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Public Contract Tendering – Not Every Breach of the Rules Justifies Damages

Where a breach of the Public Contracts Regulations 2015 results in a public contract being awarded to the wrong tenderer, is the bidder who would have succeeded but for the breach always entitled to an award of damages? In a ruling that broke new legal ground, the High Court has answered that question in the negative.

The case concerned an orthodontic practice which, by a very narrow margin, failed to win a seven-year NHS contract. In a two-horse race, its bid scored 80.25 per cent whereas the successful tenderer scored 82.5 per cent. The practice’s response was to launch proceedings against the NHS, alleging breaches of the Regulations. It sought, amongst other things, £4.7 million in damages to reflect loss of profits that it asserted it would have earned had it been awarded the contract.

Following a trial, the Court rejected all but one of the practice’s complaints. It found that the authority had made a manifest error in under-scoring the practice’s patient accessibility arrangements as ‘good’ rather than ‘excellent’. Had it not been for that error, the Court found that the practice would have won the contract by a margin of 0.25 per cent.

In finding that the breach of the Regulations was not sufficiently serious to justify an award of damages to the practice, however, the Court was generally impressed by the carefully planned and well-organised manner in which the procurement exercise was conducted. What occurred was a single breach in a very close competition which, because it was so close, happened to have a powerful impact on the outcome.

The scoring error arose because NHS evaluators misread elements of the practice’s tender. The breach was inadvertent and self-evidently occurred in good faith. The laudable purpose of scoring the rival bidders’ accessibility arrangements was to maximise disabled access to publicly funded orthodontic services.

The Court acknowledged that the practice was not awarded a contract that it should have been and may well have suffered financial loss as a result. However, the loss of the contract did not threaten to put it out of business and the breach had no impact on the wider community. The closeness of the race indicated that patients would have been almost equally well served by either bidder.

28 September 2022
Last Updated
23 October 2022