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Public Procurement Case Law Update: Sanofi v HSE

AUTHOR(S): Michael Finn, Helen Kelly, Kate McKenna
PRACTICE AREA GROUP: Life Sciences
DATE: 25.10.2018

Life Sciences businesses eagerly awaited the High Court judgment of 12 October on Sanofi v HSE.  It is the first final Irish court judgment on a challenge of a tender for supply of a pharmaceutical product, namely the ‘6-in-1’ vaccine, and it sets a higher standard of procedural fairness for the HSE to meet in future tenders.  It is also the first procurement judgment of McDonald J., who was recently appointed to the High Court and has provided a welcome clear and comprehensive summary of the law.

While Sanofi failed to overturn the HSE tender which selected GlaxoSmithKline as the winner, it did obtain a declaration that HSE had infringed its rights and must provide additional information to it. Sanofi’s main argument was that the HSE failed to provide adequate reasons for its decision and this was rejected except in relation to the reasons provided for two ‘sub-sub criteria’.  Sanofi also argued unsuccessfully that the HSE had (i) failed to disclose criteria and (ii) made a ‘manifest error’ in awarding a higher score to GlaxoSmithKline than what Sanofi felt was justified on the facts.

Some key points from this case include:

  • Criticism of lack of records of HSE Procurement Evaluation Group – HSE was criticised for having limited records of the Procurement Evaluation Group’s deliberations.  There is a stark contrast between the HSE’s limited records in this case and those of Transport Infrastructure Irelan which are described in another recent High Court procurement judgment of 17 October 2018 (Transcore v TII):

    extensive documentation provided by the Authority in the course of discovery which enabled the parties to demonstrate to the court precisely how the Evaluation Committee reached the conclusions… the documentation itself clearly demonstrated to me how the thinking of the members of the Evaluation Committee evolved in the course of the process and how its decision was ultimately reached.”

    Unfortunately for Sanofi, the criticism of the HSE’s limited records was obiter and not part of the judgment as Sanofi failed to plead the point.  It will be interesting to see how the HSE responds to this in future tenders.
     
  • Worth of post-tender letters - Court found that more extensive HSE obligations to give reasons are triggered when an unsuccessful tenderer writes seeking further information.  Building on the 2016 judgment on RPS v Kildare CC, the Court found that, while the HSE must in any event provide reasons when notifying its decision, a request for further information triggers a separate obligation to provide more extensive reasons including (non-confidential) information on the characteristics and relative advantages of the successful tenderer.
     
  • Strength of arguments depends on their impact on tender outcome - Court found it would be disproportionate to grant a remedy for a breach which, if corrected, was unlikely to bridge a large gap between the scores of the claimant and the successful tenderer.
     
  • Summary of high standard for manifest error arguments – Court provided a helpful summary of the well-established high standard that any legal argument of ‘manifest error’ must meet given the expertise of the of HSE Procurement Evaluation Group : “no basis on which an expert evaluation body such as the PEG could properly come to the conclusion which it did.”  The above-referenced 17 October judgment in Transcore v TII also illustrates this point.
     
  • HSE practice of ‘voluntary’ standstill period – Court noted that the HSE had respected a standstill period after notifying bidders of the mini-competition outcome when it was not legally obliged to do so.  It will be interesting to see whether the HSE continues to do this, in particular given that it could seek to avoid litigation by executing contracts more quickly.
     
  • Win-Win for incumbent supplier? - The practical impact of this case was that the pre-existing HSE contract with GlaxoSmithKline was extended for a year pending resolution of the case.  However, GlaxoSmithKline’s active and extensive participation in the case shows the cost of procurement litigation to the winning tenderer as well as to the HSE.

Given the growing importance of public procurement decisions to Life Sciences businesses in Ireland, the judgment in Sanofi provides welcome clarification of the law which should inform future tenders and public procurement cases in this sector including the on-going High Court case of Nutricia v HSE.

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