Medicure Ltd v The Minister for the Cabinet Office

In 2012, the defendant conducted a procurement exercise in respect of a new Framework Agreement (“FA”) to govern the supply of locum doctors, including temporary staff. If a supplier was awarded a FA by the defendant, it could then be asked by customers, such as NHS Trusts, to provide locum doctors pursuant to separate call-off contracts entered into by the supplier and the customer. The claimant bid but failed to obtain a FA pursuant to that procurement exercise. Although the claimant challenged the decision not to award it a FA in correspondence in August 2012, it subsequently accepted the defendant’s decision, and there were no court proceedings.

The claimant was, however, successful in obtaining a FA with the defendant as part of the Avoca consortium. But it appears that, as a result of what the claimant calls “extensive problems” internally within that consortium (which are nothing whatsoever to do with the defendant), the claimant has not been called upon by NHS Trusts or other contracting authorities to supply locum doctors under that FA. The claimant now complains that, as a result of the information that it has obtained as part of the Avoca consortium, the defendant is operating the FA in a way that is materially different to that which was represented at the time of the procurement exercise.

The issues that arise in this case are relatively unusual. On the claimant’s original presentation of its case, they also arose in a rather odd sequence. The claimant’s basic case is that the tender documents represented that the FA required the provision of managed services (i.e. managing a supply chain) and did not allow for the direct (or ‘ad-hoc’, as the claimant called it) provision of services from the tenderer’s own resource pool. The claimant also maintains that this is the proper interpretation of the FA itself. The claimant alleges that, in late November 2013, it became apparent that the defendant was permitting direct or ad-hoc services to be provided, pursuant to call-offs being made under the terms of other FAs with other suppliers. This, the claimant says, is either a significant variation of the FA (which requires a new competition) or constitutes the improper use of the FA. In the alternative, if they are wrong about that, and the court finds that the provision of direct services was envisaged by the FA, then the claimant submits that its tender was wrongly excluded on the ground that it could not demonstrate any experience of managed services (as opposed to direct supply).

As I made plain to counsel during the hearing, this Judgment will deal with these issues in what I hope is a more logical sequence. In Section 3 I set out the relevant history of the tender process. Then at Section 4 I analyse the claimant’s challenge to that process. Thereafter I go on to consider the Framework Agreement and the claims made in respect of it. I set out parts of the FA in Section 5. I set out my views as to the proper construction of that FA in Section 6. Then I deal with the twin claims made by the claimant to the effect that the FA has been varied (Section 7) or has been improperly used (Section 8). There is a short summary of my conclusions in Section 9. I am grateful to both counsel for their clear and concise written and oral submissions.

The OJEU Notice in respect of the FA was dated 2 February 2012. It identified three different Lots in respect of the provision of locum doctors. Although this case is solely concerned with Lot 2, it should be noted that, for Lot 1, the Notice stated expressly that “awarded suppliers will not be eligible to supply locum doctors registered with the supplier”. That was a clear prohibition of direct or ‘ad hoc’ supply.

The Notice said this about Lot 2:

“Lot title: Resource pool management: Managed service provision of the supply of locum doctors (including Locum GPs) to Contracting Authorities for hire on temporary assignment or contracts though employment businesses.

(1)

Short Description

The Required Services are for the supply of fully vetted locum doctors (including locum GPs) for hire on temporary assignments or Contracting Authorities. Awarded suppliers will supply locum doctors (including locum GPs) registered with them as an Employment Business and will make up any shortfall by managing supplementary supply from other high quality Employment Businesses. The awarded supplier will be responsible for the compliance of the Employment Businesses used with regards to all the relevant Terms and Conditions of the Framework Agreement and with all legislative and regulatory requirements.”

The ‘Additional Information’ section of the Notice set out a lengthy list of contracting authorities who could enter into call-off contracts with the successful FA suppliers. The passage introducing those organisations said this:

“If the Contracting Authority decides to enter into a Framework Agreement with the successful supplier, this does not mean that there is any guarantee of subsequent contracts being awarded. Any expenditure, work or effort undertaken prior to the Contract award is accordingly a matter solely for the commercial judgement of potential suppliers. Any orders placed under this Framework Agreement will form a separate Contract under the scope of this Framework between the Supplier and the specific requesting other contracting body.”

There was a Pre-Qualification Questionnaire (“PQQ”). Section 2 of that document explained that the new FA would replace the existing Framework Agreement and would be different in scope, structure and operation. Section 2.4 said that the precise scope of the work in any particular case would be defined by the customer (such as the relevant NHS Trust) entering into the call-off contract with the supplier. Paragraph 2.13 said this:

“It is important to point out that the Stakeholder’s current positions are all different; some have service delivery models already in operation through either direct supply or temporary and fixed term locum doctors (including locum GPs) by employment agencies, employment businesses or by managed service provider models (e.g. neutral vendor or ‘supply chain’ managed services; or master vendor or ‘resource pool’ managed services) or sourcing from internal managed staff banks (and some of those were relatively long period of time). Others have been interested in implementing either a supply chain or resource pool managed service provision model but to date, have not had the opportunity to do so.”

