The Secretary of State for Health and Social Care v PPE Medpro Limited

A contractual requirement that medical devices achieve a specified Sterility Assurance Level is necessarily implemented through an appropriate, validated sterilisation process and records demonstrating that process. A supplier cannot treat preliminary technical approval or contractual annexes as conclusive proof of compliance unless the contract clearly says so.

Contractual estoppel requires a clearly established representation or assumption, actual reliance and resulting detriment. A buyer’s failure to reject defective goods within a reasonable time may lose the contractual right to reject, but damages remain available. Mitigation is an aspect of causation. The defendant must identify a realistic alternative use or market. Storage losses must be proved by admissible and sufficiently supported evidence.

During the COVID-19 pandemic, the Secretary of State contracted with PPE Medpro Limited for 25 million sterile surgical gowns at a price of approximately £122 million. The gowns were manufactured in China, sterilised by electron-beam irradiation and delivered ex works.

DHSC later found that the gowns lacked appropriate notified-body CE marking and supporting evidence of a validated sterilisation process. It rejected the gowns, sought repayment and claimed storage costs. Medpro denied breach and advanced estoppel, rectification, negligent misstatement and mitigation arguments. The central issues concerned contractual sterility requirements, rejection, damages and Medpro’s counterclaim.

1. Liability. The Contract required gowns with a SAL of 10^-6. That requirement could not sensibly be established by post-delivery testing of individual gowns or treated as conclusively satisfied by the contractual annexes. It necessarily required an appropriate, validated sterilisation process, including dose-setting by reference to bioburden and documentation demonstrating validation.
2. The evidence did not establish dose-setting or bioburden testing. The gowns therefore breached the contractual requirement. The Contract also required compliance with the principal requirements of EN 556-1, including a validated process demonstrating the required SAL, and valid CE marking with a notified-body number for sterile medical devices.
3. Estoppel and counterclaim. The statement that the gowns had been approved by Technical did not clearly represent that the gowns complied with all contractual or regulatory requirements. Medpro called no factual witness capable of proving reliance. Contractual non-reliance and entire-understanding clauses supplied an additional obstacle. Rectification failed because Medpro did not prove a relevant subjective mistake. No general duty required DHSC to advise an experienced commercial supplier on the applicable requirements.
4. Rejection and damages. DHSC lost the right to reject because it did not inspect and communicate rejection within a reasonable time. The ex works arrangement enabled visual inspection for the defective CE marking at collection. DHSC nevertheless recovered the full contract price as damages: the evidence did not establish a realistic alternative use or market for the gowns, and mitigation is an aspect of causation rather than a freestanding duty.
5. The storage-cost claim failed for want of adequate proof. Judgment was therefore entered for DHSC for the value of the gowns, but the storage claim and Medpro’s counterclaim were dismissed.