PROCUREMENT GUIDANCE NOTE: MANDATORY CONTRACT STANDSTILL PERIOD
[European Court of Justice’s (ECJ) Alcatel Judgment (C-91/980)]
Date of Publication: 16 September 2005
Date of Update: 10 June 2010 (R. Valentine)
Author: Kathy Hill, Purchasing Co-ordinator
Contact: , Tel. 01392 263104 / 01392 263672 (R. Valentine 01392 726117)
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Incorporating the Remedies Directive - implemented into UK legislation by The Public Contracts (Amendment) Regulations 2009 (the “Regulations”)1. The Regulations apply to tender processes commenced on or after 20 December 2009.
1. INTRODUCTION
1.1 Procedure
This guidance sets out the procedure to be adhered to by all staff for notifying tenderers of contract award decisions for contracts at or above the relevant E.U. tender thresholds. The current thresholds are published in the University’s Financial Handbook, which is accessible via the University’s intranet.
The guidance is based on advice received from the Office of Government Commerce and is to be adopted with immediate effect. New procedures (such as the Remedies Directive) have arisen from negotiations between the UK government and the European Commission concerning the length and scope of the mandatory standstill period, the requirements relating to the process of notifying all tenderers of the contract award decision at the beginning of the standstill period and the new debriefing requirements during the standstill period.
1.2 What is the standstill period?
In order to allow suppliers to challenge effectively in court any decision made under the regulations, a purchaser is required to notify all suppliers involved in a procurement process of its decision as to which supplier has ‘won’ the competition. This notification, which can lead to further requests for relevant information, provides ‘non-winning’ suppliers with information to allow them to challenge the decision in court. To allow the court full discretion in applying legal remedies, the purchaser is not permitted to conclude a contract with the ‘winning’ supplier until a period of at least ten (10) calendar days has elapsed, from the date on which suppliers are advised of the decision.
2. SUMMARY OF MAIN POINTS
2.1 Mandatory Standstill Period
A minimum of ten (10) days’ Mandatory Standstill Period must be observed between communicating the award decision to all tenderers and the contract conclusion (signing off of the contract documents, purchase order etc.).
The standstill period should be:
· extended if necessary e.g. around public holidays or to comply with individual requirements of the project;
· the 10-day countdown commences the day after the award decision is issued to all tenderers;
· the Mandatory Standstill Period must end on a working day.
A contract cannot be concluded with the winning supplier until at least the eleventh (11th) calendar day at the earliest following notification. This would not prevent continuing discussions with the ‘winning’ supplier (e.g. to ensure prompt mobilisation of the supplier’s resources once a contract was concluded).
University staff should take special care in calculating the minimum standstill period - for example the standstill period must be extended to the next working day if it would otherwise fall on a non-working day.
The University must provide the relevant information by the quickest means available, as soon as possible after the award decision has been made and shall do so by the most rapid means of communication practicable.
2.2 Exclusion to the Standstill Period
The mandatory standstill period does not apply to:
· contracts and purchase orders whose total value excluding VAT is below the E.U. tender thresholds
· procurements outside the full scope of the E.U. Procurement Directives
· where single tendering occurs under the ‘Urgency’ provision of the Negotiated Procedure
3. NEW PROCEDURES (from December 2009)
3.1 The Mandatory Standstill Period and the effects of Remedies Directive
The Remedies Directive (which came into force on 20th December 2010) makes provision for a number of changes to the current regime, but by far the most important is the introduction of a new remedy of ineffectiveness.
Under previous legislation, the only remedy available for the disgruntled bidder was damages. At present, it is a well established general principle that once a contract has been awarded, it cannot be set aside by the courts, even where they find a breach of the procurement rules… this is no longer the case.
Under the new Remedies Directive, in certain circumstances, the courts will be able to render such contracts ineffective by ordering their cancellation. In addition, the court must impose a fine (or, as it is termed, a Civil Financial Penalty) on the contracting authority. Limited discretion is given to the courts to make such an order, but if it does, it must make an alternative penalty, which could be a shortening of the contract or a fine.