For the purposes of this case, only two elements of the PQQ are relevant, namely E16 and E17. E16 was a question dealing with the total number of locum doctors previously supplied by the tenderer. The scoring criterion said that there was a total of 400 marks available for this question. If the historic supply was less than 49,999 hours then no marks would be awarded. If the supply was between 50,000 and 99,999 hours then 20% of the maximum of 400 (ie 80 marks) would be awarded. Thereafter, 40% of the marks were awarded for hours between 100,000 and 199,999; 60% for between 200,000 and 399,999 hours; 80% for between 400,000 and 799,999 hours; and 100% for supply greater than 800,000 hours.

E17 was in these terms:

“In relation to the Services intended to be provided, please demonstrate the Potential Provider’s technical and professional ability to supply the Required Services by providing three examples of how the Potential Provider has delivered a similar contract to meet the Customer’s requirements. The response to this question E17 must provide the relevant details which answer each part of the question:

(i)

the scope and value of the contract which must be comparable with the requirements of this Lot:

(ii)

a successful methodology for the management of a supply chain of Employment Agencies / Employment Company businesses used.

(iii)

the internal controls used to manage and monitor the delivery of the Services to ensure that the Customer’s requirements were fully met in terms of the quality, cost, timely delivery and to the Customer’s satisfaction;

(iv)

the selection process for the doctors (including locum GPs) supplied for the assignment and explain how the Potential Provider ensured that the customer received high quality, qualified and relevant locum doctors (including locum GPs) to meet their exacting requirements.

(v)

the top three challenges presented to the Potential Provider and how these were managed. ”

On 17 July 2012, the defendant wrote to the claimant noting that their FA bid had been unsuccessful. Attached to the letter was a detailed response to the claimant’s PQQ. This demonstrated that, in respect of E16, the claimant had scored 80 out of 400, because it had previously supplied between 50,000 and 99,999 hours of locum doctors. The response also went on to indicate that the claimant scored 0 for E17. In respect for each of the three examples provided by the claimant under this head, the defendant’s response was the same:

“Evaluators agree that the Potential Provider’s example response did not describe how the supply chain was selected and managed to deliver successful customer outcomes or how the supply chain activities were regularly monitored and reassessed. In terms of component (iii) it was agreed that the response did not provide the approach to quality assurance or the approach to ensure that services delivered were kept within budget and / or how any additional costs were present and approved by the client. With regard to component (iv) the evaluators agreed that the response did not demonstrate the approach to seeking the Customer’s approval of the nominated candidate or the approach to the management and review of the candidate’s performance in accordance with requirements of the response”

Thus, this is not a case in which the claimant narrowly lost out on winning the contract in question. On the contrary, the claimant did badly, scoring 20% and zero on these two parts of the PQQ, which meant that they were nowhere near being awarded a FA.

The claimant was unhappy with the rejection of its bid and, in the latter part of July and August 2012 there were detailed exchanges between the parties on this topic. The claimant’s principal complaint was that it had been in business for 18 years and provided a successful service to the NHS, which history was now being ignored. In response, the defendant relied on the evaluation of the PQQ, particularly in relation to E17. On 3 August 2012, the defendant said:

“The reason you were unsuccessful with each of the Lot 2 examples was because you did not fully satisfy part (ii) (iii) (iv) which resulted in a final converted score of 0, as detailed in the debrief letter provided. Your example did satisfy component parts (i) and (v) and were credited accordingly with 2 marks for each example. These marks were then converted in accordance with paragraph 8.8.3 and 8.11 of the PQQ Read First document which resulted in a zero score. The evaluation team firstly scored each submission independently and then together in a consensus session to ensure all bids were scored objectively and fairly.”

More detail was provided by the defendant in its letter to the claimant of 10 August 2012. The defendant made plain that they could not evaluate the claimant’s ‘18 years of experience’ directly. The went on:

“1.

Part (ii) for each of the examples fails to describe a successful methodology for the management of a supply chain of Employment Businesses used. You refer only to your own recruitment. You have not described how any Employment Business was selected, managed, monitored and re-assessed.

2.

Part (iii) for each of the examples failed to describe the approach to quality assurance and the approach for ensuring that services delivered were kept within budget and how any additional costs were approved by the client. (Although you list a number of procedures that are documented you made no attempt to describe how quality is assured).

3.

Part (iv) for each of the examples fails to describe the approach to seeking the customer’s approval and the approach to management and review of the locum doctors. Part (iii) makes reference to end of placement forms but no other detail is provided.”

Following further exchanges, the defendant wrote a further lengthy letter justifying the refusal of the claimant’s bid, dated 23 August. The relevant section was in these terms:

“Part (ii) – Following consultation with market and our representative stakeholder group before commencing the procurement process, it was established that there are few, if any, Employment Businesses that are capable of supplying the full range of locum doctors (including locum GPs) – as detailed in Schedule 3 (Grading structure and specialities) of the PQQ Read First PQQ document – on an on-going basis over the lifetime of the framework agreement.

Therefore, it was proportionate to the requirements of the Required Services under Lot 2 that we assess whether or not applicants interested in Lot 2 have the ability to manage supplementary supply from other Employment Businesses. Correspondingly, component (ii) of question E17 asked for experience of managing a supply chain of Employment Businesses, which is entirely consistent with, and relevant to, the Required Services, under Lot 2.

