Council expected to pay damages after conducting flawed procurement process

Out-Law News | 31 Jul 2015 | 4:20 pm | 2 min. read

Milton Keynes Council is expected to have to pay damages to a business that lost out on a contract the local authority tendered, the High Court in London has said.

Mr Justice Coulson said that Woods Building Services (Woods) was entitled to damages after losing out on the contract on the basis of a flawed procurement run by Milton Keynes Council.

Woods had also asked the judge to award it the contract that it had lost out on as a result of the mistakes, but Mr Justice Coulson ruled it would be "inappropriate" to do so.

"Woods were right to challenge the procurement and, all other things being equal, they would have been awarded the contract," Mr Justice Coulson said in his judgment. "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."

Public procurement law expert Christopher Murray of Pinsent Masons, the law firm behind Out-Law.com, said that it was unusual for legal challenges brought under public procurement legislation to reach a hearing on remedies.

"This is the first time, outside the context of a framework agreement situation, where a judge in England and Wales has considered whether to award a contract to a claimant under the 2006 Public Contract Regulations," Murray said. "It is extremely rare for public procurement cases to reach the stage where a judicial decision on remedies is made, and there have only been a handful of cases where an award of damages has been ordered."

Woods must wait until Milton Keynes Council has "re-run…the procurement exercise" for the asbestos removal contract before the precise amount of damages it is entitled to will be set, Mr Justice Coulson said.

Earlier this summer, Mr Justice Coulson set aside Milton Keynes Council's decision to award a contract for asbestos removal to European Asbestos Services (EAS). He found that the authority had made “a number of manifest errors” and breaches of equality and transparency requirements under public procurement rules. It was the first time a judge in an English court had set aside a public body’s contract award decision under the 2006 Public Contract Regulations.

Unsuccessful bidder Woods had challenged the initial award decision. In hearing its case, Mr Justice Coulson determined that Milton Keynes Council's evaluation of eight out of the 12 award criteria had been unlawful. After making adjustments to the evaluation, it was determined that Woods had "provided the best tender", according to the most recent judgment in the case.

Following that judgment Woods asked the High Court to order Milton Keynes Council to award the contract to it. However, that request was rejected.

Mr Justice Coulson said 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".

"In principle, it might be open to the Court to order a mandatory injunction requiring the Council to enter into a contract with Woods," the judge said. "But it is trite law that a mandatory injunction, which would here require the Council to enter into a contract which would last for many years, will only rarely be granted."

"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," he said.

Mr Justice Coulson cited a number of reasons for not awarding Woods the contract by way of remedy, including stating that it would have been wrong to award the contract to Woods after determining that the procurement process had been flawed.