This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2015 decision in Medicure Ltd v. The Minister for the Cabinet Office, the England and Wales High Court of Justice (Technology and Construction Court) considered a claim by a long-term government supplier who was being cut out of a new framework arrangement that had been scoped beyond the supplier’s reach. The dispute dealt with the use of a new framework arrangement for health services. The complainant was in the business of providing doctors to health authorities, but it was unable to provide the additional managed services required under the new arrangement. The complainant alleged that the scope of the new agreement only covered the supply of managed services rather than the direct provision of doctors. It challenged the government’s direct acquisition of doctor’s services as falling outside the proper scope of the framework arrangement. In reviewing the contract terms of the framework arrangement, referred to in the decision as FA, the Court noted that the agreement was unnecessarily long and complex, which undoubtedly contributed to the confusion over its proper scope:
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 small print 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. (para. 35)
The Court ultimately determined that the complainant’s interpretation was incorrect, since the scope of the framework arrangement included both the direct provision of doctors as well as the supply of managed services. However, the Court expressed sympathy for the complainant who had been providing doctor’s services to government institutions for 18 years. As the Court noted, the expanded scope of the new agreement put these contracting opportunities out of reach of smaller firms:
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.
As this case illustrates, contract scoping decisions can be the subject of significant controversy. Purchasing institutions should be careful to ensure that they clearly define the scope of their contracts to better ensure their defensibility against out-of-scope allegations. When scoping larger contracts, purchasing institutions should also be mindful of the impact that those scoping decisions can have on existing suppliers and on long-term competition in the marketplace.
