity to consider, let alone counter for the purposes of the application. As for the second statement of Miss Gibson, I have read it but can only give it limited weight in circumstances where its contents are not accepted and the Claimant has had no meaningful opportunity respond to it. The Claimant states that, at least in part, it contains blatant factual error.
16. I summarise the evidence briefly. Miss Gibson's evidence is to the effect that substance and alcohol misuse are very serious issues in the Sunderland area. The Defendant's services aim to provide treatment for those who are often vulnerable and affected by substance misuse. These are issues which have an importance to the wider community in Sunderland, given the implications for crime levels and, for example, child protection issues. Miss Gibson says that the current model of three providers is causing a real risk to users lost in the system and falling between the providers. She says there is no shared IT system, no co-location of service delivery and no cohesive working together or co-ordination and role clarity. She expresses concerns in respect of referral processes and suggests that the result is a real risk that people's lives are put at risk. She contends that it is in the public interest to award the new contract without delay.

"91. Obviously the issuing of these proceedings has meant a delay in the commencement of the mobilisation required for the new contract. As stated above, it is estimated that at the very least, mobilisation will take around three months. Every day delayed is a day lost, hence the urgency of the application made. However, I can confirm that the contract documentation has been finalised and collated and is ready for signature. The Council has received confirmation from NTW that it is ready to sign the contract as soon as possible and has made resources available over the Christmas period in order to ensure that no further time is lost. NTW has a meeting with its partners, scheduled for 18 December 2015. I have been informed that mobilisation can and will be the focus of that meeting if the suspension is lifted prior to that time. If not, that opportunity to progress mobilisation will be lost. I can also confirm that although I have annual leave booked over the Christmas period, I have committed to cancel my plans in order to assist in ensuring that timescales are met. Another member of the team has also been allocated to this task over the Christmas break.

……….

92. For the reasons I have explained above, the award of the contract to the preferred bidder is now a matter of very considerable urgency. Every day that we have to wait for the contract to be awarded is another day on which service users are unnecessarily put at risk. I am genuinely concerned about the level of service currently being provided to service users and must accept that service users' lives are being put at risk, as well as the safety of the residents of Sunderland. I maintain that the Council has done all it can to make the Existing Arrangements work. However, whose fault this is no longer matters and in reality, all parties involved must share some of the blame."