As well as introducing the new remedy of ineffectiveness, the Directive has brought about technical changes to the mandatory standstill requirements. The most significant of these is the removal of the ‘accelerated’ debrief provision in the old rules and its replacement with the obligation to serve a fuller statement of reasons for the decision as part of the initial notice.
Additionally, the new Regulations make it explicit that the contracting authority cannot enter into the contract if it has not met its Mandatory Standstill obligations or if the award has been challenged.
3.2 New Debriefing Rules
From immediate effect, to mitigate risk under the Remedies Directive, University staff must now provide significantly more information up front in the Standstill Notice than previously (subject to the limits of commercially confidential information) to minimise the risk of a complainant arguing that a Standstill Notice is not effective. Tenderers can expect, in that Standstill Notice, a full statement of reasons including:
· the award criteria (should indicate weightings);
· the tenderer’s score;
· the winning tenderer’s score;
· the name of the winning tenderer;
· the characteristics and advantages of the successful bid;
· a detailed breakdown of the scoring for successful bidders and for individual unsuccessful bidders, and;
· the date when the standstill period is expected to end.
Under the new Mandatory Standstill requirements there is no longer a requirement for an ‘accelerated’ debriefing during the standstill period (although the requirement to give relevant reasons when notifying the award decision remains). There must be an automatic suspension of the award procedure if an economic operator appeals against the award decision.
3.3 The Standstill Notice
The Standstill Notice must be followed by a Contract Award Notice. A template is attached at Appendix 2 for use by university staff. Much of this information can be gleaned from the evaluation and in keeping with the criteria set out in the ITT.
NB: The time limits, or risk period, for ineffectiveness can be reduced from the default position of 6-months following contract award, to 30 days, if the contracting authority has published a Contract Award Notice in the Official Journal of the EU.
3.4 Legal Challenge
If there is a legal challenge to a contract award decision, the University (& staff) should wait to see if ‘Interim Measures’ are granted before proceeding.
If Interim Measures are granted, the university (and staff) should wait until the outcome of the legal proceedings is known before concluding the contract.
3.5 Limitation periods
Under the old regulations, a complainant was required to bring a challenge under the procurement rules within three months of the date of the alleged breach and in any event "promptly".
Under the new mandatory standstill requirements the supplier must now notify the University of the alleged breach and intention to bring proceedings. An application to the High Court must be made promptly and within 3 months of the grounds arising, (unless the Courts allow longer). Legal precedence currently insists that the three month period is calculated from the time when a complainant was aware, or should have reasonably been aware, of the nature of the breach.
This general 3 month time remains the starting point but, where the remedy of ineffectiveness is sought, there are special time limits. The default position is that proceedings seeking a declaration of ineffectiveness must be started within 6 months of the contract award. It is important to note that, in the vast majority of circumstances, the reduced time limits can be achieved by notifying suppliers that the contract has been awarded in the way and for the reasons that had been given in the Standstill Notice.
3.6 VEAT
In circumstances where there has been no OJEU contract notice, and the contract is covered by the full scope of the procurement rules (e.g. negotiated procedures without competition, or above-threshold contract variations) there is also an opportunity to shorten the ineffectiveness time limit to 30 days by use of the "Voluntary Ex Ante Transparency" (VEAT) notice
The completion of a VEAT notice effectively provides an opportunity for suppliers to challenge the contracting authority’s decision to award the contract without prior publication of a notice, before the contract is awarded and disengages the ineffectiveness remedy.
The main difference between the VEAT notices to a normal standstill period is that the form has to be completed and published in the Official Journal of the European Union (OJEU) before the contract is awarded, and then a 10-day period follows that publication date. If no challenges are brought during that 10-day period, the contract can be awarded, with the ineffectiveness remedy disengaged.
The VEAT notice itself is modelled on the Contract Award Notice and so will seem familiar to procurement staff, but the main difference is that only a limited number of fields need completing on the VEAT form. These mandatory fields are explained on the first page of the VEAT form
3.7 Mitigating risk
The Regulations and OGC Guidance on the Regulations helpfully provide contracting authorities with a number of ways of mitigating risk. However early identification of potential issues is crucial to enable mitigating steps to be taken: http://www.ogc.gov.uk/
4. FURTHER ADVICE
Help with the interpretation and implementation of this new procedure is available from Kathy Hill, Purchasing Coordinator (or Bob Valentine Senior Contracts’ Officer: Procurement Team). Contact details as shown in ‘header’ above. The following Appendices contain a flowchart (App1) and a MSP template (App2).
