Sanofi Aventis Ireland Ltd Trading as Sanofi Pasteur v Health Service Executive

• Jurisdiction: Ireland
• Judge: Mr. Justice Denis McDonald
• Judgment Date: 12 October 2018
• Neutral Citation: [2018] IEHC 566
• Date: 12 October 2018
• Court: High Court
• Docket Number: [2018 No. 102 J.R.] [2018 No. 22 COM]

IN THE MATTER OF COUNCIL DIRECTIVE 2014/18/EC

AND IN THE MATTER OF THE EUROPEAN COMMUNITIES (AWARD OF PUBLIC AUTHORITIES" CONTRACTS) REGULATIONS (S.I. 284 OF 2016)

AND IN THE MATTER OF THE EUROPEAN COMMUNITIES PUBLIC AUTHORITIES" CONTRACTS) (REVIEW PROCEDURES) REGULATIONS 2010 (S.I. 130 OF 2010 AS AMENDED BY S.I. 192 OF 2015 AND S.I. 327 OF 2017)

BETWEEN

SANOFI AVENTIS IRELAND LTD TRADING AS SANOFI PASTEUR

APPLICANT

AND

HEALTH SERVICE EXECUTIVE

RESPONDENT

AND

GLAXOSMITHKLINE IRELAND LTD

NOTICE PARTY

[2018] IEHC 566

[2018 No. 102 J.R.]

[2018 No. 22 COM]

THE HIGH COURT

COMMERCIAL

Contract – Failure to provide reasons – Transparency – Applicant seeking to challenge the decision by the respondent to award to the notice party a contract – Whether the respondent failed to comply with its obligations to provide reasons for its decision

Facts: The applicant, Sanofi Aventis Ireland Ltd, applied to the High Court seeking to challenge the decision by the respondent, the Health Service Executive (the HSE), to award to the notice party, GlaxoSmithKline Ireland Ltd, a contract for the supply of approximately one million doses of 6-in-1 Vaccine (Diphtheria, tetanus, acellular pertussis, Hepatitis B, inactivate polio vaccine, haemophilus influenza Type B conjugate) over a five-year period (approximately) together with a contingency of 200,000 doses. The contract was due to commence in January 2018. It was contended that the HSE failed to comply with its obligations to provide reasons for its decision and in particular (but not exclusively) failed to set out the characteristics and relative advantages of the Glaxo tender. It was also contended that there had been a breach by the HSE of the principles of equal treatment and transparency. It was alleged that there was a failure to formulate the award criteria in such a way that reasonably well-informed and normally diligent tenderers would interpret them in the same way and that there was a failure to disclose sub-criteria and/or weighting. It was also contended that the HSE made a manifest error in the way in which it evaluated the tenders.

Held by McDonald J that, regarding the failure to provide reasons in relation to the sub-sub-criteria described as (a) regularity of batch supply and expiry date management (in respect of which Sanofi achieved a score of 27 and Glaxo achieved a score of 28.5) and (b) packaging and labelling (in respect of which Sanofi achieved a score of 12 while Glaxo achieved a score of 16), the appropriate relief to be granted was, first, a declaration that Sanofi's rights had been infringed and, secondly, an order pursuant to Regulation 9(1)(c) of the European Communities (Public Authorities Contracts) (Review Procedures) Regulations 2010 (the Remedies Regulations) directing the HSE to provide full reasons (including the characteristics and relative advantages of the Glaxo tender) to Sanofi within a period of time which he would fix after hearing from the parties. McDonald J was of the view that such relief would provide an appropriate, adequate and proportionate remedy to Sanofi which would vindicate the infringement of its rights and that the provision of proper reasons in accordance with an order pursuant to Regulation 9(1)(c) would assist Sanofi in improving the overall quality of future tenders. McDonald J held that the new letter of reasons must be confined to the specific facts that existed in the minds of the Procurement Evaluation Group (the PEG) at the time of their evaluation of the tender; when furnishing the reasons, the HSE must confirm that the members of the PEG have themselves confirmed that these were the specific matters to which they had regard on the date of the evaluation. McDonald J held that if any one or more of the members of the PEG were not prepared to make that statement, the HSE must also inform Sanofi of this when furnishing the new letter of reasons.

McDonald J held that he would reject the case made by Sanofi save to the limited extent set out above. He would hear the parties in due course in relation to the precise form of order to be made and in relation to costs.

Case rejected in part.