If an Employment Business was unable to demonstrate experience of managing supplementary supply from other high quality Employment Businesses, this would represent a commercial risk to the performance of the framework agreement. We therefore designed a risk based scoring system (see section 8.3.3 of the PQQ Read First document) in relation to question E17, which awarded scores according to the number of other components (including part (ii)) that an applicant satisfied. It was not a pass / fail requirement to have experience of managing supplementary supply from other high quality Employment Businesses and therefore Potential Providers unable to demonstrate such experience could still pre-qualify although they would not be able to achieve full marks for question E17.

In terms of your comments in relation to providing ‘hypothetical’ responses, we did not ask nor would we evaluate responses which detailed proposed methodologies for the management of a supply chain for this framework agreement and any subsequent call-off contracts. What we asked for was details of an applicant’s successful methodology for the management of a supply chain in the context of these examples, i.e. we were evaluating Potential Provider’s skills, efficiency, experience and reliability of supply chain management.

You did not demonstrate any experience of managing a supply chain and this has been confirmed by you in your most recent letter. A fail in respect of this component is therefore amply justified.

As explained in our letter dated 10 August 2012, there is a significant gap of 259 marks between your score and the lowest score achieved by a Potential Provider selected (339 marks). Even if the remaining components of your question E17 were fully satisfied, the maximum possible marks you could achieve is 198 marks.

This would therefore provide you with a possible maximum score of 298 marks (made up of 80 marks (Stage 5) and the possible maximum 198 marks (Stage 6)). This total score is insufficient for you to be invited to receive the ITT documentation.”

Following still further exchanges, there was a message from the Defendant to the Claimant on 29 August 2012 in these terms:

“Lot 2 – Resource pool management: Managed service provision for the supply of locum doctors (including locum GPs) to cover Contracting Authorities for hire on temporary assignments or Contracts through Employment Businesses. The Required Services are for the supply of fully-vetted locum doctors (including locum GPs) for hire on temporary assignments or contracts by Contracting Authorities. Awarded suppliers will supply locum doctors (including locum GPs) registered with them as an Employment Business and will make up any short-fall by managing supplementary supply from other high quality Employment Businesses. [This is usually known in the industry as a master vendor managed service provision / solution i.e. for the Contracting Authority receiving the Required Services, the provision shall be seamless and the Contracting Authority should contract only with the awarded Supplier and not with the Sub-Contracted Employment Businesses used] The awarding supplier will be responsible for compliance of the Employment Businesses used with regard to all the relevant Terms and Conditions of the Framework Agreement and with all legislative and regulatory requirements.

As responded to in our letter dated 23 August 2012, it was therefore entirely consistent with, and relevant to, these requirements that we proportionately assessed whether or not applicants interested in supplying under Lot 2 had the ability to manage supplementary supply from other Employment Businesses.”

Although there was some further desultory correspondence thereafter, the claimant’s challenge to the outcome of the tender process was not further pursued.

The Challenge

Paragraph 19 of the Particulars of Claim sets out the particulars of the alleged breach of transparency, fairness and the like (by reference to the Public Contract Regulations 47(A) in these terms:

“a.

Failing to set out the true scope of the services being procured under Lot 2 and making clear and emphatic representations to the effect that Lot 2 was confined to the provision of a managed service rather than ad-hoc provision;

b.

Employing selection criteria concerning experience of managed service provision which was devoid of objective justification, unfair and disproportionate;

c.

Excluding the Claimant at the qualification stage on the basis that it had experience only ad-hoc service rather than managed service provisions.”

For the reasons set out in detail below, I consider that this pleaded challenge is misconceived.

The Central Assumption

The central assumption made by the claimant in this part of its case is that the OJEU Notice and the PQQ made “clear and emphatic representations” to the effect that Lot 2 required only the provision of a managed service and excluded the provision of services directly by the successful bidder. That is plainly wrong as a matter of fact.

First, during her closing submissions, Ms Haynes conceded that her pleading was wrong to say that there was an emphatic representation in the tender documents that Lot 2 excluded the provision of direct or ad-hoc supplies. It plainly did not. As she accepted, there was nothing in the Notice or the PQQ that supported that assertion.

Secondly, I consider that the Notice and the PQQ were both entirely consistent. They made it clear that Lot 2 involved the potential direct supply of locum doctors registered with the suppliers, and also envisaged the possibility that there would be a shortfall in the supplier’s own resources which would require the management of a supplementary supply from other ‘high quality Employment Businesses’. In other words, the documents envisaged both direct supply and the management of the supply by sub-suppliers, depending on the circumstances.

That likely scenario can be seen in the description of Lot 2 in the Notice (“awarded suppliers will supply locum doctors registered with them as an Employment Business and will make up any shortfall by managing supplementary supply from other high quality Employment Businesses”). There was nothing in the PQQ which said anything different. I note that, of the five questions in E17 only one, question (ii), concerned “the management of a supply chain”.

Thirdly, a prohibition on direct supply was something that the defendant had expressly said in the Notice would apply to Lot 1 (see paragraph 5 above). In other words, Lot 1 contained the express words which the claimant is now attempting to read into Lot 2, but that clear prohibition is entirely absent from the description of what was included within Lot 2. That only reinforces my conclusion that Lot 2 did not contain a similar prohibition.

