Procurement, the acquisition of goods and services, is a vital business function. From sourcing, negotiation and purchasing through to receiving, inspection and recording, a well-implemented procurement strategy can improve the quality of a business’ offering and ultimately boost revenue.
With such a direct impact on the bottom line, there is no surprise that there are often legal challenges to procurement contract awards. Businesses can learn valuable lessons from recent cases in this area.
Eircom UK v Department for Finance NI
In 2018, the Department for Finance awarded the Northern Ireland Public Shared Network Contract to BT, prompting legal action by Eircom UK. Eircom alleged that BT’s bid was abnormally low and contravened competition law through predatory pricing or margin squeeze.
- Lack of evidence
The Court found that Eircom failed to provide compelling evidence that the contract award would cause the collapse of their business. Even in the event of a collapse, damages would be an adequate remedy. Eircom UK, as part of a billion-Euro group, had the necessary resources to compete with BT. Ultimately, the court determined that the greater risk of irreparable harm lay in maintaining the suspension, allowing the Department for Finance to proceed with awarding the contract to BT.
This case has significant implications for unsuccessful tenderers seeking to argue against the removal of a suspension, as they must present convincing evidence of potential catastrophic losses. Large, well-funded entities may struggle to convince the court that losing a specific contract would irreversibly impair their competitiveness.
This case also highlights the importance of an early trial in influencing the court’s decision. If a trial can be expedited within a few months, the court is more likely to maintain the suspension. However, longer delays raise concerns of potential injustice.
Braceurself Limited v NHS England
In this case, the Claimant failed to secure a contract for orthodontic services, missing out by a mere 2.25%. The Claimant alleged that various errors and breaches of the Public Contracts Regulations 2015 adversely affected their score.
The court analysed the procurement process and identified a single error made by the Defendant, which resulted in the Claimant receiving a lower score for one question. This error accounted for a 2.5% difference in the Claimant’s overall score, constituting a breach of the duty to award the contract to the most economically advantageous tenderer and frustrating the Claimant’s efforts. Despite the Claimant arguing that the error warranted damages, the court disagreed. It considered the error to be minor rather than egregious or gross.
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