Lancashire County Council has lost a legal ruling over privatised healthcare services in Fylde and Wyre.
The High Court case relates to a £104m contract for community health services, which the county council awarded to Virgin Care.
Blackpool Teaching Hospitals and Lancashire Care took out a legal challenge, arguing that the council had not followed procurement processes correctly.
The High Court judgement has been published, upholding the legal challenge and ordering the council to stop the process.
County Hall’s Labour leader Coun Azhar Ali condemned the way the council had handled the process, leaving itself with a sizeable legal bill for defending the court challenge.
“This is good news for the NHS and public services, but it is very disturbing that in a tender of this magnitude the highest court in the land ruled we got it wrong,” he said. “There now needs to be a root and branch review and lessons need to be learned by the county council.
“Thousands of pounds, maybe tens of thousands, have been spent on defending a decision of LCC which has now been overturned by a High Court judge.”
The 0-19 service is part of the public health service provided by LCC in Lancashire, offering children and families much-needed support from the antenatal period through to adulthood. It includes health visitors and school nurses.
It is currently provided in Fylde, Wyre and North Lancashire by Blackpool Teaching Hospitals Trust.
The tender bid for included the public health nursing service, the reception age vision screening service, the community infant feeding service and the oral health improvement service.
When the NHS trusts were invited to tender last autumn for the next five years they lost out to Virgin Care, sparking claims of “privatisation by the backdoor.”
The decision was immediately challenged by the trusts, beginning a legal fight over the council’s procurement process which ended with yesterday’s judgement by Mr Justice Stuart-Smith.
The judge decided that while the bulk of the process had been carried out correctly, the council’s records of the moderation stage fell short of the standards required.
As such “the decision of the council to award the contract to Virgin must be set aside.”
Coun Shaun Taylor, cabinet member for health and wellbeing, reacted by saying: “Although we are disappointed in the outcome of this judgement, we are reassured, with the exception of the moderation element, the county council’s procurement process was appropriate.
However, following this judgement, we accept that we cannot award the contract at this time.
“We will not be re-running the procurement or inviting new bids as only the moderation, the final step in the procurement process, was considered to be flawed. We are now considering our options.”
Virgin Care declined to comment.
The current contract with the two NHS trusts does not run out until March 2019, so LCC say there will be no disruption to services.
One of the options available to the authority will be to re-run just the moderation process - where applicants are scored on various aspects of their tender - but by a different independent panel.
If that happens then there is a chance Virgin Care could still win the contract.
When asked for a comment, a spokesman for the company said: “As we are only a bidder, I’m not sure there is anything for us to respond to from this judgement.”