Fourthly, the correspondence which I have set out in paragraphs 13-17 above, emanating from the defendant after the tender process, was entirely consistent with the representations in the Notice and the PQQ. They made it clear that there would be a mixture of both direct and indirect supply. Indeed the message of 29 August 2012 (paragraph 16 above), upon which Ms Haynes placed some reliance in her closing submissions, made that point expressly. It talked about awarded suppliers supplying locum doctors “registered with them as an Employment Business” (i.e. direct supply) and then talks about “making up any shortfall by managing supplementary supply from other businesses”.

Finally, the later FAQs, sent out by the defendant from July 2013 onwards and dealing with the FA as it came onstream, expressly described Lot 2 as “a managed service provision by direct and sub-contracted supply”. Again, the words could not be clearer: both direct supply and the management of a supply chain are envisaged.

Accordingly, the central assumption on which this part of the claimant’s claim hangs is, in my view, misconceived. It is wrong to say that the Notice or the PQQ or the Defendant’s detailed responses or the FAQs ever suggested that all that was required was the management of others, and/or that direct supply was somehow prohibited. On the contrary, all of these documents envisaged both sources of personnel being utilised, depending on the circumstances. Thus the “statement and emphatic representation” pleaded at paragraph 19a of the Particulars of Claim is simply not made out.

The Test for Managed Services

It is of course right that, because the provision of managed services was included within the services to be provided by the tenderer, the defendant was entitled (and indeed obliged) to test for that as part of the PQQ. That therefore explains question E17(ii) and its reference to “the management of a supply chain”.

On behalf of the defendant, Ms Sloane argued that it was clearly proportionate for the defendant to test the potential provider’s ability to manage sub-contractors since that was, at least potentially, an important element of the FA. I accept that submission. It was appropriate for this aspect of the potential provision to be tested in the PQQ in some way. There was nothing to indicate that this question was in any way disproportionate or prejudicial. It was palpably transparent. Accordingly, the allegation at paragraph 19b of the Particulars of Claim (paragraph 17 above) must also fail.

The Reasons for the Claimant’s Failure

The claimant has repeatedly stated that it failed to obtain a FA because it had been unable to demonstrate experience of managing sub-contractors: see paragraph 19c of the Particulars of Claim. Again, that is wrong as a matter of fact. Although the claimant failed to answer E17 (ii) in a way which resulted in any marks being awarded, that failure was just one of many within the claimant’s PQQ.

First, on question E16, the Claimant was awarded just 80 out of 400 marks. That question concerned the past provision of locum doctors by reference to the hours that they had worked. That was a matter of historical record. There was nothing the claimant could do about that: in consequence, it scored far less than many of its competitors. That alone was a reason why its bid was refused. I do not accept the submission that had anything to do with the question of managed (as opposed to direct) services.

Equally, as the correspondence set out in paragraphs 13-17 above demonstrates, the Claimant’s answers to E17(ii),(iii) and (iv) were each inadequate and lead to a nil score. As already noted, only question (ii) was concerned with the management of a supply chain; questions (iii) and (iv) were nothing whatsoever to do with that topic. The claimant also scored nil on those questions. Again therefore, the Claimant’s failure on E17 was only partially related to the question of the managed services. This point was made on more than one occasion in the defendant’s debriefing correspondence, which provided much more information than is typical of a contracting authority in such circumstances.

For those reasons, I reject paragraph 19c of the Particulars of Claim. It is incorrect on the facts to say that the inability to demonstrate the provision of managed services was the reason for the Claimant’s failure to win a FA.

Out of Time

A claim arising out of a refused tender needs to be made within 30 days of the date that the claimant had knowledge of facts which clearly indicated an infringement (see Sita UK LTD v Greater Manchester Waste Disposal Authority[2011] EWCA Civ 156). In the present case, the claimant was aware of the reasons for the rejection of its tender from the outset (see paragraphs 13-17 above). Thus, if I am wrong to reject the challenge on its merits (as set out in Sections 4.2-4.4 above), there can be no basis for saying that the claimant was not well aware in late August 2012 of all the points it now seeks to argue. Indeed, the claimant sought to make those same points in the correspondence with the defendant. These proceedings, in which the tender process is challenged, were not commenced until January 2014. That was something like 16 months too late.

Summary

For all these reasons, I am in no doubt that there can be no challenge now to the validity of the tender process. The relevant documents, namely the Notice, the PQQ, the subsequent correspondence from the defendant and the FAQs, all made clear that the provision of direct services was included within the possible scope of the FA, along with the management of other sub-contractors. Moreover, the claimant cannot say that it was not aware of that until November 2013; it was aware of it from late August 2012 onwards. Thus if (contrary to my primary conclusion) there is a claim, it is wholly out of time.

I have been through the FA, which runs to over 500 pages. I question the wisdom of contracts of this length: nobody ever reads the detail until something goes wrong, and then the parties scrabble around trying to find bits and pieces of the smallprint that help their case. It would make this Judgment even duller than it already is if I included within it every clause or section of the FA to which I was taken, or which I have read. Accordingly the parties can take it that I have considered all of the sections to which I was referred, but I confine myself to setting out below what I consider to be the particularly relevant sections of the FA, in order to explain my views in the subsequent sections of this Judgment.

In the ‘Background’ section, I note that at C it said:

“On 14/11/2012 the Authority issued an invitation to tender for the provision of locum doctors (including locum GPs) managed services.”

