Procurement Law Jargon Buster - "Standstill Periods" and "Alcatel Letters"

The Public Contracts Regulations 2006 (the ”Regulations”) require public contracting authorities to apply a compulsory waiting period between their decision to award a contract to which the Regulations apply and the date on which the contract is signed. This is commonly called the Standstill Period.

This requirement follows a judgement of the European Court of Justice in the Alcatel case when the ECJ decided that contracting authorities should allow a period of time to elapse between decision and signing in order to give unsuccessful bidders a chance to seek remedies if they were dissatisfied with the procurement process.

To achieve this, a contracting authority must inform bidders of its decision to award the contract, commonly called Alcatel Letters.

With effect from 20 December 2009, new regulations apply as to the content of these letters. This is part of a range of measures introduced by the European Commission to toughen up the rules for procuring authorities and to increase the remedies available to dissatisfied bidders.

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What public contracts does this apply to?

The definition of public contracting authorities is very wide including a range of “quangos” and other publicly financed institutions as well as local and central government bodies. The regulations themselves apply to contracts for the supply of goods works and services, where contract values are above specified thresholds. From 1 January 2010 these range from around £156,000 for essentially local government supplies and services contacts (£101,000 for central government) to around £3,927,000 for works contracts. Similar regulations apply to utilities companies.

When does the Standstill Period commence?

The period kicks in from the date the authority decides to award the contract. Usually this will come towards the end of an often lengthy procurement process where bidders will have been shortlisted and finally whittled down to one, for example through a process called “competitive dialogue”. At that point, when the authority makes its selection, the Alcatel Letter is issued and the standstill period should then commence. At the end of that period the contract is signed.

How long is the Standstill Period?

10 to 15 days from the decision to award, depending on the method by which the Alcatel letter is communicated. This is designed to give unsuccessful bidders an opportunity to challenge the award if they believe there has been a breach of the procurement rules.

Who should be sent an Alcatel letter?

Both the successful and unsuccessful “tenderers” and “candidates” in a procurement.. In other words, not only unsuccessful bidders but also any applicant who submitted a “PQQ” (a completed prequalification questionnaire) should receive one.

What must go into an Alcatel letter?

The decision notice should include the criteria for the contract award and the reasons for the decision including the characteristics and relative advantages of the winning tender, the scores of the winning bid and of the party receiving the notice. The notice also must name the winning bidder and provide details of the standstill period.

On receipt of the notice, unsuccessful bidders may request an “accelerated debrief”. The request must be made in writing before midnight on the second working day of the standstill period. This can be one of the processes by which an unsuccessful bidder may hope to obtain information that might assist a challenge to the award. In practice though, hard evidence may be difficult to come by although in current market conditions, bidders will be looking at all options very carefully.

What happens if the contract is awarded inside the standstill period or an Alcatel letter is not issued?

Under the new rules, it may be possible to get the contract declared “ineffective” with potentially serious consequences for the procuring authority. See our briefing note “New UK Regulations on Remedies for Breach of Procurement Regulations” for more information.