Group Companies & Adequacy of Damages in Procurement Challenges

The recent case of Teleperformance Contact Ltd v Secretary of State for the Home Department [2023] saw the court consider the nuance of whether damages can be an adequate remedy for corporate groups bidding for public contracts.

Key Takeaways:

• The losses of group companies might not be taken into account when considering the adequacy of damages as a remedy in procurement challenges.
• Where entities in the same corporate group as an aggrieved bidder have not been party to a procurement, they are a third party with no right of action.
• When evidencing far-reaching corporate losses, it is important to provide precise internal analysis and papers demonstrating the claimed losses.

The Challenge

The Home Department ran a procurement for the delivery of visa and citizenship application services worth an estimated £1.2 billion with five lots. Teleperformance Contact Ltd (“TCL”), the incumbent provider for all five lots, lost all but Lot 5, and challenged the award decisions for the first three Lots.

Automatic suspension kicked in to prevent the Contracting Authority from entering into a contract with the successful bidder.

The Issue

TCL argued that the automatic suspension should not be lifted and sought injunctive relief, as in their view damages could not be an adequate remedy due to the losses suffered by the Teleperformance corporate group. TCL alleged that the Contracting Authority’s decision had led to extensive losses across the group including the closure of at least 67 visa and application centres; a reduction in the group’s prospects of securing future business; over 750 redundancies; and loss of reputation.

The court therefore had to determine whether the corporate group’s losses should be considered in assessing if damages could be an adequate remedy, alongside whether the losses claimed by TCL had been evidenced in the course of proceedings.

The Teleperformance Contact Ltd v Secretary of State for the Home Department [2023] case can be viewed in its entirety here.

The Decision

The court decided that the losses of the corporate group should not be considered in this case, as no other entity within the group was a party to the procurement or the claim, and so the losses claimed by TCL had been sustained by a third party or parties with no right of action. As a result, the court decided that damages would be an adequate remedy for TCL, and the automatic suspension was lifted.

The court also decided that TCL had not adequately evidenced the losses claimed, and the judge commented that internal analysis and assessments or papers should have been submitted as evidence, and that the evidence that had been submitted was “imprecise and vague”.

Quigg Golden Comment

While losses may be suffered by the wider group as a result of a contracting authority’s decision, these losses will have no bearing on the court’s decision whether to lift the automatic suspension.  In addition, this case highlights the importance of substantiating that damages are not an adequate remedy with clear, accurate and credible evidence.  This can be particularly difficult when experts evidence in rarely admissible in procurement challenges. If you wish to discuss any of the matters discussed with this article, please reach out to our construction and procurement law experts here.