In the definition section, ‘Services’ is said to mean “the services described in Schedule 1 (Services) of this Framework Agreement which the Supplier shall make available to the Contracting Bodies”.

Clause 3 dealt with the scope of the FA, making it clear that it governed the relationship between the defendant and the supplier in respect of the provision of the services by the supplier to the defendant and to other contracting bodies. Clause 5 was a non-exclusivity provision, the supplier acknowledging that in entering into the FA, no form of exclusivity had been conferred upon it by the defendant or other contracting parties. Section 6 was concerned with ordering procedures, that is to say the ordering by the contracting body (usually an NHS Trust or group of Trusts) and the supplier. Clause 16 was concerned with the management charge which was a charge made by the defendant on the supplier. It was calculated as a percentage of reportable spend.

Clause 35 was concerned with variations to the FA. It made clear that the FA could not be varied unless the defendant notified the supplier that it wanted to vary the terms of the FA; the defendant’s representative and the supplier’s representative agreed to the variation; and a written variation agreement was signed by both.

Schedule 1 defined the services to be provided under Lot 2 in these terms:

“The Services are for the supply of fully-vetted locum doctors (including locum GPs) for hire on temporary assignments or contracts by Contracting Authorities. Awarded Suppliers will supply locum doctors (including locum GPs) registered with them as an Employment Business and will make up any shortfall by managing supplementary supply from other high quality Employment Businesses. The Awarded Supplier will be responsible for the compliance of the Employment Businesses used with regards to all the relevant terms and conditions of the Framework Agreement and with all legislative and regulatory requirements.

The Services that the Supplier will be required to supply for this Lot are set out in Framework Agreement Schedule 1 (Services) Sub-schedule 1(A) (Services specification for the provision of temporary work-seekers)”

Part 2 of Schedule 1 dealt with the services to be provided. Clause 1.2 said that the purpose of Schedule 1 was to provide the contractual statement of the services, service levels (where applicable) and service credits (where applicable) to the FA and subject to order by contracting bodies. At such time as a contracting body placed an order for the services, the details of those services in the schedule would be specified in the ensuing call-off contract.

Schedule 5 contained the ordering procedure. It is unnecessary to set that out in detail, although I note that it expressly envisaged “direct ordering without a further competition”. The form of order had to be in accordance with schedule 4 (see clause 7 of Schedule 5) but the preceding clause, clause 6, made plain that the supplier acknowledged that ‘each contracting body was independently responsible for the conduct [of] its award of call-off contracts under the FA, and that the authority was not responsible or accountable for and would have no liability whatsoever in relation to those matters’.

Schedule 1 Annex A included a definition of ‘managed services’ as being “where one MSP [Managed Service Provider] takes responsibility for delivering the Services on behalf of the customer, as an alternative to the Customer managing a framework of individual Employment Agencies or Employment Businesses. Managed Services can often involve the Supplier operating a Tiered Structure of either other Framework Suppliers or other third-parties Employment Agencies or Employment Businesses, as applicable, to deliver the Services.”

In addition, there was Sub-schedule 1(A) which set out service requirements for all customers. Clause 1 was in these terms:

“1.

GENERAL REQUIREMENTS

1.1

Under this Framework Agreement Schedule 1 (Services) Sub-schedule 1(a) (Service specification for the provision of Temporary work-seekers):

1.1.1

a wide range of locum doctors (including locum GPs) (“Temporary work-seekers”) are required(a list giving a broad overview is provided under Framework Agreement Schedule 1 (services) Appendix 1 (Person Specifications); and

1.1.2

the Supplier must provide an end to process for sourcing, Introducing and managing the effective provision of all temporary work-seekers as needed by the Customer across the Customer’s organisation (as appropriate and relevant to the Lot which the Supplier has been appointed to supply under the Framework). In doing so, the Supplier must be able to either:

1.1.2.1 in the case of a Supply Chain Manager (Lot one provision, Introduce the Temporary work-seeker for hire on an assignment through Approved Sub-Contractors; or

1.1.2.2. in the case of a Resource Pool Manager (Lot two provision), Introduce the Temporary work-seeker for hire on an assignment from within his own pool of registered Temporary work-seekers and where unable to do so, source and manage the supplementary Introduction of Temporary work-seekers for hire on an Assignment with the Customer through Approved Sub-Contractors.

For all Assignments this will be:

1.1.3

in compliance with this Framework Agreement Schedule 1 (services) Sub-Schedule 1(a) (Service specification for the provision of Temporary work-seekers) and Framework Agreement Schedule 4 (Order Form & Call-off Terms), the Contract and the Order;

1.1.4

up to twenty four (24) hours a day, all year round;

1.1.5

in all skill sets required across the entire Customer organisation (a List giving a broad overview is enclosed at Framework Agreement Schedule 1 (Services) Appendix 1 (Person Specifications); and

1.1.6

in a timely manner, i.e. in accordance with the timescales set out in the paragraph 6.7 below or as otherwise agreed in writing in paragraph 3.b.ii of the Part 1A Part1A Order Form (Relationship Agreement) or as otherwise agreed in writing for individual service delivery or Assignments in the Order.”

Clause 4 of Sub-schedule 1(A) was headed ‘Managed Service Provision’ and set out various matters for which the supplier would be responsible, all subject to the words of clause 4.1, which qualified everything that followed by the words “recognising that the service delivery model proposed for each Customer will vary …”. Within clause 4 there was a section dealing with tiering of approved sub-contractors.

