Remedies for NHS Procurement breaches and the role of Monitor
Posted by Nelson Poon on July 20, 2015
Breaches in procurement can be due to a number of reasons such as deliberate breaches and accidental breaches. It can be said that deliberate breaches are unlikely to occur as it can risk the reputation of the contracting organisation. Accidental breaches may arise where national regimes apply to numerous low value contracts and responsibilities are assigned to separate parts of the organisation. Monitor is the sector regulator for health services in England and aim to make the health sector work better for patients. This is an executive non-departmental public body that are sponsored by the Department of Health. This blog will explore the remedies available for NHS procurement breaches under the Public Contracts Regulation, Judicial Review and on the NHS (Procurement, Patient Choice and Competition) Regulations 2013 (No 2) enforced by Monitor.
Under the Public Contracts Regulations 2015 many claims have been successful in obtaining satisfactory remedies through the courts for procurement for supplies and for Part A services. Arguably, there are few instances where there are really effective remedies through the Courts in procurement for community care and primary care services.
Public Contracts Regulation
There will be a delay to the transposition for health care services until April 2016. Until then, the health care services in the UK are regulated by the Public Contracts Regulations 2006 (as amended). Health services fall under the Part B Services part of the Regulation (which has now been abolished), thus, cause of action will be limited to Regulation 4 of the 2006 Regulations, the Treaty of the Functioning of the European Union (TFEU) where there is cross border interest and also general public law principles.
The remedies can be found under Part 9 of the 2006 Regulations and are applicable where a breach is made out. Firstly, automatic suspension is available. This falls under Section 47(8) of the 2006 Regulations where the Court can order suspension of the procedure which means that the procedure is automatically suspended prior to the contract being entered into. Secondly, damages are also possible where the economic operator has suffered a loss or damage as a consequence of the breach of contract. The law also states that if satisfied that a decision or action by the contracting authority amounts to a breach then both automatic suspension and damages are applicable in conjunction with each other.
Public Contracts Regulation (Post April 2016)
The Public Contracts Regulation 2015 came into place on Feb 26th 2015 and resulted in the light touch regime applying to health care services. This involves Sections 74-76 of the 2015 Regulation. Significant change are to be made to the express obligation to make a call for competition for above threshold light regime contracts (£625,050/750,000 Euros). These changes are discussed in more details within this blog. As these changes are more onerous on the buyers there is potential for the procurement procedures to not be followed correctly and therefore this may lead for a greater incidence of challenges by losing bidders where a proper call for competition has not arisen.
Judicial review involves the court where a judge reviews the lawfulness or unlawfulness of a decision made by a body, in this instance, a public body. This procedure does not involve the review of the conclusion of a process but focuses on whether the correct procedure has been followed.
Many cases involving health service procurement which have been determined by the Courts have been subject to judicial review. From this, consent of the Court is needed in order to continue to a full trial, where an official decision can be made in regards to damages.
The most common cause of action involving breaches to the following Acts:
- Equality Act 2010 S149 – Public sector equality duty – where public authorities, such as the NHS, in the exercise of its functions, have due regard to the need to eliminate discrimination, harassment, victimisation and any other conduct that is prohibited under the Equality Act, foster good relations between person who share relevant protected characteristics and persons who do not share it. Failure to properly discharge the public sector equality duty faces a breach of this section of the Act.
- Health and Social Care Act 2012 S26 – Clinical commissioning groups: general duties etc – more specifically under sub-section 14Z2: public involvement and consultation by clinical commission groups where any health.
- National Health Service Act 2006 (Superseded by the above Health and Social Care Act 2012) – breaches made under this Act required adequate management of primary care services and failure to investigate amounted to grave misconduct of doctors in practice to whom out of hours contract was awarded.
A recent example of health care procurement cases with regard to remedies can be seen in the following case:
R (RB) v (1) Devon County Council (2) Devon Primary Care Trust  EWHC 3597 (Admin)
Here the claimant was a mother of two children and was eligible for support under the Integrated Children’s Services Scheme, which was operated by Devon County Council and the Primary Care Trust NHS Devon. The PTC and Council wanted to integrate health and social care services and find an external provider, where they appointed Virgin Care as the preferred bidder in July 2012. The mother in this case brought judicial review proceedings alleging that the council and the PTC had failed to consider the equality duty when deciding to appoint Virgin Care as the preferred bidder to provide the integrated children’s health and care services. The first ground was that the defendants failed to discharge the public sector equality duty imposed by section 149 of the Equality Act 2010. The second ground is that the defendants failed to follow their own equality policies.
