Awarding of contract to build new cancer hospital ‘broke procurement rules’ says barrister

Martin Shipton

A campaign group has released a barrister’s opinion that argues a contract awarded for the construction of a new cancer hospital broke procurement regulations because two of the companies involved in the winning consortium had convictions for corruption.

Simon Taylor of Keating Chambers in London provided legal advice to the Co-locate Velindre group in July 2024. A link to the full advice appears at the foot of this article.

The group has consistently argued that the new Velindre Cancer Centre, currently under construction in Cardiff, should have been built adjacent to a large general hospital.

But Velindre University NHS Trust, with the backing of the Welsh Government, insisted on a stand-alone building.

In his written opinion, Mr Taylor stated: “While I have not had sight of any of the tender documents for the Procurement, my understanding of the key facts is as follows:

(1) The Pre-Qualification Questionnaire (“PQQ”) stage of the Procurement took place in April

to July 2021. The Invitation To Tender was then sent out and the award to [the Acorn consortium] was published on 27 July 2022.

(2) Members of Acorn include companies in the Kajima Corporation group (“Kajima”) and Sacyr Construcción SA (“Sacyr”).

(3) Members of the Sacyr group have been fined for infringing competition law by bid rigging in Portugal (Sacyr Neopul S.A. in 2018, fine of 360,000 euros) and Spain (Sacyr Construcción SA on 7 July 2022, fine of £16.7m). Bid rigging is a serious competition infringement and one specifically aimed at distorting or removing competition in the procurement process and thus increasing costs to the taxpayer. It could potentially lead to a criminal conviction if conducted in the UK.

(4) Kajima Corporation was also found guilty of bid rigging in a criminal prosecution in Japan on 1 March 2021.

(5) Both Sacyr and Kajima have appealed these rulings, but according to the latest update,, those appeals are still pending.

(6) The PQQ used was the standard form published by the Welsh Government for MIM [Mutual Investment Model – a variation on PFI where a public body forms a partnership with a private company to build an infrastructure project, typically a hospital or school] projects (the “MIM PQQ”). Under the heading ‘Exclusion Grounds’, the MIM PQQ asked bidders to confirm among other things that neither they nor any members of their administrative, management or supervisory body has “been the subject of a conviction by final judgment for one of the reasons listed above, by a conviction rendered at the most five years ago or in which an exclusion period set out directly in the conviction continues to be applicable”.

(7) The MIM PQQ also asked bidders to confirm whether they “have entered into agreements with other economic operators aimed at distorting competition”.

(8) Finally, the MIM PQQ asked bidders to confirm that they “have not been guilty of serious misrepresentation in supplying the information required for the verification of the absence of grounds for exclusion or the fulfilment of the 20 selection criteria.

(9) Kajima and Sacyr answered ‘No’ to the above questions.

(10) On the basis of the letter of 17 May 2023 from the Director General of NHS Wales and the evidence given by Nick Wood (deputy CEO NHS Wales) to [the Senedd’s Public Accounts and Public Administration Committee], the reason for answering ‘No’ appears to be that “there are no final binding judgments” in the above infringement decisions/convictions against Kajima and Sacyr because they are under appeal.

(11) NHS Wales and Velindre verified procedural information on the infringement decisions/convictions in the course of the Procurement, accepted the ‘No’ answers and concluded that there was no change in circumstances which would result in Acorn failing either the Criminal Conviction Ground or Competition Ground.

(12) NHS Wales referred in its letter of 30 May 2024 to legal advice received that it was appropriate to answer ‘No’ to the above questions on the basis that the cases against the companies had not been finalised. There is reference in that letter also to the companies being asked to provide evidence of self-cleaning [which they purge themselves of criminality], but no detail is provided of what action has since been taken. However, the letter from NHS Wales of 17 May 2023 indicates that a process was then underway as to the assessment of self-cleaning information.

‘Manifest errors’

He continued: “In summary, my view, based on the limited information available, is that there are reasonably good arguments that Velindre/NHS Wales have made manifest errors and acted in breach of their duties under the Public Contracts Regulations 2015 (the “Regulations”) in concluding and/or relying on the conclusion that there has been no ‘final binding judgment’ in relation to both the Competition Ground and the Criminal Conviction Ground.

“Those errors appear to have led to their failure to conduct further investigations and, in particular, require evidence of self-cleaning before making a final decision as to eligibility and awarding the Contract to Acorn in late July 2022. The process followed as to the assessment of the self-cleaning actions offered by Acorn since contract award is unclear and clarification should be sought. Once that information is supplied, it is possible that this could give rise to a separate cause of action under the Regulations.

“As regards the Competition Ground: (1) Regulation 57(8)(d) of the Regulations provides a discretionary ground for exclusion where the “contracting authority has sufficiently plausible indications to conclude that the economic operator has entered into agreements with other economic operators aimed at distorting competition.”