Clause 9.3 of sub-schedule 1(A) was, said Ms Haynes, “of critical importance”. I therefore set it out in full:

“Where the a supplier is acting solely as the Customers Resource Pool Manager (Lot 2 provision), the supplier shall in the provision of the Services ensure that it introduces Temporary work-seekers from its own resource pool / register F Temporary work-seekers and where unable to do so, manages the supplementary introduction of Temporary work-seekers through the wider network of Approved Sub-Contractors within its (and/or the Customer’s) supply chain, subject to one of the following additional conditions (unless otherwise agreed in writing to the contrary between the parties):

9.3.1

Option 1 (Supplier category lead)

The Supplier shall provide the Services on the basis that it shall provide for all of the Customer’s requirements in a named category, or categories, via its own resource pool / register of Temporary work-seekers and no others.

For example, the Supplier shall provide for all of the Customer’s requirements with the exception of Anaesthesia and Pathology. This is to ensure that during the Contract Period there is an opportunity for other Approved Sub-Contractors within the Supplier’s and / or Customer’s supply chain to provide the Services.

With the exception of the services provided for and described in the preceding paragraph hereof, the Supplier shall expose all of the other Customer’s requirements for the services to the wider network of contracted Approved Sub-Contractors within its (and/or the Customer’s) supply chain and to produce evidence thereof if reasonably requested by the Customer (or any person authorised on their behalf) to do so.

For the avoidance of doubt, any Affiliates of the Supplier shall be subject to the same restrictions as referred to above and shall not be permitted to therefore provide the Services beyond the scope of the named category or categories referred to therein. An affiliate shall be treated as part of the Supplier’s own pool / /register of Temporary work-seekers for these purposes.

All quotations received by the Supplier from the approved subcontractors (save as may be provided for otherwise in the paragraph 9.3.1) shall be treated equally and without discrimination by the Supplier.

9.3.2

Option 2 (Volume cap)

The supplier shall be required to ensure the provision of the services via its own resource pool / register of temporary work-seekers on the basis that it shall provide for all of the Customer’s requirements but not exceeding an agreed volume cap of the Assignments requested in any agreed rolling week or Month period. For example, the Supplier shall provide for all of the Customer’s requirements but not exceed seventy five percent (volume cap) of the assignments requested in any rolling four (4) week period. This is to ensure that when averaged out at any point during the Contract Period, there is an opportunity for other Approved Sub-Contractors within its (and / or the Customer’s) supply chain to provide the services.

With the exception of the services provided for and described in the preceding paragraph hereof, the supplier shall expose all of the customers requirements for the services in excess of the volume cap to the wider network of contracted Approved Sub-Contractors within the supply chain and to produce evidence thereof if reasonably requested to do so by the customer (or any person authorised on its behalf) to do so.

For the avoidance of doubt, any Affiliates of the Supplier shall be subject to the same restrictions as referred to above and shall not be permitted to therefore provide the Services in excess of the volume cap. An affiliate shall be treated as part of the Supplier’s own pool / register of Temporary work-seekers for these purposes.

All quotations received by the Supplier from Approved Sub-Contractors in the supply chain (save as may be provided for otherwise in this paragraph 9.3.2) shall be treated equally and without discrimination by the Supplier.

9.3.3

Option 3 (time limited Supply Option)

The supplier shall only be required to provide the Services via its own resource pool / register of Temporary work-seekers on the basis that it shall provide for all of the Customer’s requirements, where the requirements of the Customer can be confirmed In Writing within an agreed timeframe of the Customer’s request. For example, the Supplier shall provide for all of the Customer’s requirements which can be confirmed In Writing within twenty four (24) hours of the Customer’s request. This to ensure [sic] that when averaged out at any point during the Contract Period, there is an opportunity for other Approved Sub-Contractors within its (and / or the Customer’s) supply chain to provide the Services.

In all circumstances where the Supplier cannot satisfy the agreed timeframe for use of its own resource pool / register of Temporary work-seekers, then the Supplier shall expose all of the Customer’s requirements for the Services to the wider network of contracted Approved Sub-Contractors within its (and / or the Customer’s) supply chain and to produce evidence thereof if reasonable requested to do so by the Customer (or any person authorised on its behalf) to do so.

For the avoidance of doubt, any Affiliates of the Supplier shall be subject to the same restrictions as referred to above and shall not be permitted to therefore provide the Services in excess of the agreed timeframe. An affiliate shall be treated as part of the Supplier’s own pool / /register of Temporary work-seekers for these purposes.

All quotations received from Approved Sub-Contractors in the supply chain (save as may be provided for otherwise in this paragraph 9.3.3) shall be treated equally and without discrimination by the Supplier.”

Schedule 4 was, as I have indicated, concerned with order forms and call-off terms. It purported to identify the documents that would form part of any call-off contract, being the terms set out in the Part 1A Order Form and the call-off terms, together with the Schedules.

Clause 17 of Schedule 4, under the heading of ‘monitoring and review’, dealt with data to be supplied by the supplier to the customer. That included a note of the “summary percentage supply from own candidate pool versus the supply chain in the given period”.

