Tata Consultancy Services Limited v Disclosure and Barring Service

A contractual delay regime must be construed according to its language and commercial context. Relief for an authority-caused delay required proof that the contractor would otherwise have achieved the milestone by its due date. A condition precedent governing compensation did not prevent reliance on the delay as a defence. A separate notice obligation was a condition precedent to recovering delay payments.

An authority cause required breach of an identifiable contractual obligation. A third party’s failure, without more, was insufficient. A sophisticated agreement allocating responsibility to a contractor could not be supplemented by an inconsistent implied term. Loss of anticipated savings was, in substance, loss of profit and was excluded by the agreed limitation clause.

Tata Consultancy Services Limited provided business-process outsourcing and information-technology services to the Disclosure and Barring Service under an agreement dated 4 December 2012. The agreement required TCS to operate legacy services while developing modernised R1 systems.

The project suffered substantial delay. TCS claimed relief, compensation and other losses, alleging that infrastructure, third-party dependencies and DBS’s conduct caused delay. DBS counterclaimed for delay damages, defects, service-transfer costs and other losses. The court determined contractual construction issues, responsibility for delay, the validity of DBS’s partial termination of R1 Disclosure, quantum and a charges-variation dispute.

1. Contractual construction. The Agreement had to be construed on its own terms, applying ordinary contractual principles. Its sophisticated drafting supported a predominantly textual approach where the language was clear. The standards and responsibilities of the parties were not to be expanded by reference to the Model ICT Contract or broad commercial notions.
2. Authority Cause and delay. “AUTHORITY Cause” required a breach by DBS of an identifiable express or implied contractual obligation. HPE’s failures were not, without more, DBS’s contractual breaches. Under Clause 7, TCS had to show both that an Authority Cause caused delay and that it would otherwise have achieved the relevant Milestone by the Milestone Date. Sub-critical delay attributable to TCS could therefore defeat or reduce relief. A reliable analysis had to identify actual periods and causes of delay retrospectively; the prospective analysis relied upon by TCS was inadequate.
3. Conditions precedent. Clause 5.6 made compliance with Clauses 5.1–5.3 a condition precedent to compensation for critical Delays, including common-law damages. It did not prevent TCS relying on an Authority Cause defensively or obtaining contractual relief from delay payments. DBS was estopped from relying on the five-working-day requirement because both parties proceeded on the shared assumption that the time limit had fallen away. Clause 6.1 separately required DBS promptly to issue a valid Non-conformance Report before exercising the Clause 6.2 options. DBS’s failure barred its claim for Delay Payments, although actual damages after six months remained potentially recoverable under Clause 6.3.2.
4. Partial termination. Clause 55.11 was subject to the Remedial Plan Process. Where a material default might objectively be remedied, DBS had to invoke Clause 56. It could not wait until the default became irremediable through delay and then avoid that process. The R1 Disclosure partial termination was therefore invalid. From June 2018, DBS’s failure to co-operate in the provision of information necessary to deliver R1 Disclosure constituted an Authority Cause.
5. Other contractual issues. Clause 52.2.6 created a single cap for the relevant “other” claims. Clause 52.4 excluded loss of anticipated savings because the claim was substantively a loss-of-profit claim. The Digital-by-Default standards were not contractual requirements pending commercial resolution, although aspects of good industry practice required appropriate usability testing and design. Most DBS counterclaims failed for want of causation, pleading, reliable evidence or mitigation.
6. Disposition. TCS recovered £666,735 in manpower costs, £1,732,989.70 in non-manpower costs and £6,976,737 for volume-based service charges. DBS recovered £4,559,439 under CCN041 and £8,270 for Adobe licences. All other claims and counterclaims were dismissed. The net sum payable by DBS to TCS was £4,808,752.70, subject to VAT and consequential orders.