Bird & Bird Procurement Green Paper Briefings: the abolition of the standstill letter

While transparency has always been a requirement in the context of conducting a public procurement process, it is clear that the Government wishes to strengthen this long-standing and essential principle by introducing a number of mechanisms which have previously discussed by my colleague Roger Bickerstaff in his recent article “Procurement Green Paper Briefings: eProcurement Proposals”.  This article focusses on one of those measures in particular –the removal of the obligation to send so-called “standstill letters” to bidders following completion of the process, and what this is likely to mean in practice.

The role of the standstill letter

In a nutshell, the purpose of standstill letters is to communicate the results of a procurement process to both the successful and unsuccessful bidders.  They must contain certain information including the name of the successful bidder and the reasons for the award decision including the characteristics and relative advantages of the successful tender.  The issuance of standstill letters marks the commencement of the “standstill period”.  This is a minimum 10-day period during which unsuccessful bidders essentially have the opportunity to consider the results of the competition and decide whether there are grounds to challenge the award decision before the contract can be entered into between the authority and the successful bidder.

The standstill period is significant because, from a contracting authority’s perspective, it usually represents the ‘highest risk’ point within a regulated procurement process.  This is because if a claim form is issued before a contract is signed, this gives rise to an ‘automatic suspension’, which prevents the authority from entering into the contract with the successful bidder unless and until:

• the Court lifts the suspension (note that the authority has the option to apply to the Court to end the automatic suspension.  If successful, this enables the authority to enter into the contract pending a trial on damages); or
  
  
• the proceedings are determined, discontinued or otherwise disposed of.

From an unsuccessful bidder’s perspective, the standstill period is also significant because, during this period, there is a guarantee that no contract has been entered into between the authority and the successful bidder, and so bringing a claim then, and triggering the automatic suspension, ensures that this continues to be the case.  In our overwhelming experience, most bidders who wish to challenge a procurement do so because their ultimate objective is to secure the contract in question.  Therefore, a claim often becomes much less attractive to an unsuccessful bidder once the contract is signed as, in most cases, the only remedy remaining available to the challenger in these circumstances is damages.

The new proposals

The Green Paper recognises that the preference of many aggrieved bidders is to have the opportunity to perform the contract instead of the award of damages.  Further, the Government’s ambition is to put in place a quicker review system in an attempt to shift the focus of supplier remedies away from damages and towards pre-contractual remedies which allow for elements of a procurement to be re-run, decisions to be set aside or documents amended where a breach has been identified (see paragraph 203 of the Green Paper).

While a number of fundamental changes are proposed to the way in which procurement challenges are dealt with to facilitate these ambitions (more fully discussed by my colleague, Chris Murray, in his article entitled “Green Paper Briefings: Procurement Challenge Proposals”), perhaps one of the more controversial proposals is to no longer mandate the use of standstill letters.

In place of standstill letters, it is proposed that bidders will be able to access the authority’s rationale for the award decision as a result of new transparency obligations which will come into force. These obligations will require authorities to input information relating to all stages of the procurement lifecycle from planning, the procurement process itself, contract award and completion into a newly developed central system, which will be interoperable with other e-procurement systems.  It is proposed that the central system will require authorities to publish bidder identities, the basis of the award decision, basic disclosure of tenders submitted, evaluation reports and basic evaluation disclosure information which we understand will be “accessible to all”. Under the new rules, authorities will not be able to commence the standstill period unless and until this information has been published.

In addition, paragraph 219 of the Green Paper proposes that authorities will no longer be required to provide the characteristics and relative advantages of the successful bidder’s bid. The rationale for this being that authorities find this task “complicated and time consuming” as it requires a comparative analysis of the successful bidder’s tender against each unsuccessful bidder.  Instead, the Green Paper suggests that bidders will be able to access information on the evaluation of each bid under the new transparency obligations discussed above, which will enable them to see why they were unsuccessful and the relative advantages of the winning bid by default.

From a procurement practitioner’s perspective, although these are very interesting ideas, there may be some further issues for the Government to consider before deciding on a final approach. For example:

• Firstly, the proposal to increase the amount of information to be released on completion of a tender process would appear to work in an unsuccessful bidder’s favour, as it seems to involve the disclosure of more information than is currently provided by way of a standstill letter, including (importantly) contemporaneous information relating to the evaluation process actually carried out. However, this would appear to come at a price in the form of the proposal to make available basic disclosure of tenders submitted (see para 166 of the Green Paper).  While the Green Paper clarifies that such disclosure would be subject to the Freedom of Information Act 2000 (FOIA), Environmental Information Regulations 2004 and the Data Protection Act 2018, it is not yet clear how extensive such disclosure will be.  For example, is it proposed that full copies of bids will be available which would redact information concerning profit margin, price, overheads and other elements of the bid which would be considered “commercially sensitive” in accordance with the above-mentioned legislation? Or is it proposed that only certain elements of bids will be disclosed in standard-form such as ‘name of bidding entity’, ‘names of subcontractors’ etc. without requiring the authority to append a copy of the bid itself?  In either scenario, we would then question how much information would be left to review, once all the commercially sensitive elements are removed.  There are obviously important practical issues which would need to be considered here, and even if the above-mentioned legislation did prevent a significant amount of information from being disclosed, we wonder if successful/unsuccessful bidders would be comfortable with this concept and whether this could lead to a general reluctance to participate in public tendering procedures;
  
