HM Insights

Lifting an automatic suspension of contract

Last month, the Scottish Court of Session once again lifted an automatic suspension of contract and allowed the public body in question to enter into the contract with its chosen supplier. South Lanarkshire Council had sought tenders for the provision of municipal waste services. Patersons was unsuccessful, and because they served proceedings on the Council during the mandatory standstill period which followed the Council's contract award notices to all tenderers, the Council's intended contract with the successful supplier was automatically suspended. This is in terms of regulation 47 of the Public Contracts (Scotland) Regulations 2012.

Patersons' arguments for continuation of the automatic suspension had included that the Council had not complied with its obligations to provide debrief information to unsuccessful tenderers; that the Council had made a manifest error in the assessment of one aspect of the tenders; and that there was a lack of transparency in relation to award criteria. The Court found that each of Patersons' arguments was weak. The Court considered that the balance of convenience and public interest favoured lifting the automatic suspension of the Council's contract with the successful supplier. Part of the Court's reasoning included that the remedy of damages would afford an adequate remedy to Patersons.

No case for suspense

The Court's decision is in line with established case law on this point. When faced with the question of whether to lift an automatic suspension of a contract, the Courts in Scotland have always done so. There have been very high-profile examples of this, including the recent decision of the Court of Session in the battle between BT and the NHS in relation to the high-value SWAN IT contract. When BT (as unsuccessful tenderer) served proceedings on the NHS in the standstill period, the NHS had automatically been prevented from entering into the contract with the successful supplier, until this automatic suspension was lifted by the Courts.

Contract suspension is an attractive remedy for unsuccessful tenderers as it is likely to lead to the re-running of the procurement process being challenged. It seems from all case law to date, however, that the Courts will be very reluctant to allow the continued suspension of public contracts. The lifting of the automatic suspension does not preclude tenderers pursuing other remedies, such as damages. A successful claim for damages for breach of the procurement regulations can be difficult, however, as it depends on establishing that the unsuccessful tenderer would have been awarded the contract if the public body had not breached the procurement regulations, and establishing the amount of profit which the unsuccessful tenderer would have made had it been awarded the contract. Court action always involves an element of uncertainty and can be a time-consuming and costly process.
Despite these obstacles, BT has announced its intention to pursue a damages claim against the NHS and it will be interesting to see how that progresses.

Jill Fryer is an Associate with Harper Macleod LLP and can be contacted at jill.fryer@harpermacleod.co.uk.