Limitation and standstill: why you shouldn’t conflate the two!

In a recent public procurement case, a court refused to allow a small charity that provides services to people with learning disabilities an extension of time to issue its claim against a council. The charity had wrongly conflated the standstill period with the limitation period and the claim was therefore out of time. The court decided that there was no good reason to extend time, so the claim was struck out.

What is the limitation period?

The limitation period is the time within which a claimant has to commence formal legal proceedings at court. For many claims, this period can last a number of years. However, to ensure certainty in relation to contracts with public bodies, this period is much shorter for challenges to decisions following a public procurement.

The Public Contracts Regulations 2015 (“PCR”) stipulate that formal legal proceedings need to be started within 30 days of the claimant becoming aware that the grounds for a challenge have arisen – or within 30 days of when they ought to have been aware.

What is the standstill period?

The PCR stipulate that an authority must not enter into a contract with the winning bidder for a period of at least 10 days from when the authority informs all bidders which bidder has won the procurement. This is called the “standstill period”.

The standstill period is intended to give losing bidders an opportunity to challenge the award of the contract to the winning bidder. If a losing bidder commences formal legal proceedings at court within this standstill period, then the authority cannot enter into the contract with the winning bidder until a court has authorised them to do so following a hearing.

This means that losing bidders still have an opportunity to persuade the authority or the court that the contract should be awarded to them instead of the winning bidder. Once the authority has awarded the contract, the only remedy available to a losing bidder is an award of damages.

Can the limitation period and standstill period be extended?

An authority can agree to extend the standstill period for as long as it sees fit. Often it will do so while it considers the grounds on which a losing bidder is threatening to challenge its decision to award the contract to the winning bidder. In effect, it is simply agreeing to hold off from awarding the contract.

The limitation period is fixed at 30 days by the PCR. However, it can be extended to up to three months by the court when it considers that there is a “good reason” for doing so.

What happened in this case?

The charity was providing services to people with learning disabilities on behalf of the council. The council was the charity’s only client and the charity had been supporting a number of vulnerable individuals for years. When the council undertook a procurement process for the award of 12 adult learning supported living services, the charity bid for all the lots that covered the services it was currently providing.

Having evaluated the bids, the council informed the charity in a decision notice that it had been unsuccessful in all the lots for which it had bid. The council also provided reasons for the way it had scored the different elements of the charity’s bid. The 10-day standstill period started to run from that date, as did the 30-day limitation period.

The charity complained that the council’s evaluation of its bid was in breach of the principles of transparency and equal treatment that underpin public procurement. After some correspondence, the council agreed to extend the standstill period to a date 34 days from the date of the decision notice. The parties continued to exchange letters but ultimately the charity formally issued a claim against the council 32 days from the date of the decision notice.

As a result, the council made an application to the court arguing that, even though the claim had been issued before the end of the standstill period, the limitation period had by that stage already expired. They argued that the claim was therefore out of time and should be struck out.

The charity made its own application, arguing that the court should agree to extend the limitation period. However, the judge refused to do so. The error in conflating the limitation period and the standstill period did not amount to a “good reason”. Nor did the fact that the delay was short or that the charity’s decision-making structure was very strict. Nor that an unfavourable finding would have serious consequences for the survival of the charity.

The judge therefore struck out the charity’s claim for being out of time.

Why is the case important? / What does it mean for me?

The case is an important reminder of the distinction between the limitation period and the standstill period in the context of a challenge to a public procurement. And how imperative it is not to conflate the two.

Although an authority might agree to an extension of the standstill period, this does not equate to an extension of the limitation period. Unless the claim is issued within the limitation period, it is likely to be struck out by the court – regardless of whether the standstill period has expired and even if the delay is very short.

The case is also helpful in providing guidance on when a court will agree to extend the limitation period – in practice, very rarely. The judge suggested that a “good reason” might include a factor out of the control of the claimant that had prevented them from starting the claim, for example a significant illness. 

If you are concerned about confusing the limitation period with the standstill period, worried about the very tight timescales when challenging public procurements or would like to discuss anything else related to public procurement, please don’t hesitate to contact us.