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Fri April 10 2020

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It's not just the winning, it's the taking part

11 Jan 11 The University Hospitals Coventry and Warwickshire NHS Trust (The Trust) decided that it wanted to transfer the responsibility of managing and operating the Healthcare Purchasing Consortium (HPC), which required a great deal of financial investment.

It started discussions with a number of potential partners, including HCA International Ltd. (HCA), a subsidiary of an American group, which had substantial experience of medical and hospital procurements in the USA. A contract notice was published in March 2010, and Exel was one of the tenderers. Exel suspected that there had been a “done deal” between the Trust and HCA, and even went as far as obtaining a Freedom of Information request to investigate this further.

Exel raised a number of questions about the Invitation to Tender (ITT0, challenging the amount of information provided by the Trust and the tender period. In the end Exel decided not to proceed with its tender and all the other tenderers apart from HCA also withdrew. The contract was awarded to Health Trust-Europe LLP ("HTE") "a newly-created entity within the same group as HCA International Ltd."
Exel commenced proceedings, alleging six breaches of the public procurement regulations, including the Trust’s alleged failure to establish the most advantageous economic tender, given that there was only one tenderer in the end. Exel also challenged the award to HTE, which had not even submitted a tender, and what it referred to as “unauthorised negotiations” between the Trust and HCA prior to the publication of the ITT.

One of the issues was whether Exel could raise causes of action or breaches of duty which arose after it had dropped out of the tendering process, with a distinction to be drawn between such breaches which occurred before its withdrawal from the tender process, and breaches of the Regulations which actually occurred after.

Exel was a "services provider" type economic operator within the meaning of Regulation 47. As far as the definition of "services provider" was concerned, Exel was a person which offered on the market services and who arguably "would have wished…to be the person to whom a public services contract is awarded". It was difficult to see that Exel was a person who after May 2010 sought to be such a person, having dropped out. By dropping out, it put itself in the position where it could never be the person to whom that contract in those terms was awarded. However, the definition of "services provider" meaning a person "who would have wished" to be the person to whom the contract was awarded could refer to anyone who might simply theoretically have wanted to secure the contract; from the standpoint of a purposive interpretation, the definition must envisage a party which goes a significant way down the road of putting itself in a position in which it can tender or at least pre-qualify to tender.

Whilst the court rejected Exel’s challenge as to the breach of the regulations, the judge agreed that there was an issue to be tried about the possible “unauthorised negotiations”. A conclusion could not be reached on this aspect of Exel’s case without full disclosure.

Related Information

Exel Europe Ltd. v University Hospitals Coventry and Warwickshire NHS Trust, [2010] EWHC 3332 (TCC)


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