Summary
This case is an important reminder that where the outcome of a procurement is marginal, even a minor breach of duty by the contracting authority can have big repercussions. It is also an important reminder that even if a bidder is able to successfully establish a breach by a contracting authority, that breach must be held to be "sufficiently serious" in order to warrant an award of damages to the bidder.
Although all bar one of the unsuccessful bidder's claims were rejected by the Court, the claimant ("Braceurself") was able to successfully argue that the contracting authority, NHS England ("NHSE"), had made a manifest error in its evaluation of one of Braceurself's responses to the Invitation to Tender ("ITT"). The Court was satisfied that but for this manifest error Braceurself would have been awarded a higher score for that question, which would have rendered it the successful bidder in the procurement.
This case also serves as a helpful example of the principles that the Court will follow in determining a complaint of manifest error against a contracting authority.
For those representing unsuccessful bidders, this shows that casting a wide net and challenging a decision on a number of bases can be a worthwhile tactic if a minor alteration to the scoring would have had a decisive impact on the outcome.
For contracting authorities, this serves as an unfortunate reminder that, in an otherwise well run and carefully planned procurement (as the judge, Alexander Nissen KC, admitted), evaluators must ensure they have correctly understood a bidder's response and have not taken irrelevant considerations into account in awarding a score.
In addition, Mr. Nissen KC also confirmed the approach that the Court should take when faced with claims of manifest error against a contracting authority.
Mr. Nissen KC adopted the approach taken by Fraser J in Bechtel Ltd v High Speed Two (HS2) Ltd [2021] 195 Con LR 124; [2021] EWHC 458, that where the Court is asked to consider evaluations which have been undertaken, only manifestly erroneous conclusions or scores should be reconsidered. The test for manifest error is a high hurdle (broadly equivalent to the concept of irrationality) and the Court's role is not to reconsider and remark every evaluation, but to review the decision being challenged to see whether a manifest error has been made. Mr. Nissen KC also accepted that contracting authorities should be afforded a 'margin of appreciation' by the Court when making a determination of manifest error (but stated this is not relevant in determining whether a straightforward factual misunderstanding has taken place).
The claim
The case arose from a procurement run by NHSE for the provision of orthodontic services in East Hampshire. The competition comprised of two bidders: Braceurself (the incumbent) and another bidder. Braceurself's bid was unsuccessful, with a score of 80.25%, with the successful bidder being awarded a score of 82.5%. The contract was let to the winning bidder, following which Braceurself brought a claim for relief (including damages) pursuant to the Public Contracts Regulations 2015.
The Court ordered a split trial, whereby the Court would first determine issues of liability including the seriousness of any breach by NHSE.
The main issues in the case turned on the interpretation of the 'Service Specification' included as part of the ITT, and in particular the sections relating to accessibility for patients with a disability, the number of service days required and emergency treatment. This included whether the ITT allowed bidders to make reasonable adjustments for disabled patients under the Equality Act 2010 ("Equality Act").
Braceurself brought a number of claims in respect of these sections arguing that in its award of the contract to the winning bidder NHSE had used undisclosed award criteria and / or breached the principle of transparency and / or breached the principle of equal treatment.
Braceurself also raised a number of claims that NHSE had made manifest errors in its evaluation of Braceurself's and the winning bidder's responses to specific questions in the ITT, which would have otherwise resulted in a higher score being awarded to Braceurself and / or a lower score being awarded to the winning bidder.
Mr. Nissen KC rejected Braceurself's claims that NHSE had used undisclosed award criteria in its evaluation of the sections in question or that it had breached the principles of transparency or equal treatment. He reiterated that the Court's role is to construe the tender documentation with regard to how it would be understood by the 'reasonably well-informed and normally diligent tenderer' ("RWIND tenderer"). In this case the RWIND tenderer would have understood the relevant sections of the ITT as the winning bidder had done (including being permitted to make reasonable adjustments pursuant to the Equality Act) and would have framed its bid accordingly.
However, whilst Mr. Nissen KC also rejected the remainder of Braceurself's claims regarding manifest errors by NHSE in its evaluation of the bids, he found that the evaluators had misunderstood Braceurself's answer to a question regarding accessibility requirements for disabled patients. He held that two aspects of Braceurself's response had been misunderstood by NHSE's evaluators, relating to the proposals for stair access and to provide alternative premises. These errors had clearly caused Braceurself's score for this question to be marked down from a 4 to a 3, and accordingly it should have received a 4.
The impact of this scoring would have increased Braceurself's bid by 2.5%, which would have meant it was the successful bidder in the procurement. Mr. Nissen KC admitted that it was unfortunate that by reason of the closeness of the two bidders' scores, NHSE's manifest error in respect of one question had such drastic consequences.
The Court deferred a decision on whether the breach had been sufficiently serious as to merit the award of 'Francovich' damages for a further hearing.
Damages hearing
At the subsequent damages hearing, the Court, applying the eight factors identified in R. v Secretary of State for Transport Ex p. Factortame Ltd (No. 5), found that the breach was not sufficiently serious to warrant an award of damages. Those factors include the importance of the principle which has been breached, the degree of excusability of an error of law, the state of mind of the infringer and the persons affected by the breach.
Braceurself had argued that as an individual breach had altered the outcome of the competition, it was in and of itself a sufficiently serious breach on the facts of this case.
However, the court did not accept this argument and noted that the phrase "sufficiently serious" indicates that a fairly high threshold must be passed. Having regard to all the factors, Mr. Nissen KC held that the breach did not meet this threshold. Mr. Nissen's reasons included the fact that this was a single breach in a very close competition, the fact that the evaluators' two errors were at the excusable end of the spectrum and were minor, the fact that the breach was inadvertent and not deliberate, and the fact that the procurement itself was carefully planned and well organized.
Accordingly, the breach was held not to be sufficiently serious to entitle to Braceurself to a remedy in damages.
Update: following a further hearing on 7 December 2022, Mr. Nissen KC granted Braceurself permission to appeal the damages judgment to the Court of Appeal regarding the question of whether the breach was sufficiently serious.
