COVID-19: Procurement Guidance on Urgent Contract Awards
26 March 2020
During the unprecedented circumstances we are all currently facing, many public sector bodies and utilities will need to urgently procure goods, services and / or works.
Under normal circumstances, for contracts caught by the procurement rules, a competitive tender process is required before a contract can be awarded. This process can take many weeks, or indeed months, to conclude. However, the procurement rules provide certain exceptions for addressing difficult circumstances such as these and moreover, the UK Government has now issued a welcome reminder and helpful guidance on just how those rules may help in the current situation.
On 18 March 2020, the UK Government published its guidance in relation to public procurement in light of the Coronavirus outbreak (COVID-19) (https://www.gov.uk/government/publications/procurement-policy-note-0120-responding-to-covid-19). This guidance has been published to provide reassurance in these unsettling times and assistance for bodies subject to the procurement rules, that need to quickly procure goods, services and / or works to ensure continued provision of public services.
This new guidance supplements provisions already implemented by the UK Government to ensure public procurement limitations are set aside as a result of extreme urgency of which COVID-19 falls within. For example, Regulation 32(2) (c) of the Public Contracts Regulations 2015 (as amended) (PCR 2015) provides for contracting authorities to use the negotiated procedure without prior publication “for reasons of extreme urgency brought about by events unforeseeable by the contracting authority”. This provision allows for contracting authorities to carry out either a negotiated procedure with limited competition (e.g. to directly approach a number of possible contractors) or a direct award to a supplier, without any competition.
Likewise for utilities, Regulation 32(2) (c) of the PCR 2015 is mirrored in Regulation 50(1) (d) of the Utilities Contracts Regulations 2016 (UCR 2016). Regulation 50(1) (d) states that utilities may use the negotiated procedure without prior call for competition “insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the utility, the time limits laid down for open procedures, restricted procedures and negotiated procedures with prior call for competition cannot be complied with”.
Additionally, the guidance note reminds contracting authorities that an extension / variation of a contract may be sought under Regulation 72 of the PCR 2015. Provided that the nature of the contract is not changed or goes over the 50% value threshold, a contracting authority is permitted to modify the contract where the reason for extension / variation could not have been foreseen. However, it must be noted that in order to rely on Regulation 72, a contracting authority must publish a contract modification notice in the Official Journal of the European Union. Equally, Regulation 88(c) UCR 2016 provides contracting authorities with the option of an extension / variation of a contract where the need for modification has been brought about by circumstances that could not have been foreseen and does not alter the overall nature of the contract (note that the 50% rule does not apply to utilities).
Furthermore, the guidance note states that, in relation to COVID-19, contracting bodies are permitted to enter into contracts without advertising or competing where they can prove the following tests have all been met:
1. There are genuine reasons for extreme urgency, for example:
- The contracting authority must take action against COVID-19 as it is a public health risk; and
- They are reacting to a genuine emergency and not planning for one.
2. The events that have led to the need for extreme urgency were unforeseeable, for example:
- The consequences of COVID-19 could not have been predicted.
3. It is impossible to comply with the usual timescales in the PCRs, for example:
- Not enough time to undertake an accelerated procurement under the open or restricted procedures, or competitive procedures with negotiation; and
- There is no time to place a call off contract under an existing commercial agreement such as a framework or dynamic purchasing system.
4. The situation is not attributable to the contracting authority, for example:
- They have not done anything to cause or contribute to the need for extreme urgency.
As set out in the guidance note, if availing of the exemptions, then sufficient written justification must first be put in place that demonstrates these tests are in fact satisfied. It is also essential that separate and renewed tests are undertaken before conducting any additional procurement, to ensure the events are still unforeseeable. As time goes on, what might amount to unforeseeable now, may not do so in the future.
The Procurement Policy Note (PPN) rightly stresses the importance of contracting authorities taking a phased approach which would mean only using extreme urgency direct awards for short-term supplies or services which could be for between three and six months. Alternatively, the extreme urgency procedures could also be helpful in the event of procurement procedures failing, for example, suppliers failing to deliver or increased demand for products which cannot be met by suppliers.
Therefore, whilst there is no doubt the challenges faced by public bodies and utilities alike are considerable (and in some cases may still be in the process of being fully scoped), the guidance provides a helpful reminder that there are processes in place to ensure that essential services and projects can continue to be delivered at this critical time and that procurement does not present a barrier to dealing with these challenges.
If you have any queries please contact Kerry Teahan at Carson McDowell for further information.
*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.