A mountain to climb? The challenge of a procurement challenge ...

We are often asked to advise authorities and tenderers alike on the process for bringing, or defending, a procurement challenge. 

It’s widely accepted (see for example, the responses to the government’s consultation on procurement law reform) that the environment is a difficult one for a tenderer who is looking to challenge a procurement decision in the courts.  Not only is there a relatively short limitation period of 30 days from the date of knowledge of the breach, but there is also a significant fee merely to issue a claim in the High Court for a claim under the Public Contracts Regulation 2015 (PCR 2015).  A recent case only emphasizes further how difficult a procurement challenge can be for tenderers – in the case we are about to discuss, the claimant was successful in its challenge, but despite this, did not qualify for a payment of damages as a result. 

We have recently written about this case - Braceurself Ltd v NHS England – which concerned a procurement for orthodontics services in the south of England. The scores were very close indeed, with the winner scoring 80.50% and the second placed bidder, Braceurself, scoring 80.25%.  The specification had required the tenderer to facilitate access for wheelchair-bound patients – and Braceurself had offered a “stair climber” – which can support a wheelchair and climb stairs without the wheelchair user needing to mobilize out of the wheelchair. The evaluators did not properly appreciate that a stair climber was different to a stair lift – which would require the user to transfer from the wheelchair to a seat – and marked Braceurself down accordingly. 

Realizing this, and encouraged by the miniscule difference in scores, Braceurself brought a challenge and was successful. It argued that NHS England’s evaluators made a “manifest error” in how they scored its bid (because they had not properly understood the solution being offered). The Court agreed and proceeded to carry out the evaluation on the correct basis; following this it was clear that Braceurself would have won the contract, had the manifest error not been made. 

However, sadly for Braceurself, this was not the end of the story.

Following the main judgment there was a second hearing to determine what remedy should be granted to Braceurself, given the breach of the PCR 2015. It can often be forgotten – even by lawyers! – that simply winning a case does not automatically entitle a claimant to an award of damages. There is a further hurdle to get over in procurement challenges – established by the UK Supreme Court in the case of EnergySolutions v Nuclear Decommissioning Authority. Applying the principle in an earlier case named Fabricom, this case says that the court will order a damages payment only where the breach can be characterized as “sufficiently serious” as to warrant it. 

This raises the immediate question “what does ‘sufficiently serious’ actually mean”? Do you measure seriousness by reference to the seriousness of the impact on the claimant? If so, at first glance it seems clear that here the impact on the claimant was serious indeed; it lost a contract, which, on a correct evaluation, it would have won. 

If, however, “sufficiently serious” is assessed on different terms, then the conclusion could be different, as happened in this case. The court ruled that the impact on the claimant is indeed one factor, but that other considerations also have to be thought about, including:

•  how excusable was the mistake made by NHS England? In particular, had there been any deliberate intent to deprive the claimant of the contract? On this point the court decided that, in general, this procurement was a well-run one, and this was a simple, one-off mistake, perhaps easily made and excused;
•  what was the impact of the loss of the contract on the claimant? Here the court noted that, unlike other cases where the impact of the loss was existential on the claimant, in this case it was a relatively small, routine contract – and that Braceurself was still in full fettle and trading as a business; and
•  where did the public interest lie? Here the court noted that there was very little to choose between either of the two tenders, which each scored similarly. Regardless of which won the contract, the experience of orthodontics patients was likely to be much the same. 

Taking those factors into account, the court decided that the single mistake here – a simple misunderstanding by evaluators of the difference between a stair lift and a stair climber – was not on balance sufficiently serious as to warrant a damages payment. 

This will be welcome news for contracting authorities and give them confidence that the court may take a lenient view on damages where the error made is simple, excusable and unintentional, and does not have a serious effect on the claimant’s business.

On the other hand, it is a bitter pill for tenderers, for whom it acts as a reminder that damages will not necessarily be automatically awarded even where a claim is successful. It perhaps amplifies the sense discussed at the start of this blog post, that the UK – with no procurement law tribunal service as yet - is rather a difficult environment for tenderers wishing to litigate.