It is the claimant’s case that, when taken as a whole, the FA envisaged the supply of managed services and that this excluded, either in whole or in part, the direct or ad-hoc supply of locum doctors. For the reasons set out below, I consider that to be an incorrect interpretation of the FA.

The first point to make, of course, is that this case appears to be an extension of the claimant’s earlier submission that the requirement for managed services automatically excluded the direct or ‘ad hoc’ provision of personnel. That was the basis of their challenge to the tender process and, for the reasons set out in Section 4 above, I have rejected it.

Secondly, in my view, on a proper interpretation of the FA, it is plain that (just as advertised in the Notice, maintained in the PQQ, and identified in the subsequent correspondence and FAQs) the FA envisaged the supply of both direct labour, from those registered with the supplier and, where necessary (in particular where there was a shortfall), the management of a supply chain. The description of Lot 2 in Schedule 1 (paragraph 39 above) makes that expressly clear. No other interpretation is possible. Furthermore, Schedule 5 envisages direct ordering without any limitation or prohibition on direct supply (paragraph 41 above), and clause 9.3 of sub-schedule 1A, which sets out the three options (paragraph 45 above) also expressly envisages both the supply of direct labour and, where appropriate, the management of a supply chain of approved sub-contractors. Finally, even the supply of data from the supplier envisages both direct and supply chain supply (paragraph 47 above). Again, therefore, on the basis of the express words of the FA itself, direct supply is expressly endorsed.

For the avoidance of doubt, I have set out a number of the definition sections from the different documents making up the FA, because Ms Haynes relied on them during her oral submissions (see in particular those set out at paragraphs 42 and 43 above). They say nothing which prohibits direct supply, or in any way cut across those parts of the FA to which I have referred in the preceding paragraph.

Thirdly, during her closing submissions, I understood Ms Haynes to accept this analysis. I put to her that, in a situation where there was no shortfall, and the number of locum doctors required could be met from the direct resource pool of the supplier, there would be no need for any management of a supply chain. She agreed that the FA could be used in those circumstances, and that there would be no need for any ‘cascading’ down to the sub-contractors. She also agreed that the first port of call would be the supplier’s own pool of resources.

Accordingly, everything will always turn on the particular needs of the customer at the particular time that the call-off is made. Sometimes the personnel can be provided directly; sometimes, particularly if there is a shortfall, they would come form the supply chain. That is a proper working of the FA, and it again demonstrates the importance of direct or ad-hoc supply within it.

At another point in her submissions, by reference to clause 9.3, Ms Haynes appeared to be arguing that it would never be legitimate for the supply to be entirely from the supplier’s own resource pool, and that the whole purpose of the three options was always to allow some cascading down to approved sub-contractors. There are three points about that. First, as Ms Sloane pointed out, those options were just that: options. Clause 9.3 made clear that the customer and the supplier could contract out of them without difficulty. Schedule 1(A) is not part of any call-off contract and is simply setting out the range of services available. Second, it would be a matter of detail between the customer and the approved supplier as to whether or not, either on a single call-off or on a series of call-offs, there was direct supply and/or cascading down the supply chain. Third, to the extent that it is relevant, I do not read these provisions as saying that there must always be cascading, even if, for example, only three locum doctors are needed, and the supplier can provide all three from its own resource pool.

In one sense, none of the points arising out of clause 9.3 are relevant to the present case because all I am concerned with is a proper interpretation of the FA. Any detailed points arising out of the call-off contracts are, as the FA makes plain, for the parties to the call-off agreement, and not for the defendant.

So for all these reasons, I consider that the FA provided in (inordinate) detail what the Notice said that it would: a Framework Agreement whereby individual call-offs could be made to suppliers providing personnel directly form their own resource pool, or by managing a supply chain, or both. The claimant is wrong to say that, as a matter of a proper interpretation of the FA, direct supply was prohibited, either in whole or in part.

That conclusion means that the claimant’s case as to the variation and/or misuse of the FA must fail, because that case wrongly pre-supposes that direct supply under the FA is prohibited, and has been allowed only because of the variation or the misuse of the FA. However, it is worth dealing with the variation and misuse arguments separately because, even on their own terms, they have not been made out.

It is the claimant’s case that the defendant was varying the framework agreement by including ad-hoc or direct provision of personnel. At paragraphs 12 and 13 of the Particulars of Claim it is suggested that the defendant was instructing NHS bodies to operate the FA in this amended fashion. It is also said that this was a change in position because the claimant’s tender was rejected “solely on the basis that they were ad hoc providers” (paragraph 13). On analysis, none of these points get off the ground.

First, for the reasons explained in Section 6 above, the FA has not been amended. The supply directly from the supplier’s own pool was envisaged by the FA. This had also been envisaged in the OJEU Notice and in the subsequent FAQs. It was explained in the correspondence from the defendant that told the claimant how and why their bid was unsuccessful. Moreover, I find that this same point was reiterated by Ms Howarth of the defendant at the meeting in November 2013 with the Avoca consortium, and in the subsequent correspondence. Accordingly, there is nothing to suggest any change of position on the part of the defendant; on the contrary all of the evidence points the same way, namely that the supply of labour directly from the supplier’s own resource pool was within the FA, and it was always treated as such.