17. It is fair to say, as the Claimant points out, that Miss Gibson puts the Defendant's case very high: so, for example, she suggests that lives are at risk on a daily basis due to alleged shortcomings and that is something that she worries about every night that she goes to bed.
18. For the Claimant, there are two witness statements from Mr. Devitt, the Claimant's Chief Executive, a witness statement from Susan Leigh, the Project Manager for Sunderland Area Parents Support, and from Dr. Martin Weatherhead, the Claimant's Medical Director.
19. In summary, Mr. Devitt explains how the Claimant was set up as a response to the failings of NTW. NTW was decommissioned by Sunderland Primary Care Trust. He sets out the Claimant's concerns about the procurement process, as reflected in the Claimant's pleaded case, and sets out details of the past relationship with Mr. Seale and problems with the existing contract. The provision of a safe and reliable service for those suffering from substance misuse, says Mr. Devitt, is the Claimant's raison d'être. He comments that Miss Gibson has only been a public health consultant since 2009 and has little, if any, experience in this particular field. If he thought for one moment that the Claimant's service was unsafe he would not stand in the way of NTW being awarded the new contract. He explains in great detail why, in his view, the Claimant's service is not unsafe. He makes the broad point that, were the Defendant's concerns to be legitimate, it is extraordinary that before this litigation such concerns were not communicated. It would surely have taken action and flagged such concerns before this dispute, and it is significant that it did not do so. He says that the service is fit for purpose, in particular, changes were introduced in 2014 and early 2015 following a rapid process improvement workshop.
20. In his second witness statement, he clarifies that the real catalyst for improvement was in fact a change of manager at Turning Point in April and May 2015. He said this has led to a marked acceleration in improvement in the safety of the system. There has also then been increased use of co-located premises. He sets out why the absence of a single IT system between service providers has no impact on the safety of the system. He sets out the issues around co-location. There have been unsuccessful attempts at co-location, but nevertheless, there is good communication between the providers and constructive co-working.
21. He goes on to explain the Claimant's financial position. Its accounts have shown losses for the past two years, but the Claimant managed to make a surplus in the year 2014 to 2015. The Claimant is seeking to develop other business ventures and recently won a short-term contract for a new pilot project. Mr. Devitt believes that the Claimant can be a stable and long-term project.
22. Importantly, he sets out the impact of the lifting of the suspension on the Claimant in graphic terms. In short, it would be (in his words) "devastating and irreversible". The Claimant has a unique drug service team made up of skilled, experienced and professionally qualified staff. It has created a multi-disciplinary team of experts and a multi-functional team. The Claimant is at the moment almost wholly reliant on the existing contract. Virtually all of the current infrastructure is dependent on it. Should NTW be awarded the contract now, the bulk of the Claimant's staff would have to be "TUPEd" over to the new provider, as otherwise the Claimant does not have the income to sustain the workforce. Its ability to service one other contract for services at Stockton would be put at risk. Finally, he questions the apparent advantages of the proposed new contract.