(2) Neither the EU Directive on which the Regulations are based nor regulation 57(8)(d) of the Regulations nor the MIM PQQ require a “final judgment” in relation to the Competition Ground. The current UK Government guidance … states in the FAQs (explaining what sufficiently plausible indications means): “the use of this term indicates that definitive evidence of collusion is not required for the exclusion to apply. Although a conviction would clearly be sufficient evidence it is not required. For example, depending on the circumstances, a decision by a regulatory body such as the Competitions and Markets Authority (CMA) finding a company to have restricted, distorted or prevented competition may amount to a ‘sufficiently plausible indication.’

(3) I understand that NHS Wales/Velindre were aware of the Kajima conviction in Japan and the Spanish infringement decision for Sacyr (or at least the investigation) before contract award. There appear to have been “sufficiently plausible indications” under Regulation 57(8)(d) and Velindre/NHS Wales were wrong, in my view, to rely on the fact that appeals had been or were to be lodged. While Sacyr arguably did not need to declare the 2018 competition infringement of its Portuguese affiliate, it knew before June/July 2021 when it answered ‘No’ in the PQQ that it had been the subject of a formal investigation by the Spanish competition authority (“CNMC”) for bid rigging since October 2018.

(4) The failure to answer this question as a ‘Yes’ may also have been a serious misrepresentation which gives grounds for exclusion under Regulation 57(8)(h) of the Regulations and the Misrepresentation Ground, though this may depend on what supplementary information was provided by each of Sacyr and Kajima (if any) on the infringement investigation/decision/convictions and appeals at the time of completing the PQQ.

“(5) It is possible that further investigations and undertakings to provide specific self-cleaning actions might have been sufficient to give Velindre and NHS Wales a justification for deciding not to disqualify Acorn despite the lack of declaration prior to the award decision in late July 2022. I note, in this regard, that it is stated in the 17 May 2023 letter that Sacyr provided information on the competition decision and appeal at the same time as its PQQ declaration and that self-cleaning action would be assessed prior to financial close.

“The statement that information was provided on the decision at PQQ stage (July 2021) seems at odds with the fact that the Spanish infringement decision was not taken until July 2022 and clarification should be obtained. There is no indication that Kajima made any voluntary disclosures. It is also unclear from the documents that I have seen as to what self-cleaning was ultimately offered by Sacyr and Kajima and what process was followed by NHS Wales/Velindre in becoming satisfied with such offers prior to financial close.

(6) In any event, it appears that no consideration was given by NHS Wales/Velindre prior to contract award to its discretion to exclude Acorn on the Competition Ground because they considered (wrongly in my view) that it was appropriate for Acorn to say ‘No’ to the relevant question. It may be difficult for NHS Wales/Velindre to demonstrate (eg in any proceedings brought under the Regulations) the counterfactual that, had they put their mind to this, they would have elected not to exclude Acorn prior to contract award.

“This is because any investigations conducted and self-cleaning action accepted by the contracting authority in lieu of exclusion after announcing the contract award decision may be vulnerable to accusations of apparent bias. It also remains unclear whether a robust process was followed to assess self-cleaning prior to financial close. Explanations as to the process followed and conclusions reached should be sought.”

Regulations

In addition Mr Taylor quotes other parts of the regulations, claiming they back his view that they had been broken.

His advice concludes: “I have not seen the contractual documentation but there ought, in accordance with regulation 73(1)(b) of the Regulations, be provision for early termination of the Contract in the event that it is found that the contractor ought to have been excluded from the Procurement on the basis of a mandatory grounds for exclusion. This would enable and may require termination of the Contract in the event of a finding that the Criminal Conviction Ground is satisfied, unless there is sufficient evidence of self-cleaning or the exception in regulation 57(6) applies (overriding reasons relating to the public interest).”

Due diligence

A spokesperson for Velindre University NHS Trust responded: “The procurement process for the new Velindre Cancer Centre (nVCC) project was undertaken in line with procurement law, UK and Welsh Government policy and all required due diligence was undertaken.

“A recent Audit Wales report examining decision-making on the nVCC concluded that the Trust followed due process, was well governed and arrived at sound decisions. Specifically relating to the procurement exercise, Audit Wales stated that: “The procurement process followed the regulations in place at the time, informed by extensive legal advice” and that “The Trust followed legal advice and took appropriate steps in response to concerns about anti-competitive practices that emerged after ACORN’s appointment.” The full report is available here.

“The nVCC is scheduled to open spring 2027 and will deliver better outcomes through world-class cancer treatment, enhanced diagnostic capability and greater access to innovation, training and research. The nVCC will improve access to clinical trials, offer cutting-edge treatment with expanded clinical capacity helping our patients receive better care now and in the future.

“The nVCC is key in Velindre’s fundamental shift towards delivering care in the right place – combining a state-of-the-art specialist cancer centre with an expanded network of regional assets and working with a wide range of partners across South East Wales.”

The spokesperson added that the advice was nearly two years old and pre-dated lots of the scrutiny mentioned in the Trust’s statement.

Simon Taylor’s full advice can be accessed via this link to Colocate Velindre’s blog.