UK High Court soon to rule on conflicts of interest under reg.24 PCR2015 (Art 24 Dir 2014/24) (Counted4 CIC v Sunderland City Council)

In its Judgment of 18 December 2015 in Counted4 Community Interest Company v Sunderland City Council [2015] EWHC 3898 (TCC) [*], Justice Carr decided the first request for the lift of the automatic suspension under regs. 95 and 96 of the Public Contracts Regulations 2015 (PCR2015) and decided to keep the suspension of the award until trial--thus departing from the general trend of lifts before the UK Courts. This aspect of the Judgment has been discussed abundantly (for example, see here), and whether it will actually reverse the generous approach of the UK courts to lifting the automatic Alcatel suspension remains unclear.

However, there is a second aspect of the case that I find more interesting. The case concerns the procurement of a services contract for substance misuse treatment and harm reduction services for substance users in Sunderland. Counted4 CIC is the incumbent supplier and has initially lost in its bid to renew the contract to Northumberland Tyne and Wear NHS Foundation Trust (NTW), which was the immediate previous provider before Counted4 CIC.

The primary claim of Counted4 CIC in its challenge of Sunderland CC 's decision to award the services contract to NTW is based on the alleged existence of a conflict of interest affecting one of the members of the evaluation team. In particular, Counted4 CIC challenges the participation of the person responsible for the administration of the current contract [Mr. S] in the evaluation of the new bids. The challenge is not made in abstracto, but based on the existence of a strained relationship between Counted4 CIC and the contract administrator [Mr. S], of which there seems to be sufficient (indiciary) proof on the file.

What I find interesting is the way in which Carr J frames the issue in the following terms:

[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. S] 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. S]'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. S]'s impartiality and independence. The issues with [Mr. S] appear to have been grave. [Mr. D, the Claimant's Chief Executive] states the difficulties were beyond normal managerial issues. [Mr. S] often became emotional. It is said that his failings were recognised. It is also now apparent that the Claimant's complaints about [Mr. S] led to an internal investigation into [Mr. S]'s performance, though the results of that investigation have not hitherto been disclosed by the Defendant.

This will probably be the first time in which Article 24 of Directive 2014/24, as transposed in reg.24 PCR2015 is interpreted in the European Union as a whole. Without disagreeing with this approach in principle, I think that the broad terms in which Carr J foresees a possible interpretation of the provision may not necessarily be the most straightforward (ie 'other personal interests' could relate to family, sentimental or equivalent situations, rather than professional concerns)--or, at least, it seems obvious that there will certainly be opposing views and an interest in adopting a narrow interpretation of the provision. Consequently, a referral to the Court of Justice of the European Union for a preliminary interpretation may well be warranted (if not on on this first instance, certainly on appeal).

Additionally, given that the case concerns procurement 'at the edges' of NHS procurement activity, it will be interesting to compare the decision in Counted4 Community Interest Company v Sunderland City Council in this judicial setting, with that recently adopted by the sector regulator Monitor in a recent case involving allegations of conflict of interest against members of the evaluation team; see its Investigation into New Devon CCG’s commissioning of community services for adults with complex care needs in eastern Devon: final report [Case CCD01/15, decided on 26 August 2015]. This is something that we will do at this event organised at the University of Bristol Law School on 23 June 2016, so do come along if you are interested on these issues (registration is free).

[*] I am grateful to P Somalis for bringing this case to my attention.