Secondly, the allegation that the defendant was instructing bodies in a way that was contrary to the FA fails on the evidence. There was no evidence of any instruction from the defendant to any NHS trust or other contracting body. Ms Popat of the claimant accepted that she could not identify any such instruction. Both of the defendant’s witnesses denied any such instructions in their witness statements. Ms Philpotts was not cross-examined at all and Ms Howarth was not cross-examined on that part of her statement.

The high watermark of the claimant’s case in respect of these matters concerned a possible contract available to Avoca with the East of England Hub, which was not obtained, and a mini-competition which SBS aborted. But on analysis, there was no valid claim in respect of either. In respect of the East of England Hub, Avoca simply failed to get its bid in on time, a fact that Ms Popat properly concedes in her witness statement. There was nothing to suggest that the East of England Hub were not using the FA correctly, much less that they were being instructed to vary or misuse it by the defendant. The emails referred to by Ms Popat in this regard indicated no instructions of any kind from the defendant. As for SBS, they carried out a mini-competition that was then apparently aborted, but nobody could say why, and again there was nothing to suggest that this was anything to do with the defendant, let alone a variation to or misuse of the FA.

The third pleaded element of this part of the case, namely that the defendant excluded the claimant’s tender “solely on the basis that they were ad-hoc providers” is wrong, for the reasons set out in Section 4 above.

For these reasons, the suggestions that the FA had been amended or varied, and that this variation was being promulgated by instructions or directions from the defendant, were simply not made out. It is therefore unnecessary for me to consider Case C-454/06 Pressetext [2008] ECR 1-4401, which deals with the parties’ rights and obligations where there has been a material variation to the contract in question.

For completeness, I should say that I accept Ms Haynes’ submission that, merely because there has been no formal variation to the FA pursuant to clause 32 (paragraph 38 above) is not, of itself, an answer, since it is possible to envisage a situation where the FA had been varied as a matter of fact, and that it was in the defendant’s interests not to formally acknowledge that variation. But that has not happened here. For the reasons that I have explained, the FA is being operated in accordance with its terms.

In the alternative, the claimants suggest that there is a breach of Regulation 19(12) because the FA is being improperly used. Since this argument relies on the same points as the alleged variation, I reject it for the same reasons.

In addition, I agree with Ms Sloane that this aspect of the case against the defendant is hopeless for another, freestanding reason. If (and there is no evidence of it) the FA is being improperly used, it could only be improperly used by the customers under the individual call-off contracts. There is nothing to say that the defendant is in any way involved with any improper use, let alone orchestrating or condoning it. Indeed Ms Howarth was adamant in her cross-examination that she never got involved in the detail of the call-off contracts. There is therefore no cause of action against the defendant in respect of this aspect of the case.

That conclusion is supported by clauses 5 and 6 of schedule 5 of the FA (paragraph 41 above) which make clear that it is the other contracting body who is ‘independently responsible for the conduct [of] its award’ of call-off contracts, and that the defendant ‘is not responsible or accountable for and shall have no liability whatsoever’ for the conduct of those other contracting bodies in relation to the FA.

I reiterate however that in my view, on the evidence before me, the customers are not improperly using the FA. There are hundreds of customers using the FA, yet only two potential problems were referred to, and in my view, neither the East of England Hub nor the SBS examples got the claimant anywhere. The highest that it could be put was a reference by the procurement officer at the East of England Hub that a tiered arrangement might be used. It was suggested by the claimant that that arrangement was now excluded by the FA. But as Ms Sloane pointed out, we do not know what the terms of the competition were; what eventual arrangement was reached; whether it was outside the FA or not; or how it had come about.

What we do know is that, on the evidence, the defendant played no part at all in the events concerning East of England or SBS. Ms Howarth explained this in paragraphs 7 and 8 of her second witness statement. She was not cross-examined on it and Ms Popat could not contradict it.

For these reasons, the claimant’s case as to improper use of the FA must also fail.

For the reasons which I have given, the claimant’s case fails at every level. The basic assumption that underpinned it, namely that all of the original documentation, including the Framework Agreement itself, prohibited ad-hoc or direct supply, was simply wrong. Direct supply was always envisaged, along with the management of a supply chain in appropriate circumstances. The claimant’s bid was rejected because of their very low scores, and only one element of the scoring criteria had anything to do with the management of a supply chain. Subsequently, it is plain that the claimant’s difficulties have arisen, not because of the defendant’s conduct, but because of problems within the Avoca consortium.

Although it will be cold comfort for them, I have some sympathy with the claimant’s position. They had successfully supplied the NHS with locum doctors for 18 years. The new Framework Agreement seems to favour larger organisations (hence the scale of marks available under question E16, about historic supply) and it legitimately raised a question about the management of a supply chain which the claimant was always going to struggle to answer satisfactorily. All of that appears to have made it difficult for a smaller organisation, like the claimant, to compete for this FA.

In addition, I accept that, although direct supply was always envisaged as a possibility by the FA, it may now be receiving greater emphasis than was expected because, in truth, direct supply (rather than the management of a supply chain) was always what the customers wanted. So although the NHS has been involved in a lengthy and doubtless expensive new procurement exercise, it may be an open question as to whether it has actually improved the supply of locum doctors, let alone saved the public money.

However, none of that is ultimately of any assistance to the claimant in these proceedings. The tender process was neither unfair nor lacking in transparency. Both the tender process and the FA have been properly and fairly operated. The claimant’s claim is therefore dismissed.