Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Keep moving at a standstill

LAW - The 2006 Public Contract Regulations provide unsuccessful bidders with the right to ask for an explanation of the award process. The regs also require a 10-day 'standstill' period before the contract is concluded, writes Jeremy Winter

TENDERS for public sector contracts of any appreciable size are now subject to the procurement rules set out in the Public Contracts Regulations 2006.

These regulations aim to ensure transparency, non-discrimination and equal treatment in the award process.

One significant aspect of the 2006 regulations is the creation of a 10-day standstill period between the contract being awarded and the conclusion of the contract with the successful bidder.

This 10-day period gives any disgruntled bidder the opportunity to apply to the court to have the tender process halted.

After the 10 days have passed, the disgruntled bidder can only claim damages.

This standstill period is therefore a great help to wouldbe claimants, as it allows for the full range of remedies, including an interim injunction to stop, temporarily, the contract being concluded.

The July case of Rapiscan Systems v HM Revenue and Customs provides a good illustration of what should and should not be done by a public body during this standstill period. The case was actually decided before the 2006 regulations came into force, but HMRC had adopted a standstill period as this was already considered good practice.

The tender in Rapiscan was for scanners to examine vehicles coming into the UK. After holding a tender process, HMRC informed Rapiscan and others on July 14, 2006, that their bids had not been successful. HMRC intended to conclude the contract on July 26 but offered to hold a debriefing day for the unsuccessful bidders on August 1.

This would have been no good to the unsuccessful bidders as by that time they would be precluded from seeking an injunction to stop the contract being concluded.

On July 20 Rapiscan sent a letter to HMRC asking for information about the award and that the standstill period be extended until the information was given.

A day later HMRC refused the extension but provided some further details about the criteria used to assess the bids.

Rapiscan considered this to be unsatisfactory and made an application for an interim injunction to prevent the contract award being concluded.

That injunction was granted on July 27, thereby demonstrating the speed with which outcomes can be achieved.

Moreover, as this case was under the much less rigorous information provision sections of the old regulations, it augurs well for the use that might be made of the more extensive provisions in the 2006 regs.

Regulation 32(4) stipulates that, provided a request is made by midnight on the second working day of the standstill period, then the public authority must supply the information requested at least three working days before the end of the period.

If that is not possible, then the period must be extended to allow the three working days gap.

If the request is made later, then the public authority has 15 days to respond, even if this falls after the standstill ends.

Of course it was the old version of this provision which applied in Rapiscan but nevertheless it is useful authority for later requests as well as emphasising that the automatic extension of the standstill must be adhered to for requests within two working days.

Ms Justice Dobbs, who awarded the injunction, considered that HMRC needed to provide more detailed information to allow a proper assessment of its decision making process.

She did not accept that the position had been sufficiently clarified by HMRC's letter of July 21 and indicated that what HMRC had said could have confused matters. This is certainly not an unusual complaint for bidders and is worth pressing.

The judge also disagreed that transparency is only needed to the extent that it gives effect to the principles of non-discrimination and equal treatment.

She said that a 'common sense approach dictates that a broad interpretation of the principle should apply'.

This is also a common issue and these comments will no doubt help in focusing the public authority on the need for transparency in the tender process.

Two addition practical points were made in Rapiscan. First, public authorities should be prepared to provide information that clarifies the decision because this might be enough to nullify complaints made by an unsuccessful bidder.

This is really a principle of good administration as well as a potentially cost-effective way for public authorities to avoid costly litigation.

Second, the judge made clear her concerns about the refusal to extend the standstill period because it was not urgent that the contract start and the bidder had said further information could avoid proceedings.

The judge said that 'even if the rules have been compiled with strictly, the parties should seek to ensure they do not frustrate the rights of others deliberately or otherwise'.

This potentially places a considerable obligation on public authorities, particularly if they should be going beyond the more comprehensive rules in the 2006 regulations.

This is not a case that should encourage litigation by either bidders or public authorities, although I suspect Judge Dobbs' comments will often be quoted in later cases.

If you are a bidder who is unhappy with the tender process, you should act within the two working days period for an information request because this will almost guarantee you a response with three working days to consider it before the contract is concluded.

If you are a public authority on the receiving end of an information request outside of the two-day period, be ready to provide adequate information about the decision, especially if urgency cannot be shown and agree to extend the standstill period if that might resolve matters without proceedings.

Any other approach may find little sympathy with the court.

Key points

As soon as notification is given that a public contract has been awarded, the 2006 procurement regulations provide that there must be a 10-day standstill period.

If more informat ion is needed about the award , an unsuccessful bidder should make a request before midnight on the end of the second working day.

This should guarantee information is provided at least three working days before the end of the standst ill even if the per iod has to be extended.

The recent case of Rapiscan shows that public authorities may have to go beyond strict compliance with the procurement rules when awarding cont racts to ensure they do not f rust rate the legal rights of unsuccessful bidders.