Date Issued to Tenderers:
Signed:
Position:
Contact Details:
Appendix 1
Flowchart/Timetable of Standstill Period (10 Calendar Days)
.
NB: University must provide de-briefing information ‘up front’ and in the Mandatory Standstill Notice letter (below).
Appendix 2 - MANDATORY STANDSTILL NOTICE TEMPLATE
(items in blue need input)
/ ??? SERVICES??? Services
Address
Exeter
EX4 ???
Telephone: +44 (0)1392 72 ????
Email: [email protected]
http://admin.??????
To:
??th ???? 20??
Tender for ??? (Ref: UOE/????/???)
Thank you for participating in the tender procedure for the above project. The University has now evaluated all of the tenders it received. The University has chosen to/not to award a contract to you.
The University will now observe a ten day standstill period before entering into any contract in accordance with the requirements of regulation 32 of the Public Contracts Regulations 2006 as follows:
1. MANDATORY STANDSTILL NOTICE
What is a Mandatory Standstill Notice?
A ‘public body’ purchaser is required to notify suppliers involved in a procurement process of its decision as to which supplier has ‘won’ the competition. This letter constitutes the Mandatory Standstill Notice within the requirements of regulation 32 of the Public Contracts Regulations 2006.
Mandatory Standstill Period
A minimum of ten (10) days’ Mandatory Standstill Period must be observed between communicating the award decision to all tenderers and the contract conclusion (signing off of the contract documents, purchase order etc.).
A contract cannot be concluded with the winning supplier until at least the eleventh (11th) calendar day at the earliest following notification. This would not prevent continuing discussions with the ‘winning’ supplier to ensure prompt mobilisation of the supplier’s resources once a contract was concluded.
What Tenderers can expect
Tenderers can expect, in this Standstill Notice, a statement of reasons including:
· the award criteria (with weightings);
· the tenderer’s score;
· the winning tenderer’s score;
· the name of the winning tenderer;
· the characteristics and advantages of the successful bid;
· a detailed breakdown of the scoring for successful bidders and for individual unsuccessful bidders, and;
· the date when the standstill period is expected to end.
2. MANDATORY STANDSTILL NOTICE - INFORMATION
The results of the evaluation process used by the University for this tender are shown below.
AWARD DETAILS
Name of Tenderer
/ Insert name of tendererName of Winning Tenderer
/ Insert name of winning tendererName of Contract
/ ??? - Ref. UOE/20??/????Contract Duration
/ Insert relevant information hereDate Mandatory Standstill Period Ends
/ Insert 10 days after you expect tenderer to receive this letterExtract information from your evaluation/evaluation matrix to populate data below
CONTRACT AWARD CRITERIAInsert from the ITT / Maximum
Score / Award Criteria / Score / Your Weighted Score / Successful Bidder’s Weighted Score
e.g. Specification of Requirements / ?? / ?? / ?? / ?? / ??
e.g. Price / ?? / ?? / ?? / ?? / ??
e.g. Presentations / ?? / ?? / ?? / ?? / ??
TOTALS / 100%
NOTE: The score results stated on this document relate to the specific tender procedure followed for the stated project and consequently not all of the tables shown may contain data. However; a comprehensive breakdown must be made available to tenderers.
CHARACTERISTICS AND ADVANTAGES OF THE SUCCESSFUL BIDInsert here – be as helpful as you can to help supplier improve any future bid – without giving anything commercially sensitive away. Concentrate on what you expected to see in the response – including (but no exclusively) level of detail, addressing the specification/outputs, clarity and relevance.
The University can provide a more detailed debrief should you request it by contacting the University via In-Tend.
Thank you for your interest in this procurement and we hope you will apply to tender for future contracts to be let by the University.
or
We look forward to working with you on this project /procurement.
Yours sincerely
Name & Title
Page 4 11 June 2010