Court approves lifting of automatic suspension in procurement challenge

On 13 March the High Court handed down a judgment - Boxxe Limited -v- The Secretary of State for Justice - pursuant to regulation 96 of the Public Contracts Regulations 2015 (PCR) to lift an automatic suspension (in place pursuant to regulation 95(1) PCR) in relation to a mini-competition for a call-off contract relating to the provision of a c £30 million contract for digital and audio-visual equipment (AV) for use by the Courts and Tribunals Service.

The application was resisted by the claimant, Boxxe Limited (Boxxe), the unsuccessful tenderer.

In summary the court held that damages would be an adequate remedy for Boxxe, and therefore the automatic suspension should be lifted, but that damages would not be an adequate remedy for the Secretary of State (the Defendant), on public interest grounds, and on that basis the balance of convenience favoured the lifting of the suspension. 

Background

In August 2022 the Defendant issued an ITT for a call off contract for the AV. On 13 December 2022 the Defendant decided to award the contract to Specialist Computer Centres Plc (SCC).  The decision was notified to Boxxe, together with feedback, on the same date.  

Boxxe claimed that, on the Defendants interpretation and application of the PCR, the contract was awarded to SCC not because SCC was the most economically advantageous tender (MEAT), but rather as a result of what it described as an ‘arithmetic quirk’ within the pricing model (around the provision of storage services under the contract), which lead to the contract being awarded to a bid that was over £1 million higher than Boxxe’s own bid, without, it said, any rationale. 

The claim was issued on 12 January 2023 and was set over 7 grounds, summarised as follows:

1. SCC’s bid was non-compliant, in that it failed to comply with the requirement to provide a substantive storage cost and/or involved price manipulation. Boxxe argued that on account of this, the Defendant was required to disqualify the bid and breached its duty by failing to do so;
2. described as ‘undisclosed evaluation criteria’, Boxxe alleged that the pricing formula ought to have been applied to all of the bids equally, with all bids (for storage) being scored 0, thereby levelling the playing field;
3. the Defendant failed to award the contract to the MEAT, but instead awarded the contract to the higher priced bid, as a result of the manipulation of the scoring; 
4. the Defendant manifestly erred in failing to award the contract to MEAT;
5. SSC’s bid was an ‘abnormally low tender’, and the Defendant failed to conclude this was the case as it would have done if the tender had been properly investigated. SCC’s bid should have been dismissed on the grounds of being non-compliant.
6. there was unequal treatment on account of a requirement for Boxxe to provide a price for each element of its bid, even where the costs were notional only, and SCC was not required to do the same; and 
7. the Defendant erred in including in the evaluation HDMCI to HDCI converters, which on Boxxe’s design would be unnecessary.  

The Defendant resisted on each of the grounds.  It also argued that the claim was brought outside the 30 day limitation period (imposed under regulation 92 PCR), on the basis that the day the decision was notified on the portal was day 1 for the purposes of limitation.

In coming to its conclusions the court applied the tests as summarised in a similar context in Camelot UK Lotteries Ltd -v- The Gambling Commission [2022] EWHC 1664 (TCC) (29 June 2022), that is: 

1. is there a serious issue to be tried?;
2. if so, would damages be an adequate remedy for Boxxe if the suspension were lifted and they succeeded at trial i.e.; is it just in all the circumstances that Boxxe should be confined to a remedy in damages?;
3. if not, would damages be an adequate remedy for the Defendant if the suspension remained in place and it succeeded at trial? And;
4. where there is doubt as to the adequacy of damages for either of the parties, which course of action is likely to carry the least risk of injustice if it transpires that it was wrong, that is, where does the balance of convenience lie?

Outcome

The court found that the course of action which is likely to carry the least risk of injustice was to lift the automatic suspension, where:

• damages will be an adequate remedy for Boxxe if it succeeds at trail; 
• if the suspension is not lifted, with or without an expedited trial, the Defendant will sustain losses caused by the ongoing delays which are real, and which cannot be compensated for by damages;
• recognising, it is correct that the public interest point goes in both directions, that is both for the implementation of the competition as planned and as soon as possible, but also for the Defendant not overpaying for those services by reason (if Boxxe is right) of a flawed procurement process; and
• SCC will be impacted adversely. 

Commentary

The case provides further important guidance on the legal principles applicable to applications to lift automatic suspensions in procurement disputes. 

This includes guidance on when damages are an adequate remedy for claimants, such that a suspension should be lifted, even if  speedy trial can be accommodated (see also the recent Braceurself decision Braceurself Ltd -v- NHS England [2022] EWHC 1532 (TCC) (20 June 2022), which is now subject to appeal), and also that the interests of a sub-contractor should not be taken into account when considering the adequacy of damages for claimants, even where, as in this case, Boxxe’s own claimed loss was relatively modest, but the impact on its subcontractor was significant. This will no doubt provide comfort to contracting authorities but is likely to have the opposite impact on bidders and suppliers, particularly in light of the high threshold and strict legal tests which must be met for a successful damages claim in a procurement challenge.

The case also provides further commentary on the correct approach for the calculation of the limitation period in procurement disputes, including the line of authority supporting the argument that the date of knowledge should be included in the limitation period, which given, the strict 30-day period for procurement challenges, will be of particular interest to bidders and contracting authorities alike. The issue will be left for fuller argument on a future strike out application (which has already issued).

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