Naturally, this is of significant interest as many have assumed that this sort of error would give an “automatic” right of damages to a bidder. Read the judgement here.
Background – the High Court Judgement:
A procurement challenge was brought by Braceurself against NHS England concerning a 7-year contract for the provision of orthodontic services in East Hampshire. Braceurself sought damages on account of NHS England breaching the Public Contracts Regulations 2015. These regulations very closely mirror the Public Contracts (Scotland) Regulations 2015.
Braceurself was the incumbent provider and lost the competition to the only other bidder by 2.25%.
The court determined that there was a manifest error by NHS England in evaluating Braceurself’s tender, finding that NHS England had misinterpreted Braceurself’s response to a question on accessibility.
Braceurself argued that: but for that manifest error, Braceurself would have won the contract, and as such the breach was sufficiently serious and they were entitled to an award of damages. This, however, was rejected by the High Court with reference to “Francovich conditions”. These are conditions relevant to ascertaining if a breach is sufficiently serious so as to permit damages. These conditions were set out in the Factortame case, a case concerning fishing (rather than matters of procurement). The conditions include the:
- importance of the principle which has been breached.
- clarity and precision of the rule breached.
- degree of excusability of an error of law
- existence of any relevant judgement on the point
- state of the mind of the infringer (whether deliberate or inadvertent)
- behaviour of the infringer after it has become evident that an infringement has occurred.
- persons affected by the breach, and
- position taken by one of the Community institutions in the matter.
The Court of Appeal judgement:
The primary issue at the Court of Appeal was in determining the application of the Francovich principle in the context of procurement cases and the extent to which a failure to award a contract to the most economically advantageous tender renders a breach sufficiently serious.
The Court of Appeal upheld the High Court’s decision that there was not a sufficiently serious breach of the Regulations to justify an award of Francovich damages. It concluded that the High Court judge had carried out an appropriate examination of and balancing exercise relevant to the conditions, including considering the following, in reaching its decision:
- It was a single breach at the excusable end of the spectrum. Amongst the plethora of detail, the evaluators made two errors in understanding the claimant's bid. Those errors were minor.
- The procurement exercise had otherwise been well-organised.
- It was relevant that the breach was inadvertent, and self-evidently occurred in good faith; and
- The scores had been extremely close, and the broader public would have been almost equally served by either practice. The breach had a very low impact on wider public access to orthodontic treatment in the area.
As an interesting further point
The Court of Appeal also considered that NHS England had not actually made a manifest error in its scoring in any event.
So, at one level, the two cases together give a very detailed summary of the law on how to establish whether a procurement breach is “sufficiently serious” to merit damages against a context where, ultimately, the Court of Appeal considered there was not in any event a manifest error in the scoring!
Comment
This case has attracted significant interest. In particular, contracting authorities are very interested that an inadvertent breach, even where leading to award to a party that ought not to have won, will not “automatically” lead to a right in damages. In turn, this is leading to other ripples and commentary on the implications for the legal tests used when considering if the automatic suspension on entering into a contract, pursuant to raising of procurement proceedings, ought to be lifted. These tests focus on the adequacy/availability of damages as an alternative remedy, with this case casting a different light on the availability of such damages.