23. Dr. Weatherhead is a practising GP with very considerable relevant experience. He describes the arrangements under the existing contract. He describes the Claimant's commitment to safety. It has had two CQC inspections. In November 2013, comments were made as to its high quality care and excellent patient experience. He says that the Claimant has striven to develop a safe model system, providing easy and quick access to services, sharing information on entry, clearing pathways from the wider health system into treatment and safeguarding. He comments that the introduction of new services can disrupt clients' continuity of care. He describes how the Claimant has a specialist dual diagnosis lead and a special psychiatrist. The Claimant offers health care assessment at the point of entry and at regular intervals thereafter. Prescription is managed. There is interaction with criminal justice partners and an assertive outreach scheme. He states that the Claimant's staff is of a high quality.
24. Susan Leigh is the Project Manager for the charity identified in the Sunderland area. That charity is designed to deliver interventions to carers of substance misusers. She said that she has dealt with the Claimant since 2007 and the Claimant is one of her primary sources of referrals. She states that the Claimant provides an excellent substance misuse treatment service in Sunderland and receives very positive feedback from carers. She says the service is running well.
25. In the course of the hearing, I have been taken to three reports in evidence. In particular: (a) the Maclean Report of June 2014; (b) the Public Health England Report of 10^th February 2015; (c) a Cabinet paper of 11^th March 2015. I shall refer to their contents, as necessary, below.

Serious issue

26. In explaining the requirement that there must be a serious issue to be tried, Lord Diplock explained in American Cyanamid (at p.409), that the court "must be satisfied that the claim is not frivolous or vexatious". On the question of serious issue, this Court has recently considered its application in the procurement context. Thus, in Bristol Missing Link, Coulson J. confirmed, at paragraph 33:

"But in the ordinary procurement case, where there may be points to be made on both sides, it will often be unproductive for the parties (and a waste of judicial resources) to spend a good deal of time arguing about the merits or otherwise of the underlying claim. The threshold is, after all, a low one: see The Newcastle upon Tyne NHS Foundation Trust v Newcastle Primary Care Trust [2012] EWHC 2093 (QB)…."

27. In Newcastle upon Tyne NHS Foundation Trust Coulson J. had held (at paragraph 34) that:

"….in cases where there are clear issues arising out of individual scores, it will be difficult for the court to conclude that there is no serious issue to be tried; and, second, that this difficulty arises, at least in part, because the relevant documents have yet to be disclosed."

28. The Defendant ambitiously contends that this claim does not raise a serious issue to be tried. Emphasis is placed on the very detailed and thorough procurement exercise, with very lengthy and full tender documentation, specification and questionnaire. I was taken in some detail to an evaluator's spreadsheet showing 32 different method statements. This sheet is a document said to have been completed contemporaneously by panel members within the company over many days and weeks. This is an example of an issue on which there was no direct evidence from the Defendant.
29. As to the conflict claim, the Defendant points out that it is not claimed by the Claimant that Mr. Seale had any financial interest in favouring one bidder over another. It is claimed merely that he was conflicted by having acted as the contract manager for the existing contract and, as a result of tensions in managing that contract and the past complaints, a conflict of interest existed. In the Defendant's submission, this claim is hopeless:

(a) the Defendant has supported Mr. Seale at all times and considers that he was simply doing his job in managing the contract in difficult circumstances. Thus, there can be no personal interest which could compromise the impartiality within the meaning of regulation 24;

(b) there is no reason to believe and no evidence to demonstrate that Mr. Seale's impartiality was undermined. Indeed, he made no objection to the Claimant's past performance during the evaluation stage;

(c) reliance is placed on the fact that the Claimant recently named Mr. Seale as a referee on another tender in which the Claimant is bidding, which, it is said, indicates that the Claimant does not consider Mr. Seale's impartiality to be an issue. It suggests, in the context of this hearing, that any tensions which could have undermined Mr. Seale's impartiality are in the past. (This, in my judgment, is a bad point. The naming of Mr. Seale by the Claimant in a bid was made as recently as last week and as part of an identification process of the Claimant's past work for a new contract. It is in no way indicative of the absence of the tensions existing either now or, more relevantly, at the time of the procurement exercise);

(d) Mr. Seale was an obvious candidate to assist with evaluation given his detailed experience of the services and the needs of the new services. He was but one of a panel of four evaluators with others;

(e) the evaluation process followed was rigorous and thorough and allowed no scope for any one member unduly to influence the scores. All scores, it is said (although again not evidenced), were arrived after the group read the method statement response together, agreeing on a score by consensus and noting contemporaneously the features and shortcomings of the response.

30. Finally, it is suggested that if this allegation were right, it would mean that no authority could ever allow a contract manager to participate in a re-tender, except possibly where the relationship with the incumbent has been fully harmonious. The Defendant also submits, as is indicated by those submissions, that there is no case for the Claimant to make on causation. The process was robust and three other panel members were involved.
31. I am quite satisfied there is a serious issue to be tried on the conflict allegation. Regulation 24 is relatively new and there is no relevant authority on it to date. It provides :

"Conflicts of interest

24. (1) Contracting authorities shall take appropriate measures to effectively prevent, identify and remedy conflicts of interest arising in the conduct of procurement procedures so as to avoid any distortion of competition and to ensure equal treatment of all economic operators.

(2) For the purposes of paragraph (1), the concept of conflicts of interest shall at least cover any situation where relevant staff members have, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of the procurement procedure."

32. In my judgment, it is properly arguable that the Defendant failed effectively to prevent, identify and remedy conflicts of interest in allowing Mr. Seale to be on the evaluation panel. "Other personal interest" can be directly or indirectly held. The phrase is very broad on its face and is clearly intended to add to the other conflicts identified, namely financial and economic. The Defendant submits that it is designed primarily at financial interest. That cannot be said to be certainly the case. The Claimant's case that "other personal interest" means anything pertaining to the relevant individual is arguable. It is arguable that Mr. Seale's personal interest in protecting his professional reputation and/or role at the Defendant by awarding a new contract to someone other than the Claimant might be perceived to compromise Mr. Seale's impartiality and independence. The issues with Mr. Seale appear to have been grave. Mr. Devitt states the difficulties were beyond normal managerial issues. Mr. Seale often became emotional. It is said that his failings were recognised. It is also now apparent that the Claimant's complaints about Mr. Seale led to an internal investigation into Mr. Seale's performance, though the results of that investigation have not hitherto been disclosed by the Defendant.
33. As for causation, that is pre-eminently something that needs to be tested with the relevant defence witnesses, from whom no evidence has been served on this application. The fact that Mr. Seale did not object to the Claimant's past performance in an internal procurement form does not rule out the possibility of compromised impartiality during what the Defendant says were lengthy panel meetings. The effect of a conflict can be subtle. Nor does the fact that the process was heavily documented rule out an operating confliction.
34. As to the claim based on errors or unfairness in scoring, the Defendant says that the many specific allegations on the individual method statements are entirely unconvincing and lacking in any substance. Mr. Taylor for the Defendant engaged in a careful and detailed analysis of a sample of the allegations made by reference to the evaluator's spreadsheet to demonstrate that they were groundless. Some of these submissions were entirely new to the Claimant or had been revealed for the first time in the Defence served the night before hearing. Mr. Taylor also submitted that even if the Claimant could establish some of the alleged scoring breaches, it had no chance of bridging the very significant gap in scores between its bid and that of NTW. Thus, causation cannot be established. Reference was made, by way of example, to the scoring analysis of Coulson J. in Woods Building Services v Milton Keynes Council [2015] EWHC 2011 (TCC).
35. Again, despite the careful analysis, I do not conclude that it can be said that the scoring claim is hopeless or frivolous and vexatious. The Defendant has not adduced any evidence from any of the scorers supporting the submissions made. At trial, by way of example, it will be necessary to consider each method statement question and consider what scores a properly informed and diligent evaluator would have given to the Claimant's answers assessed in the round and in all the circumstances, including the word count requirements and tender documentation as a whole.
36. As for causation, that is an allegation difficult to assess in the absence of disclosure, for example, of the successful bid. There is force in the Claimant's submission that material, which because of prior disclosure, the Claimant is not in a position to address satisfactorily if produced for an interlocutory hearing, should not ordinarily be deployed on an application such as this: see paragraphs 25 and 34 of the judgment of Coulson J. in Bristol Missing Link Limited v Bristol City Council [2015] EWHC 876 (TCC).
37. For these reasons and taking into account the scope of the exercise that it is appropriate to carry out at this stage and the fact that full disclosure has yet to take place, I have no hesitation in concluding that there are serious issues to be tried.

