Trade union application for judicial review rejected

In the case of R v NHS Shared Business Services Ltd and another, trade union Unison sought to challenge the decision of ten primary care trusts (“PCTs”) to enter into contracts with NHS Shared Business Services Ltd (“SBS”) for the provision of family health services. Previously, the services were provided in-house, but as part of an effort to reduce costs the decision was taken to outsource.

The basis of the challenge was that the PCTs had acted in breach of the Public Contract Regulations 2006 (“the Regulations”). It was argued by SBS that the Regulations were inapplicable on the basis that the contracts were entered into pursuant to a Framework Agreement already in place. This was not, however, the substantive issue to be considered by the court: Unison’s interest in the matter to satisfy the conditions for judicial review had first to be determined.

It is established that remedies are available to economic operators where there has been a breach of the Regulations. In as far as Unison is concerned, since it is not an economic operator and would have no right to enforce any statutory duty owed by the PCTs, whether owed to itself or to its members, the court determined that its only possible means of challenge was by way of judicial review.

The court noted that it is likely that breaches of the Regulations will more often give rise to private rather than public law remedies, the latter being relatively rare. Indeed, no previous example of a trade union seeking a public law remedy in the context of the Regulations was apparent to the parties to the action. The court found, however, that this was not a reason to suppose that judicial review was not legally possible.

It was therefore necessary to establish whether Unison satisfied the conditions for “standing”.

The court found that it is not permissible for any trade union, or any individual worker, to have a potential public law remedy every time it is proposed that a particular service in the public sector should be outsourced. Indeed, there is a “general disinclination to permit challenges to commercial decisions by public bodies”. Moreover, in the particular context of procurement, there has apparently been a decision by the legislature to confine the specified remedies to commercial competitors.

The court’s ruling was based on the application of a test set out in the case of R (Chandler) v Secretary of State for Children, Schools and Families [2010]:

“We incline to the view that an individual who has a sufficient interest in compliance with the public procurement regime in the sense that he is affected in some identifiable way, but is not himself an economic operator who could pursue remedies under Regulation 47, can bring judicial review proceedings to prevent non-compliance with the regulations or the obligations derived from the Treaty, especially before any infringement takes place… He may have such an interest if he can show that performance of the competitive tendering procedure in the directive or of the obligation under the Treaty might have led to a different outcome that would have had a direct impact on him. We can also envisage cases where the gravity of a departure from public law obligations may justify the grant of a public law remedy in any event.”

The question was whether Unison could show that if a compliant competitive tendering procedure had been used, it would have led to a different outcome having a direct impact on its members. The court considered that the burden rested on Unison to evidence their claim that this was the case. Unison was unable to do so, particularly since there were no alternative bidders and it was, accordingly, not possible to know the terms on which others would have bid to provide the services. Unison was unable establish that a competitive tendering procedure would have led to a different outcome which would have had a direct impact on its members. Accordingly, Unison failed to establish an actionable interest.

This blog was provided by Ruth McNaught, Solicitor at Harper Macleod for Government Opportunities.

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