Regulatory and compliance

NHS procurement breach not 'sufficiently serious' to award damages

Published on 28th Sep 2022

High Court decision raises prospect for claimants of being denied damages even if they succeed in a liability trial

An important new judgment has been handed down by the High Court in relation to the question of whether a breach of the Public Contracts Regulations 2015 is "sufficiently serious" to warrant an award of damages.

In Braceurself Limited v NHS England [2022] , the claimant was successful in arguing that it should have been awarded a public contract worth £2.5m for the provision of orthodontic services, after the authority wrongly mis-scored one element of its bid. The authority mistook the claimant's proposal to use a "stair climber" with a stair lift, which are not the same. 

Due to this misunderstanding, the authority awarded a score of "3" instead of a "4" that it should have given had it properly understood the bid and not confused a stair climber with a stair lift. The scores were so close that, had the error not occurred, the claimant would have scored 0.25% higher than the winning bidder and been awarded the contract.  

'Sufficiently serious'?

The latest judgment considered whether the claimant should be awarded damages as a result of the breach. Since the 2016 case of Energy Solutions EU Limited v Nuclear Decommissioning Authority, the court has held that damages may only be awarded where a breach is "sufficiently serious".  Since that judgement, the general view has been that any breach which affects the outcome of the procurement would meet this test. 

The recent judgment is a stark departure from that position. The court held that NHS England's breach in misunderstanding the claimant's bid was not sufficiently serious to warrant an award of damages; even though it accepted that the claimant should have been awarded the contract.

The court's reasoning for holding that the breach was not sufficiently serious was that:

  • The breach arose due to a single scoring error in a close competition.
  • The error happened to have an impact on the outcome because scores were so close, and not because the error was otherwise significant.
  • The error was essentially a misunderstanding of the claimant's bid and was held to be at the "minor and excusable end of the spectrum".
  • The breach was an inadvertent error and occurred in good faith, rather than being deliberate.
  • The subject matter of the mis-scored question related to maximising access to publicly funded orthodontic services for those who have a disability, so was for a "laudable" purpose.
  • Overall, the procurement was carefully planned and well organised 
  • The scores were so close that the public could be said to be equally served by either bidder, so there was no material impact on the wider public. Similarly, the impact of losing the contract on the claimant was significant but "not existential" (that is, the business would not be forced to cease operations)
  • The case can be distinguished from Energy Solutions, which was a multiple-breach case concerning a national multi-billion pound contract for nuclear decommissioning.

Osborne Clarke comment 

This is a significant judgment which will feel particularly galling for claimants who may now face the prospect of being denied damages even if they succeed in a liability trial. Claimants can hope that the relatively long list of factors that influenced the judge's decision may make it easier to distinguish future cases from this decision, although close-scoring procurements are often not a rarity in public procurements. Authorities will no doubt welcome the judge's view that minor errors made in an otherwise carefully planned and well-organised procurement may be "forgiven", so to speak.

Beyond this, the case could have important strategic ramifications for both authorities and suppliers in relation to applying to lift the automatic suspension. For suppliers, it is often the case that an automatic suspension is lifted on the basis that damages are found to be "adequate" for the claimant supplier. If the claimant is later denied damages due to the breach not being sufficiently serious, this could leave that claimant without an effective remedy.

Another element of the test applied when lifting the automatic suspension is that there must be a "serious issue to be tried". This point is typically conceded by defendant authorities as it is generally considered to be met in most cases. But this new judgment may mean that the point is contested more regularly in an attempt to follow in the footsteps of Braceurself v NHS England.  
 

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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