These unusual and uncertain times call for rare and exceptional measures – that is the message emanating from recent guidance published by both the UK Cabinet Office and the European Commission on public procurement during the current COVID-19 crisis.
Both sets of guidance provide advice to contracting authorities on the mechanisms built into the public procurement framework that enable them either urgently to procure goods, services, and works, or to do so within shorter timeframes than would normally apply. The publications also serve as useful reminders for economic operators on the limits and requirements of these mechanisms, helping them to ensure that a contracting authority acts within the bounds of the law, thereby reducing the risk of a contract being subject to challenge.
Options available to contracting authorities in cases of urgency
The guidance explains that the following options are available to contracting authorities to procure goods, services, and works urgently.
Call for competition using a standard procedure with accelerated timescales
- Contracting authorities may choose to award a contract following a standard procedure with accelerated timescales. In case of urgency that renders the normal timescales impracticable, the deadline for submission of tenders in an open procedure can be reduced to 15 days (although the ten day standstill period must still be observed). In a restricted procedure, the deadline for submitting a request for participation can be reduced to 15 days and the deadline for submitting an offer to 10 days.
- It is noteworthy that, unlike when making a direct award (as to which see below), there is no express requirement for the situation to be unforeseeable or not attributable to the contracting authority.
- However, the contracting authority must publish an OJEU notice that contains a clear justification for the use of accelerated timescales, citing the COVID-19 outbreak and the reasons that the consequential urgency meant that the standard minimum timescales could not be observed for the procurement in question.
Direct awards due to extreme urgency
- In cases of extreme urgency, a contracting authority may instead make a direct award of a contract. This allows the contracting authority to negotiate directly with an economic operator with no publication requirements, time limits, or other procedural requirements.
- Given pursuing this procedure runs counters to the principles of equal treatment and transparency, a contracting authority must ensure that the following tests are satisfied in respect of direct awards: (1) there are genuine reasons for extreme urgency; (2) the events leading to the need for extreme urgency were unforeseeable; (3) it is impossible to comply with the usual timescales; and (4) the situation is not attributable to the contracting authority.
For a contracting authority, the obvious question is therefore whether the current COVID-19 crisis gives rise to such urgency that shortened timeframes or a direct award are appropriate to procure goods, services, or works in its fight against the pandemic.
Whilst ultimately the answer to this question will depend on the specific circumstances of each procurement, the UK Cabinet Office and European Commission guidance is clear that the COVID-19 pandemic will commonly create situations whereby access to supplies and services is urgent, and in which the normal requirements of the procurement regime should not hold up the contracting necessary to put in place the measures needed to combat the crisis.
However, the European Commission flags that the use of the direct award procedure remains exceptional and that the requirements for using this procedure should be interpreted restrictively. As such, the guidance suggests that contracting authorities should first consider whether pursuing the standard procedure with accelerated timescales would be sufficient for its purposes and, in any event, use direct awards only to cover the gap until more stable solutions can be found to meet the authority’s needs, for example by way of framework agreements.
Other options available to contracting authorities
The UK Cabinet Office advice flags other options available to contracting authorities within the public procurement framework that may enable them to meet their needs during the COVID-19 crisis.
- Extending or modifying a contract during its term without a new procurement procedure. This is available where the need is brought about by circumstances that a diligent contracting authority could not have foreseen. However, the extension or modification must be limited to what is absolutely necessary to address the unforeseeable circumstance.
- Direct awards due to the absence of competition or protection of exclusive rights, available where the works, goods, or services needed to respond to the COVID-19 pandemic can only be obtained from a particular supplier. However, there must be no reasonable alternative or substitute available and the contracting authority must not artificially narrow the scope of the procurement in order to rely on the procedure.
- Call offs under pre-existing framework agreements or dynamic purchasing systems.
- Contracting authorities do not have carte blanche: Whilst it is clear that non-standard procedures will be more readily available to contracting authorities as a result of COVID-19, this does not mean that there is free reign to ignore EU procurement regulation. As such, for clients seeking to win a contract outside of the framework of a standard procurement procedure, it is important to be familiar with the relevant legislative requirements or seek professional advice to get comfortable that the process is being run lawfully and that a future challenge to the contract is therefore unlikely. This is especially so if a direct award is being pursued as the relevant tests are particularly strict.
- Open communication is key: Open and constructive dialogue between contracting authorities and suppliers is more important than ever. Where contracting authorities will more readily use direct awards, suppliers must ensure they are effectively communicating their capacities and offerings to contracting authorities, as there is less likelihood of having an open competition in which to do so. Moreover, in order for suppliers to get comfortable that the procedure is being run lawfully, it will be critical to understand the authority’s reasons for pursuing a particular procedure and to have opportunities to raise any concerns. As part of this dialogue, suppliers should strongly encourage the contracting authority to keep a detailed record of the decisions it has made in relation to the contract. This could be invaluable in the event that the procurement process is challenged by a third party.
- Reputational risk must factor into decision-making: As the guidance makes clear, under the law contracting authorities have options to enter into contracts with suppliers urgently, without following the usual requirements of public procurement regulation. Equally, we anticipate that the courts will take a more liberal approach to interpreting the relevant tests given the unprecedented nature of the pandemic, and the public health crisis to which it has given rise. In addition, such a challenge is likely to carry great reputational risks as the public are unlikely to look kindly upon a company they perceive as hindering an authority from responding to a health emergency.
- The fundamental principles of procurement continue to apply: Nevertheless, while the message from the UK Government and EU Commission is clear that procurement regulation does not and should not hinder the response to the pandemic, the fundamental principles of public procurement – namely equal treatment, non-discrimination, proportionality and transparency – continue to prevail. Therefore, it is important that suppliers continue to hold contracting authorities to account. Accordingly, in these unusual and uncertain times, we strongly advise seeking legal advice and considering very carefully whether it is sensible to challenge the award of a contract made by way of an exceptional procurement procedure.