Balance of convenience

38. I have considered carefully the competing arguments on balance of convenience in the context of the public interest consideration. There is no dispute that the public interest is an important factor in the balance of convenience: see, for example, Alstom Transport v Eurostar International Limited [2010] EWHC 2747 (Ch) at paragraph 80 and Solent NHS Trust v Hampshire County Council [2015] EWHC 475 (TCC) at paragraphs 38 to 39.
39. I turn first to consider whether, were the Claimant to succeed at trial, it would be compensated adequately by an award of damages. I accept the Defendant's submission that the Claimant's claim for damages would be readily calculable based on its loss/profit and/or contribution to overheads on the contract. In so far as it is suggested that the conflict of interest claim would be based on a loss of a chance, the court could assess damages on the basis of a loss of a chance: see, for example, European Dynamics SA v HM Treasury [2009] EWHC 3419 (TCC) and Open View Security Solutions Limited v London Borough of Merton Council [2015] EWHC 2694 at paragraph 32.
40. But that is not the gravamen of the Claimant's position, which is as follows. On Mr. Devitt's evidence, if the suspension is lifted, the Claimant will lose its highly and uniquely trained workforce under TUPE regulations, that workforce being predominantly engaged on the existing contract. It is a team that has taken years to develop; its skills are not available on the wider market. The Defendant ripostes by stating that in such circumstances the highly trained team would not be lost to the general public. But that ignores the irremedial harm to the Claimant which is the issue under consideration here. Even with income over the mobilisation period, the Claimant states that it would not be in a position to continue with this claim. This prejudice, it is said, should not be surprising given that the Claimant was set up for the very purpose of providing services to the Defendant.
41. I therefore conclude on the evidence that damages would not be an adequate remedy for the Claimant.
42. As for the Defendant's exposure in the event that the suspension is not lifted, there is no evidence that the Defendant would suffer any loss as a result, or, if so, in what potential amount. In fact, I pause to comment that the lifting of the suspension might in fact cause financial loss to the Defendant. It would be committed to the new contract with NTW, whose price under the procurement was higher than that of the Claimant, and might then also be found liable to the Claimant for damages for loss of profit or overhead contributions.
43. Mr Taylor submitted that the Defendant would have additional known costs if it were required to extend the existing arrangements. In particular, there is a major ongoing cost in dealing with and managing the three providers and it is said there is a significant opportunity cost arising from the continued focus on the problems of the current service arrangements which has a knock-on effect on other service reviews and contracts. The cross-undertaking should protect the Defendant from additional unknown costs and liabilities caused by the delay. These could include, for example, the ability of the successful provider to maintain its price. The Defendant contends that in circumstances where the Claimant passed the financial standing test at the tender stage of the procurement (albeit on the basis of the financial guarantees offered by the other consortia bidders), it would be wrong for a cross-undertaking not to be required. But in any event the Defendant has concerns about the value of any undertaking in the light of the Claimant's financial position.
44. The Claimant resists the notion that it should be required to offer any undertaking. The giving of an undertaking is not a mandatory pre-requisite to suspension: one has to look at the matter broadly. Reliance is placed on Allen v Jambo Holdings Limited & Ors [1980] 1 WLR 1252, 1257, albeit, that that was a case on very different facts. It is said that the need to look at the matter broadly is particularly so where in procurement challenge there is the need for an effective remedy under EU law. Thus, the Claimant contends that in the absence of any evidence as to loss and where the Claimant is not at risk of insolvency providing payments are continued under the existing contract, no cross-undertaking should be required.
45. I have some sympathy with the Claimant's position. There is no evidence that the Defendant will suffer any loss if the suspension is not lifted. The Claimant is a not-for-profit organisation whose only role and ambition is said to be to support and help substance misusers. On the other hand, the giving of cross-undertakings is, if not standard, then commonplace. During the course of the hearing, the Claimant indicated that it would be prepared, should I find it appropriate, to offer a cross-undertaking limited to covering any reasonable additional management costs of the Defendant from 31^st January 2016 up to and including trial arising out of the Defendant having to use three providers rather than one. That seems to me to be a sensible offer in all the circumstances that would address the balance between the parties and one to be accepted in the event that I decline to lift the suspension. As to the Defendant's concerns over the Claimant's financial standing, as indicated, the Claimant's position under the existing contract is currently viable.
46. I turn next to the important question of public interest and the quality of the services being provided (and to be provided) to the vulnerable substance misusers of Sunderland. I add at the outset that it should not be forgotten that there is, of course, a public interest in local authorities complying with EU legislation: see, for example, paragraph 59 of the judgment of Coulson J. in Covanta Energy Limited v Merseyside Waste Disposal Authority [2013] EWHC 2922 (TCC).
47. But as to the public interest in terms of safety to the public, I ask myself whether there is such a pressing need for NTW to take over the services on safety grounds that the suspension should be lifted set against the above findings. There is self-evidently a dispute on the facts as to how well the current service is operating. However, what is not in dispute is that there is an existing service operating whilst the suspension is in place. Miss Gibson, at paragraph 87 of her first witness statement, said:

"In summary, the existing arrangements provide a service to the people of Sunderland which attempts to address as best it can the issue of substance misuse. I do not want anyone who is contemplating using the service to think that it cannot help. Most of the staff on the ground continue to do their best in the difficult circumstances. However, it can be much improved and the new contract will ensure that the current risks associated with having a number of providers in place are addressed."

48. It is neither possible nor appropriate for me to seek to resolve the detail of the factual dispute between the parties as to how well the current system is functioning. I do note, however, that the Defendant has adduced no direct evidence other than that from Miss Gibson, who has not, for example, herself ever visited the Claimant. It is not clear from parts of her evidence on what she bases some of the views that she expresses. By contrast, the Defendant has the evidence of Dr. Weatherhead who said this:

"Counted4 and its clinical staff, including myself as Medical Director, are best placed to assess the safety and robustness of the treatment system. The system as it stands is safe and is now in fact more secure than it has been since the existing contract was signed, as best practice is well embedded across all key functions…Based on my professional opinion and years of experience in substance misuse treatment, a change of provider is an exceptionally disruptive stage which can lead to the loss of clients and the need for extensive re-engagement down the line…"

49. I have considered carefully the three reports referred to above, namely the Maclean Report, the PH England Report and the Cabinet Report. Whilst it is clear that there is scope for improvement in services, these papers do not, in my judgment, paint the drastic picture upon which the Defendant relies. None of the papers identify immediate safety concerns or suggest that immediate remedial action is necessary. Indeed, PH England contemplates a new procurement exercise commencing in "2015/16". They contain much positive comment on the services being provided and the understanding of those involved. They must also be read in context. Thus, the context of the February and March 2015 papers was, of course, the new procurement exercise.
50. I have also considered whether these papers can shed light on Miss Gibson's specific concerns, and they do. Thus, on IT, the Cabinet paper addresses IT in terms. There is no suggestion that the lack of a single IT system is creating urgent safety risks. Mr. Devitt's evidence is that the lack of a single IT system is commonplace across the NHS. The Cabinet paper also addresses co-location. Fully effective implementation of all functions requires co-location. This has only happened in some cases and this has restricted efficiency and impacted service user experience. But there is no sense that the system is not functioning at all as a result or that immediate action is required. As for working together, there is support for the suggestion that the providers are now working well together: see the second paragraph of the PH England Report, consistent with Mr. Devitt's evidence.
51. Against this background, for Miss Gibson to say that the current system is not fit for purpose or broken and requiring of immediate and urgent rectification unless lives are not to be placed at risk on a daily basis, seems to me to be something of an overstatement.
52. The Defendant referred to two emails from Mr. Devitt to the Defendant, one sent at the end of January 2015 and one in April 2015. In January, Mr. Devitt wrote, following the sad death of a substance misuser,: "Hopefully you can see that we aren't overstating the inherent risks in the system." In April, he wrote:

"The system is still not safe/responsive and there is still much to do."

The Defendant also referred to a press report in March 2015 quoting Mr. Devitt as saying that:

"It was like going back to the Dark Ages."

53. To this, the following points can be made. Mr. Devitt's evidence (though disputed by Miss Gibson) is that there has been a material improvement since April/May 2015. The emails predate this. The reported statement of Mr. Devitt was in fact made in June 2014. Secondly, the communications are consistent with the Claimant being an organisation aware of safety risks and of the need for improvement. There is force, in context, in Mr. Devitt's position that he would not be bringing the current challenge if he thought that substance users' lives were at risk from the services that the Claimant was providing.
54. In the result, I have reached the clear conclusion that the service as it is currently operating does not create such risk to the lives of substance misusers in Sunderland that the public interest can be said to outweigh the considerations set out above, in particular the prejudice to the Claimant if the suspension is lifted.
55. This conclusion is consistent with the Defendant's conduct to date. There has been no real sense of urgency on its side hitherto. It allowed slippage of six weeks from the procurement process. Even if that was for a good reason (which it may well have been), this does not suggest a desperate situation. Indeed, on the Defendant's case there have been safety problems with the services for a very long time, indeed years, and there has been no urgent action. It does not appear on the evidence before me additionally that the Defendant has raised, at least in clear terms, the matters now relied upon, suggesting the grave attendant risks with the Claimant until now. From a public interest point of view, there is therefore protection and support for substance misusers currently in place. The best that the Defendant can say is that it could be better. To use Miss Gibson's words, in certain respects at least, in reality the current service can only be said to be at most "less than ideal". It is worth noting additionally that there is the greatest incentive for the Claimant to provide the best possible service now in the run up to trial in this matter.
56. The availability of an expedited trial is also an important consideration in this context, particularly when set against the overall time line. The Defendant's concerns have apparently existed for some two years. A further delay of some two or three months or so, based on a trial in spring 2016, cannot sensibly be said to be critical.
57. As for the Defendant's concerns about the Claimant's precarious financial position and that there will be a risk of the Claimant shutting its doors, there is no suggestion by the Claimant that it will close down in the next few months, provided that the payments continue to be made under the existing contract.
58. As for concerns that the longer the transfer to the new provider is delayed the greater the risk of staff leaving is concerned, given the short time before trial, the risk of staff leaving cannot be great. The timeframe for trial will be known.
59. As for the strength of the claim, I have already concluded that a serious issue exists. I do not consider that the claim can be said to be so weak or indeed so strong that its strength is a material factor weighing either in favour of lifting or maintaining the suspension. I treat it as a neutral factor.

Conclusion

60. Weighing all these factors together, particularly the prejudice to the Claimant were the suspension to be lifted, the availability of an expedited trial date and the fact that the public interest is not unprotected at present, the balance of convenience lies in favour of maintaining the suspension and it is my judgment that the suspension should not be lifted. This is the course that seems likely to cause the least irremediable prejudice to one party or the other.
61. For all these reasons, I decline to lift the automatic suspension which is to continue on the terms now of the limited undertaking offered by the Claimant.
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