Judge orders damages and not award of contract after flawed tender

A High Court judge has decided that a council which ran a “fundamentally flawed” tender evaluation process should be required to pay the claimant damages rather award it the contract.

Earlier this month Mr Justice Coulson issued a ruling on liability in which he concluded that Milton Keynes Council had made a number of manifest errors in relation to a proposed £10m framework agreement for asbestos removal and reinstatement services.

The judge’s adjustments significantly reduced the score awarded to the successful bidder, EAS, and marginally increased the score awarded to the incumbent, Woods. It was agreed that this meant that Woods, the claimant, had provided the best tender.

In his ruling on remedy Mr Justice Coulson set aside the council’s original decision and ordered that its records should be amended by reference to his adjusted scores. He also formally declared that the Woods tender was the most economically advantageous tender provided to the council.

The claimant argued that Milton Keynes should also be ordered to award it the contract. In the alternative Woods submitted that it was entitled to an order for damages, to be assessed if they could not agreed.

The council disputed both applications.

Mr Justice Coulson concluded that it would be inappropriate to order Milton Keynes to enter into a contract with Woods. He gave five reasons:

• Such an order formed no part of Woods’ pleaded case. “It would be wrong to grant Woods a remedy which they had not formally claimed.”
• Regulation 47I of the Public Contracts Regulations 2006, which sets out the remedies available to the successful claimant where the underlying contract has not been entered into, provided three possible options, including the setting aside of the decision and amending the record. The Regulation did not identify as a remedy the ordering of the contracting authority to enter into a contract with the successful claimant.
• It was trite law that a mandatory injunction, which in this case would require the council to enter into a contract lasting many years, would only rarely be granted. At least three of the reasons identified by Lord Hoffmann in Co-Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 applied here: the need for constant supervision, the expense of enforcement and the need for precision. “I conclude that requiring A to contract with B, in respect of a contract which might last for years, would be an exceptional order for the court to make…..Whilst I do not suggest that a mandatory injunction of the type which they seek would never be granted in a procurement case, I am satisfied that it would only be granted in exceptional circumstances, and there are no such circumstances here.” [Mr Justice Coulson’s emphasis]
• A consideration of the balance of convenience led to the conclusion that such an order would be inappropriate. “I have found that, because of the mistakes made by the council, the tender evaluation process was flawed. It must follow, therefore, that any success that Woods might now have achieved has to be tempered by the knowledge that the entire process was unsatisfactory. It would, I think, be inappropriate to award Woods a contract arising out of a process which I have found to be flawed.”
• Damages were an adequate remedy in this case. “Sometimes in procurement cases it is difficult to say that damages are an adequate remedy, particularly at the outset (at the suspension/interlocutory injunction stage). But on the facts of the present case, having heard the issues through to Judgment, I am in no doubt that Woods could, if they needed to, identify both their wasted costs and their loss of profit arising from the flawed procurement. Because damages are an adequate remedy, that is another reason why it would be wrong in principle to grant an injunction.”

Mr Justice Coulson refused to accept Milton Keynes’ submission that the situation was analogous to a voluntary termination of the procurement and therefore there should be no order for damages.

The judge noted that the council had maintained throughout the trial that its tender evaluation process was in accordance with the Public Contracts Regulations.

“I have found that, for numerous reasons, they were in breach of the Regulations,” hje said. “Woods were right to challenge the procurement and, all other things being equal, they would have been awarded the contract. In those circumstances, it would be absurd if, having lost so badly, the council could then avoid the natural consequence of those breaches, namely an award of damages in favour of Woods.”

The judge did however refuse Woods’ request that he stipulate that the damages would be in respect of Woods’ loss of profit.

“I cannot do that: there has been no formulation of the damages claim, and there is currently no evidence on which the damages claim could be assessed,” he said.

“There may or may not be a loss of profit. There may be wasted costs as well. Moreover, as I pointed out to counsel, the assessment of damages will have to await the re-run of the procurement exercise, because it is perfectly possible that this could affect the quantum of any claim made by Woods for loss of profit."

Mr Justice Coulson therefore ordered that Woods were entitled to damages as a result of his substantive judgment, with the quantum of those damages to be assessed at an appropriate time.



Joseph Barrett of 11KBW appeared for the claimant, Woods, instructed by Salvus Law.

In a statement on its website, 11KBW said: “This is the first ever decision in which an English Court has held that a contract award decision must be set aside pursuant to the PCR 2006 and/or analysed what remedy a successful claimant in such a claim is entitled to as a matter of EU and English domestic law.”