  
• Secondly, we note that the rationale for removing the obligation to include the characteristics and relative advantages of the winning tender is to reduce the burden on contracting authorities.  However, overall, we question whether holistically, the new approach to transparency will increase the burden placed on authorities given the wide scope of information which is intended to be published.  Under the current regime, authorities do not publish all of this information voluntarily.  While authorities may receive requests for disclosure of this type of information, they are addressed on a ‘case by case’ basis, with appropriate consideration of whether certain documents should be protected owing to their commercial sensitivity.  It seems to us that this task can be time-consuming and may lead to a substantial increase in workload if authorities are required to apply these considerations in respect of all bidders/bids.  We also wondered whether authority personnel may adopt a more cautious approach in respect of the application of FOIA and relevant legislation, in contemplation of the fact that it seems the information would be accessible to the wider public.  We note that the intention is provide guidance on the application of FOIA etc., however our view is that this should form an integral part of any future training programme on the new regime, if the Government wishes to ensure the new measures do deliver greater transparency;
  
  
• Thirdly, it is not yet clear exactly how much information will need to be disclosed in the central system before the authority can commence its standstill period.  For example, will this be limited to ensuring that certain mandatory fields are completed notwithstanding the content of those fields? Or is a more sophisticated process envisaged (e.g. spot checks by Cabinet Office staff to ensure the quality of the information is sufficient etc.)?  While this proposal may be a welcome concept for unsuccessful bidders (as this means that authorities will not be able to commence standstill until a certain minimum level of disclosure has been provided), there are again clearly important practical considerations which need to be thought through to ensure that the process is effective, delivers the aim of ensuring full transparency and cannot be easily subverted; and
  
  
• Finally, a personalised letter at the end of a procurement process, particularly one which has required bidders to input considerable time and resource, constitutes an acknowledgement of the effort contributed by bidders.  For this reason, we understand why many authorities may continue to make this gesture.  This is precisely the reason why some authorities continue to offer oral de-briefings, even though such meetings are not mandated by law.

Conclusions

In conclusion, the Green Paper presents some very interesting proposals and it is encouraging that the Government is keen to move towards a more transparent public contracting environment.  Some further thinking and/or clarification may be required in certain areas, however the Green Paper consists of a number of preliminary proposals rather than a firm indication of what the new regime will look like, therefore it is possible that these issues could be further clarified/ironed out prior to implementation. To summarise our key thoughts:

• the proposal to remove the obligation on authorities to send standstill letters should not necessarily give cause for alarm for bidders.  It is clear that the Government is proposing to retain an obligation to provide certain information to enable bidders to understand an award decision, albeit in a slightly different form;
  
  
• the concept of providing greater transparency on completion of a procurement process should be particularly welcomed by unsuccessful bidders who often struggle to obtain basic information about an award decision, albeit the proposal to provide “basic disclosure of tenders submitted” may require some further clarification so that bidders understand exactly what this means.  For example, bidders may require further assurances that their commercially sensitive information will be protected to avoid a scenario where bidders are reluctant to participate in public tendering procedures. We would also query how useful this information would be, if the majority of the documentation is redacted correctly under FOIA and other legislation;
  
  
• the level of transparency proposed by the Green Paper is likely to involve an increased workload for authorities (e.g. redacting documents etc.), however, this needs to be weighed against the benefit of greater transparency within public sector procurement; and
  
  
• in order to ensure that the new regime ensures that unsuccessful bidders will be able to (i) understand the reasons for their own scores; and (ii) understand why the winning tenderer won the competition, there will need to be a careful balance between meeting these requirements and protecting bidders’ commercially sensitive information. If a significant amount of information is redacted under FOIA and other relevant legislation (due to public sector personnel potentially adopting an over-cautious approach in light of the fact this information will be made publicly available), which results in a scenario where unsuccessful bidders cannot understand these fundamental points, then removing the obligation to send standstill letters may not work. In a ‘worst case’ scenario, this could have the opposite effect, e.g. unsuccessful bidders may find themselves in protracted discussions with authorities during the standstill period in order to obtain further information to understand their scores/the winning bidder’s scores. We believe that this is a risk which can be mitigated, however, by ensuring that FOIA and other relevant legislation is applied correctly through training and helpful guidance.