The case went to a full trial and the Court agreed with the claimant that there had been a breach of public sector equality duty – the decision makers had failed to adequately consider their obligations at the time in July when Virgin Care was appointed.
The Court did not quash the decisions and the contract with Virgin had been put in place and therefore declined to grant the relief the claimant sought for the following reasons; sending the process back to the preferred bidder stage would have delayed the procurement exercise for which time was short and would not benefit any of the children of Devon; the defendants had addressed the equality duty by their Equality Impact Assessments of September 2012; and because the claimant was unable to point to any specific detriment that she or her children may have suffered by the failure of the defendants to have addressed the equality duty in the decision of July 2012.
Overall, in judicial review the Court’s function is not to change or retake the authority’s decision on the merits, but is to consider whether the decision made was irrational with regard to public law or based on incorrect procedures in place. Winning on substantive grounds can be difficult as the threshold is high. Where a Court decides that a decision made is rational as a matter of public law then the Court will not examine the merits of the decision any further. With regard to procedural grounds it can be said that it is easier, however, it may not result in a different outcome for the claimant as it is at the discretion of the Court whether the decline to quash the offending decision for public interest reasons or if the public body concerned retakes the decision lawfully but reaches the same decision.
NHS (Procurement, Patient Choice and Competition) Regulations 2013 (No 2) and the role of Monitor
This Regulation is an alternative to court action and cannot be used where a supplier has brought an action under the Public Contracts Regulation. There currently is no similar exclusion for Judicial Review so it is possible for a claimant who does not succeed in this to complain to Monitor.
Monitor has the discretion on which complaints it will investigate and has a prioritisation framework that it uses to determine which complaints it will take on. This will be determined on the general importance of a complaint and whether it has or has not been judicially determined previously. At present, there is no timescale for complaints to be made to Monitor. However, Monitor has stated that any delay in referring a matter to Monitor is something that it will take into consideration in whether to investigate in the complaint.
Monitor can, in comparison with Court action, can set aside health care contracts where it considers that the failure is sufficiently serious. Following this, there is a remedy of ineffectiveness under these regulations if a complaint to Monitor is made. Under the Public Contracts Regulation there is no remedy of ineffectiveness. In addition, Monitor can also direct that a commissioner puts in place remedial measures for prevention of further failures, or that it must vary or withdraw an invitation to tender.
The Health and Social Care Act 2012 Section 75 and Section 76 set out the powers of Monitor and impose a wide-ranging set of obligations on Clinical Commissioning Groups (CCGs); they must act with a view to improve efficiency of the provision of services, be transparent, treat providers equally, procure from capable providers and ensuring best value for money, and ensure competition.
In December 2013 there was an extensive Guidance issued on the Regulations, Monitor stated that it is u to the commissioner to decide which service they wish to procure and how is best to secure them in the interest of patients. Monitor’s role is to ensure that general procurement is respected and that decisions are taken in the interest of the patient’s.
An Enforcement Guidance document has also been issued by Monitor in December 2013 which lays out the favours that it will consider when deciding what orders to make. This involves the seriousness of the breaches made, the deterrent effect in a direction may have, mitigating the effect of a breach and proportionality.
Overall, the extent of scrutiny, which Monitor adopts, can be said to go beyond that of the Courts. Monitor involves health care experts and commissioning experts which is beyond the remit of the Courts and the process of this is a pro-active one rather than parties controlling the issues which it wants the courts to determine. Under the current 2015 Regulation – Monitor can be seen as a more satisfactory remedy than approaching the Courts for Judicial Review. With regard to commissioners, a Monitor investigation may be time consuming due to delays, whereas with the Court they are more reluctant to interfere with or delay the commissioning of services.
I personally would adopt the Monitor review if I were a supplier seeking remedies as they are made up of health care experts who are involved whereas with Judicial Review – the judge may have little knowledge in health care services.