Damages in procurement claims – what is sufficiently serious?

To justify an award in damages, a breach of the procurement regulations must be considered “sufficiently serious”. Until recently, many assumed that a breach would be “sufficiently serious” wherever the outcome was altered because of that breach¹.  Two cases towards the end of 2022 addressed in more detail how the “sufficiently serious” requirement will be construed in procurement cases going forwards. This article considers the recent cases of Braceurself Limited v NHS England [2022] EWHC 2348 (TCC) and Bromcom Computers plc v United Learning Trust and another [2022] EWHC 3262 (TCC) and considers what these decisions mean for those involved in procurement litigation.

 

Braceurself Limited v NHS England [2022] EWHC 2348 (TCC)

This case concerned NHS England’s procurement for the provision of orthodontic services in East Hampshire in February 2019. Braceurself was unsuccessful in its bid, losing by a margin of 2.25% and argued that the NHS had made a manifest error in its determination of the bids. The focus was on the scoring of one question – which concerned Clinical and Service Delivery. One of the evaluators had misunderstood Braceurself’s proposal to use a “stair climber” – they had thought this meant that a stair lift would be used. This misunderstanding was shared during the moderation meeting and as a result the other evaluators agreed that a stair lift would be used and lowered their score in respect of this question. This meant that Braceurself scored a 3 as opposed to a 4. The court deemed this to be a manifest error and, upon rescoring the bids, found that Braceurself would have been the winning bidder.

Braceurself argued that the breach altered the outcome of the procurement and as such was “sufficiently serious” to result in an award of damages. However, the court found that this was not the case when applying the Factortame principles (referenced in the Energy Solutions v NDA case). The judge ultimately found that the breach was not “sufficiently serious” to justify an award for damages.  Several factors were given for this decision:

• it was a single breach;
• the breach was minor – caused by a mere misunderstanding;
• it was inadvertent rather than deliberate and was made in good faith;
• the procurement was otherwise well organised and well planned; and
• there would be no material impact on the wider public’s access to orthodontic treatments.

 

Bromcom Computers plc v United Learning Trust and another [2022] EWHC 3262 (TCC)

This case concerned the award of a GBP2 million contract from United Learning Trust for the supply of a cloud-based Management Information System to 57 schools. Bromcom were unsuccessful in their bid, and the contract was awarded to Arbor Education Partners Limited. Bromcom alleged multiple breaches and argued that the breaches were sufficiently serious to justify an award of damages.

Finding in favour of Bromcom, the court held that the breaches identified were “sufficiently serious”. The judge noted at paragraph 384 that “[Braceurself] was far removed from the multiple breaches concerned with a multi-billion-pound contract for nuclear decommissioning which was the subject of Energy Solutions.”

When considering the Factortame principles the courts view was that the decision is dependent on the facts of each case and as such, a balancing exercise should be carried out.

Several reasons were given as to why the breaches in this case were “sufficiently serious”, including:

• there had been several breaches – for example the contracting authority had not carried out a proper moderation, the process had not been transparent and had not neutralised incumbent advantage in a situation where such an approach was possible;
• when considering the counterfactual, the claimant would have comfortably won the contract;
• the rules broken were clear, such as the duty to give reasons; and
• the procurement could not be said to be well-run.

Furthermore, the court found that, in truth, there were no real factors in favour of UL such that the outcome of the “sufficiently serious” analysis could work in its favour.

 

Comment

Bromcom reminds us that authorities need to be diligent in their decision-making processes and emphasises the importance of good record-keeping.

Whilst Braceurself seems to provide a fallback for authorities in cases where there is one simple mistake, Bromcom reiterates the dangers of making multiple mistakes in the procurement and/or more specifically the decision-making process.

Both cases confirm that it does not always follow that, where the outcome would have been different absent a breach, the sufficiently serious condition will be met. In Bromcom, the court pointed to the facts of each case being important in assessing this question and that there will be a need for a balancing exercise to be carried out. As such, there are still question marks over when a claimant will be able to establish that breaches made by are contracting authority are sufficiently serious and it will be fact dependent each time. Until there are more cases on this point it is unlikely that contracting authorities and bidders will have more clarity on this point. We might therefore start to see arguments on the hurdle to meet the “sufficiently serious” test during applications to lift automatic suspensions – should courts consider whether damages will be available to a claimant when determining whether it is a suitable alternative to the contract? The alternative is that a claimant may be denied the remedy of pursuing the contract itself at an automatic suspension hearing because damages are found to be an adequate remedy only for the court to subsequently find at trial that the breaches established, which may have altered the result of the procurement, were not sufficiently serious to entitle the claimant to damages after all.

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¹Energy Solutions v NDA [2016] EWHC 3326 (TCC) at [72]. In Nuclear Decommissioning Authority v Energy Solutions EU Ltd (now called ATK Energy EU Ltd) [2017] UKSC 34, the Supreme Court held that a claimant was only entitled to damages where the breach was sufficiently serious to merit an award of damages. There was no further guidance on the application but the case referred to the Factortame principles.