Braceurself Limited v NHS England: A procurement law update

The High Court has recently delivered an important judgment in the case of Braceurself Limited v NHS England [2022] EWHC 2348 (TCC). The Court considered whether a breach of the Public Contracts Regulations 2015 by the contracting authority was 'sufficiently serious' to warrant an award of damages in favour of the bidder.

The Court followed an earlier decision made by the Supreme Court in 2016 which said that damages can only be awarded if the breach of the PCRs is 'sufficiently serious'. Generally, the presumption since then has been that a breach that affects the outcome of the procurement would be sufficiently serious.

• NHSE had made a manifest error when evaluating Braceurself's bid.

• Had Braceurself's tender been correctly evaluated, Braceurself would have been the successful bidder (the contract having been successfully awarded to a competitor).

The breach was not 'sufficiently serious' and, as such, Braceurself was not entitled to a damages award.

Background

Braceurself and Orthodontics by Eva Petersfield & Alton Ltd (PAL) were rival bidders for an orthodontic supply contract from NHSE.

The bidding was close. PAL received a score of 82.5% and subsequently won the bid. Braceurself's bid received a score of 80.25%.

However, Braceurself alleged that NHSE had misunderstood the factual proposals set out in its tender relating to the accessibility of its premises (NHSE having confused a 'stair climber' with a 'stair lift' and also having misunderstood a reference to the circumstances in which Braceurself would offer alternative premises). As such, Braceurself alleged that NSHE had incorrectly scored its bid too low.    

At first, Braceurself sought to set the award to one side on the basis that it should have been awarded the contract instead. However, the automatic suspension was lifted and PAL was awarded the contract. Braceurself therefore made a claim for damages in the sum of £4.7 million for loss of profit, bid costs of £26,500 and loss of goodwill (which was not separately quantified).

Decision

The Court applied the established test in the Francovich case in order to assess whether the errors on NHSE's part were 'sufficiently serious'.  This meant that the Court considered factors such as the importance of the principle that was breached, the clarity and precision of the rule that was breached, the degree of excusability for the error, the state of mind of the infringer and the persons affected by the breach. Importantly, the Court reasoned as follows:

• The breach was clear and arose out of simple facts. The breach had a powerful outcome because the tender process was so close.

• It was understandable how the error (which was a minor misunderstanding) was made by NHSE (and was therefore at the excusable end of the spectrum).

• The breach was inadvertent and not deliberate. There was no bad faith on the part of NHSE (NHSE having run a "carefully planned and well organised" procurement process and having also conducted the process in aid of a laudable purpose i.e. publicly funded orthodontic services for those who have a disability).

• Whilst the impact of the breach on Braceurself was significant (it did not win the bid as a result), the ultimate impact on it was not existential. There was also no (or no material), impact on access to orthodontic treatment for the wider public.

Overall, whilst the Court had found that NHSE had made a manifest error in the procurement process which had impacted the outcome of the evaluation scores, the breach was not sufficiently serious so as to award damages to Braceurself.  The Court also reasoned that a breach causing a minor change in a bid score can be distinguished from a breach (or series of breaches) where the score is increased by something significantly higher.

Comment

This is an important judgment. The Court has made it clear that establishing liability does not automatically mean that the breach is serious enough to justify an award of damages.  It means though that unsuccessful bidders may find themselves in a position where they have no right to any remedy even though a clear mistake has been made in a procurement process. Of course, as the Court noted, there are varying degrees of breach and the Braceurself case was focussed on a minor breach in a well-run process which only made a minor % change to the overall scoring position. The position is likely to be different if there are a series of breaches (in a not so well-run process) and/ or there is a greater impact on the overall scoring.

However, this decision may also have another broader impact particularly in relation to the test that the Courts apply when considering whether the automatic suspension should be lifted.

• The adequacy of damages is an important consideration for the Court when deciding whether or not to lift the automatic suspension. Suspensions are often lifted because damages are deemed to be an adequate remedy. Although, as we've seen from the Braceurself case, there's no guarantee that an unsuccessful bidder will actually be entitled to those damages (even though damages, in theory, would be adequate) in the event that the suspension is lifted.

• Furthermore, whether a breach is serious enough might also begin feeding into parties' positions in relation to another factor that the Court considers when assessing the automatic suspension question i.e. whether there is a serious issue to be tried.  A contracting authority might resist this point more strongly if there's a suggestion that its breach might not be sufficiently serious to justify damages.