Procurement digest: Recent court judgments hold important lessons for contracting authorities and bidders alike

The Procurement Act 2023 came into force on 24 February 2025 – and Friday 21 February saw, by some accounts, a record number of contract notices published in time to beat the deadline for publishing under the "old" Public Contracts Regulations 2015 (PCRs). It will be some time before we start to see procurement challenges under the new Act, but in the meantime two recent cases under the PCRs hold lessons for authorities and bidders that will apply to procurements going forward.

Lifting the automatic suspension: Millbrook Healthcare Limited v Devon County Council [2025] EWHC 744

If a challenge is brought during the standstill period that applies before the contract can be entered into with the winning tenderer, this will trigger the "automatic suspension".

For more on this see our blog: What do I do if…I am unhappy with a public procurement decision or process?

The automatic suspension stops the contracting authority from entering into the contract until the challenge ends or the court lifts the suspension.

Generally the contracting authority is odds-on favourite to succeed where it applies to the court to lift the suspension and allow it to award the contract while the procurement challenge plays out. One study found that contracting authorities succeed around 75% of the time in such applications. If the suspension is lifted and the public body awards the contract, but the court later holds that this was a breach of procurement law, the unsuccessful bidder's only available remedy is damages.

The questions the court will ask itself are:

• whether the person bringing the challenge has a reasonable argument that the law has been breached (a "prima facie" case) – if not, then holding up the contract while a weak case is heard is likely to be unfair on the contracting authority;
• whether damages would be adequate to compensate them if they did ultimately win – if so, then there is no need to hold up mobilisation of the new contract while the case is decided; and
• whether, in all the circumstances, the prejudice to the contracting authority from holding up the award outweighs the prejudice to the pursuer/claimant from denying them the potential remedy of winning the contract (or at least having the process set aside).

This is sometimes known as the "American Cyanimid" test after the case that established it.

In a 2017 judgment (Nuclear Decommissioning Authority v EnergySolutions EU Ltd), the Supreme Court decided that damages were only available in a procurement challenge where the contracting authority's breach was "sufficiently serious''. That is, purely technical breaches of procurement rules do not give rise to damages, even if the challenger would have won the contract but for the breach.

Tying those two points together, claimants have taken to arguing that contracting authorities cannot have their cake and eat it: they cannot argue both that damages are sufficient and that the issue is not sufficiently serious to give rise to a damages claim. In Boxxe v Secretary of State, a desire to short circuit the argument led the defendant authority to give an undertaking that it would not maintain the latter argument at trial. In other cases, the courts have cast doubt over whether the two points can be mutually decisive – in other words, it surely cannot be the case that a challenger's argument on the automatic suspension is more persuasive in circumstances where its underlying claim is actually weaker because it is not sufficiently serious to warrant damages.

In Millbrook, the High Court was asked grasp the nettle on this issue in an application to lift the automatic suspension on a £46 million contract for health and care related services tendered by DCC. The claimant had asked DCC to concede that any breach would be sufficiently serious, but DCC refused, and so counsel for the claimant argued that, when assessing whether damages are an adequate remedy, the court had to consider the likelihood of the claimant being able to receive these damages (taking into account the ''sufficiently serious'' test) and the risk that if they do not, they could be left with no remedy at all.

In giving judgment in favour of DCC and lifting the suspension, the court dismissed Milbrook's "superficially attractive" argument on the basis that (1) sufficiency was a question for trial, not a hearing on what amounts to an injunction, (2) the claimant has no absolute right to a remedy at all, and (3) there is no incoherence between deciding each issue according to its own legal tests at its own distinct stage of the process.

Going forward, contracting authorities are now much less likely to concede the "sufficiently serious" point at such an early stage, and challengers should avoid attempting to place too much weight on it. Instead, the best focus for a claimant in resisting such an application will generally be where it can point to an opportunity to determine the case as a whole quickly. We have recently resisted such applications in the High Court and Court of Session largely on the basis of seeking to narrow the dispute to one that can be heard in a single day (which will be much easier for the court to identify than the 10-12 day hearing that Milbrook was looking for). Other cases that have seen the suspension maintained have generally focused on the market-leading nature of a given contract, or its sheer size.

The importance of clear drafting: Working on Wellbeing (t/a Optima Health) v Department for Work and Pensions [2025] EWCA Civ 127

On 14 February, the Court of Appeal overturned the decision of Freedman J in the High Court in which he had found that the DWP had acted lawfully by excluding a tenderer who submitted a pricing schedule that breached the contracting authority's stated maximum prices – see our previous case digest here.

Optima had tendered for a contract in a mini-competition under a framework agreement to provide services to the DWP. Their tender was excluded because some of its prices exceeded the prices specified in the framework agreement, something which (as the ITT had explained) was not permitted.

The ITT had notified bidders that any mini-competition tender that included prices above those set by the framework would be "discounted".

It is very common for ITTs to talk about "discounting" tenders that do not comply with one requirement or another. In the vast majority of cases it is clear that this means "disregarded" or "excluded". If a tenderer is told that failure to include a given piece of information in its tender will lead to it being discounted, there is no other way to read this.

The issue for the DWP is that when it comes to prices, there are two potential meanings of the word "discounted". It can mean excluded, but it can also mean reduced.

Optima argued that DWP had acted unlawfully by applying one meaning to exclude it when it could have applied the other meaning. The High Court disagreed. The Court of Appeal, however, sided with Optima.

The Court of Appeal found that DWP had not made it sufficiently clear in the ITT that exclusion was the consequence of exceeding the price limits and that the errors in Optima Health's pricing schedule were obvious and capable of being fixed (by reducing the prices to the specified cap). Accordingly, DWP had an obligation not to exclude Optima.

We have seen many contracting authorities worried that the word "discounted" must now be excised from all invitations to tender. Going forward it may be better to use the term "excluded" for the sake of clarity. However, the decision here is quite particular to its facts, and other than in circumstances where the word is used in relation to numerical figures, there is unlikely to be cause for panic.

More generally the decision underscores the importance of clarity, transparency and equal treatment in procurement processes. It highlights the need for contracting authorities to consider seeking clarification when they spot something that could be classed as an "error", rather than resorting to exclusion.

Procurement litigation

We have seen something of an uptick recently in the number of procurement processes that are prompting challenges. As ever, the best safeguard for contracting authorities against such challenges remains the same: the more time taken to carefully plan and prepare the process at the start, the lower the risk of something going wrong during the process or evaluation, and the lower the risk of challenge.

If you would like to discuss any of the matters discussed in this post, please do not hesitate to get in touch with Jamie Dunne, Charles Livingstone or your usual Brodies contact.