Damages Claim (Procurement)

A damages claim in public procurement is the financial remedy available to a supplier who has suffered a loss as a result of an unlawful procurement decision. Unlike pre-contractual remedies such as set-aside, a damages claim compensates the claimant in money but does not change who holds the contract.

What is a Damages Claim (Procurement)?

Damages claims in public procurement derive from the broader principle of state liability for breaches of EU law (established by the Court of Justice in Francovich and later refined in Brasserie du Pecheur), adapted to the specific context of unlawful award decisions. Article 2(1)(c) of the Remedies Directive (2007/66/EC) requires all member states to ensure that damages may be claimed by persons harmed by a procurement infringement.

To succeed in a damages claim, a claimant typically must establish three elements:

1. The contracting authority committed a sufficiently serious breach of procurement law. Minor procedural errors that had no material effect on the outcome may not give rise to liability.
2. The breach caused the claimant to suffer loss. This is usually formulated as: but for the breach, the claimant would have been awarded the contract.
3. The loss is quantifiable. The claimant must prove the amount of loss with reasonable certainty.

The central difficulty in procurement damages claims is proving causation and quantum. The claimant must show not only that the process was unlawful but that they would have won a lawful competition. Courts assess this as a "loss of chance" where the claimant was not the only other bidder: the lost profit is discounted by the probability that the claimant would have succeeded. In a two-bidder competition, the causal link is easier to establish. In a ten-bidder competition, the discount can be substantial.

In the UK, procurement damages claims are brought before the Technology and Construction Court (TCC) under the Public Contracts Regulations 2015 or the Procurement Act 2023.

Why Damages Claims Matter for Bidders

A post-contractual remedy is the fallback when the pre-contractual window has closed. A bidder who discovers a procurement irregularity only after the contract is signed, or who failed to act during the standstill period, must rely on damages. A successful claim can represent significant compensation for a lost high-value contract, particularly in sectors such as IT, construction, defence, or healthcare.

Damages claims are also strategically important because the threat of litigation encourages contracting authorities to settle, provide fuller debriefs, and conduct re-evaluations rather than face protracted court proceedings.

Example

An Irish managed IT services company loses a government contract to a competitor. They challenge during the standstill period, but the automatic suspension is lifted and the contract proceeds. The main challenge is eventually unsuccessful on procedural grounds, but the court notes several scoring inconsistencies. The company brings a separate damages claim, arguing that correct application of the scoring methodology would have placed them first. They claim three years of lost net profit on the contract, discounted for the probability of winning. The parties settle before trial.

Frequently Asked Questions

Can a claimant recover bid costs as well as lost profits?

Yes, in many European jurisdictions. Recoverable losses may include wasted bid preparation costs (the cost of preparing a tender that was never fairly evaluated) as well as lost profits. Some courts treat these as alternative heads of loss: if the claimant cannot prove they would have won, they may still recover bid costs. The availability of bid cost recovery varies by jurisdiction.

Is it worth bringing a damages claim for a small contract?

Rarely, because litigation costs quickly exceed the potential damages. Most procurement damages claims that proceed to trial involve contracts worth several million euros. Below that threshold, mediation, negotiation, or a procurement complaint to a national review body is more cost-effective.

Do procurement damages claims require expert evidence?

Almost always. Proving both causation (that the claimant would have won) and quantum (the profit they would have earned) typically requires expert evidence on tender pricing, market rates, and probability of success. Expert costs are recoverable if the claim succeeds, but they add materially to the cost and risk of litigation.