JUDGMENT of Mr. Justice Denis McDonald delivered on the 12th day of October, 2018

Introduction

1 In these proceedings, the applicant ('Sanofi') seeks to challenge the decision by the respondent ('The HSE') to award to the notice party ('Glaxo') a contract for the supply of approximately one million doses of 6-in-1 Vaccine (Diphtheria, tetanus, acellular pertussis, Hepatitis B, inactivate polio vaccine, haemophilus influenza Type B conjugate) over a five-year period (approximately) together with a contingency of 200,000 doses. The contract was due to commence in January 2018.

2 The challenge by Sanofi to the decision of the HSE is pursued on three principal grounds: -

(a) It is contended that the HSE failed to comply with its obligations to provide reasons for its decision and in particular (but not exclusively) in failing to set out the characteristics and relative advantages of the Glaxo tender;

(b) It is also contended that there has been a breach by the HSE of the principles of equal treatment and transparency. In this context, two broad complaints are made: -

(i) it is alleged that there was a failure to formulate the award criteria in such a way that reasonably well-informed and normally diligent tenderers will interpret them in the same way; and

(ii) there was a failure to disclose sub-criteria and/or weighting;

(c) Thirdly, it is contended that the HSE made a manifest error in the way in which it evaluated the tenders.

3 It will be necessary, in due course, to consider each of the grounds of challenge in detail. Before doing so, it may be helpful to set out some of the basic facts.

Background

4 According to Mr. Martin Dempsey (the deponent of the affidavits sworn on behalf of Sanofi) a broad range of high quality vaccines are manufactured by the Sanofi group, a multinational pharmaceutical company.

5 Mr. Dempsey was the person responsible for the overall coordination of the tenders submitted on behalf of Sanofi to the HSE. He has 29 years" experience in the pharmaceutical industry and has held senior positions in the Sanofi Vaccine Division for Ireland since 2005.

6 Insofar as the HSE is concerned, one of its functions is the administration of a comprehensive immunisation programme. For this purpose, the HSE National Immunisation Office ('NIO') was established in 2005 for the coordination of all publicly funded immunisation programmes including vaccine supply chain management. Since 2005, procurement of all vaccines for national programmes has been centralised and managed by the NIO. While the NIO currently has contracts of different durations for 23 vaccines, the 6-in-1 vaccine is supplied as part of the Primary Childhood Immunisation Programme under which children are required to have five visits to their general practitioner ('GP') to be fully vaccinated against thirteen infectious diseases. These vaccines are given in two or three injections to children at each of the five visits between the age of two months and thirteen months. All vaccines and their administration are funded by the HSE and provided free of charge by contracted GPs.

7 Glaxo is the supplier of the 6-in-1 vaccine to the HSE under the pre-existing contract which commenced in September 2013. Previously, it held a corresponding contract which commenced in June 2008 for the supply of the vaccine to the HSE.

8 The Sanofi vaccine is known as 'Hexion'. The Glaxo vaccine is known as 'Infanrix Hexa'. The Sanofi vaccine is a fully liquid ready to use vaccine which is supplied in a pre-filled syringe. The Glaxo vaccine requires reconstitution. It is supplied in two parts, namely a pre-filled syringe together with a vial containing a single element of the vaccine described in the affidavit evidence before the court as the 'lyophilised Hib component'. As I understand it, the vial is added by the medical practitioner to the pre-filled syringe immediately before the vaccine is administered to the child.

The tender competition

9 On 17th August 2017, seven contractors (including both Sanofi and Glaxo) were appointed by the HSE to a Framework Agreement for the provision and supply of various vaccine products. The framework agreement was put in place pursuant to Regulation 33 of the European Union (Award of Public Authority Contracts) Regulations 2016 ( S.I. 284 of 2016) ('The Procurement Regulations').

10 On 22 September 2017, the HSE published an 'Invitation of Tender' (The 'IOT') in relation to a Mini-Competition for the supply of the 6-in-1 vaccine ('the Mini Competition'). The Mini Competition was open to members of the Framework Agreement only. Included in the tender documents was a blank template Tender Response Document ('the Tender Response Document') which contained further information regarding the Mini Competition and included certain additional details relating to the technical and functional criteria. It will be necessary, in due course, to consider some of the provisions of the Tender Response Document and in particular to consider the sub-categories described in the document.

11 According to Mr. Dempsey's first affidavit, the Mini Competition presented a significant commercial opportunity for Sanofi. If Sanofi were successful in the Mini Competition, Mr. Dempsey says this would mean an increase by more than 180% of Sanofi's current sales forecasts for the next three years.

12 On 13 October 2017, Sanofi submitted the Tender Response Document (duly completed by it) together with various appendices. According to Mr. Dempsey, the Sanofi tender was designed to address the criteria identified in the template Tender Response Document. For the purposes of these proceedings, the relevant criteria are those relating to the functional and technical aspects of the tender. Mr. Dempsey says at...