Procurement in a nutshell – the standstill period
30th August, 2016
The standstill period has been described as "both a shield for contracting authorities from potential ineffectiveness claims, and as a sword for aggrieved bidders where there has been a failure to properly apply the standstill period".
While adherence to the standstill requirements limits the remedies available to challengers, infringing the rules can be fatal to a procurement exercise. Despite its significance, failure to correctly follow the standstill requirements remains a common mistake made by contracting authorities (CAs).
This update is a reminder of what the standstill period entails and provides guidance for CAs on how to avoid the trap of this potential procurement pitfall.
What is the standstill period?
Once the preferred bidder for a tender has been announced, a period of at least 10 days must elapse between the notification of the contract award and the signing of the contract.
The rules derive from the judgment in the case of Alcatel Austria v Bundesministerium fuer Wissenshaft und Verkehr (C-81/98).
The purpose of the period is to allow a window of opportunity for challenges to a contract award before the contract is entered into.
The provisions for standstill are contained in regulations 86 and 87 of the Public Contracts Regulations 2015 (PCR 2015).
The standstill notice
CAs must send a “standstill notice” (also referred to as an “award decision notice”/”regulation 86 notice” or an “Alcatel letter”) to all tenderers (those who have submitted a tender) and candidates (those who sought an invitation or were invited to take part in some procedure but not submitted a tender).
There are strict requirements as to the contents of the standstill notice. It must cover:
- the criteria for the award of the contract;
- the reasons for the decision including the characteristics and relative advantages of the successful tender. This should include a full breakdown of scores against each criterion and sub-criterion (for both the losing and winning bidder) with supporting explanation;
- the reason (if any) why the economic operator did not meet the technical specifications;
- the name of the tenderers to be awarded the contract/become party to the framework agreement; and
- a statement of when the standstill period is expected to end.
Failure to include all the required elements in the notice will mean that the standstill period will be deemed to have not yet started. In recent cases CAs have been criticised for not disclosing enough information, particularly about the relative advantages of the successful tender.
The standstill period runs from the day after notices have been sent to all the relevant economic operators. The period ends (at the earliest) at either:
- midnight at the end of the tenth day after the date on which the CA sends the standstill notice; or
- midnight at the end of the fifteenth day after the sending date, where the notice has been sent by means other than fax or email.
If a challenge to the contract award is received during the standstill period the CA cannot enter into the contract until a decision has been made by the court.
Do the standstill rules apply in every case?
In the following circumstances the standstill requirements need not be fulfilled:
i) Where there is only one tenderer remaining and no candidates.
ii) Where there is no obligation to advertise the contract in the Official Journal of the European Union (e.g. below-threshold procurements, or negotiated procedures without a call for competition).
iii) In above-threshold call-off contracts from a framework agreement or Dynamic Purchasing System. The standstill period is voluntary rather than mandatory.
Irrespective of the legal position, in respect of (ii) and (iii) CAs should consider the provision of a debriefing (akin to the information contained in the standstill notice) to all unsuccessful applicants as good practice.
This should help to raise the quality of responses to future tender exercises. In respect of (iii) it is recommended that the standstill period is applied to safeguard against the risk of possible post-contractual ineffectiveness claims.
Why is this important?
Compliance with the standstill rules provides CAs with some protection against a potential declaration of ineffectiveness – the most serious, and costly, post-contractual remedy.
It is essential that CAs are clear as to the required contents of standstill notices and how to apply time limits as these are crucial elements of compliance. CAs should seek advice where there is any doubt as to avoid falling foul of the rules.
As a final note of caution it must be remembered that while the standstill period represents the ‘ideal’ time for an aggrieved bidder to initiate a procurement challenge, it is not the only time limit which applies.
The PCR 2015 provide an overall limitation period of 30 days, within which procurement challenges must be brought (regulation 92). This period runs from the date on which the unsuccessful bidder knew or ought to have known that there had been a breach of the Regulations.
Suspension of the contract may not be a sought-after remedy by all bidders; they may be satisfied with the remedy of damages.
Therefore, it is advisable that CAs may want to delay entering into a contract until this 30 day period has expired, in order to avoid the risk of having to pay both the successful bidder for performing the contract, and damages to the unsuccessful bidder.
How can I find out more?
If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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