As set out in the recently published PPN 01-20 , the options available to public authorities (known as contracting authorities in procurement terms) under the Public Contract Regulations 2015 (PCRs), include:
- Direct award without competition due to extreme urgency (Regulation 32(c)): contracting authorities may rely on this exemption provided the following requirements are satisfied:
- There is a genuine case of extreme urgency;
- The events that have led to the need for extreme urgency were unforeseeable;
- It is impossible to comply with the usual timescales under the PCRs;
- There is no time to place a call off contract under an existing commercial agreement such as a framework or dynamic purchasing system; and
- The situation is not attributable to the contracting authority i.e. the contracting authority has not done anything to cause or contribute to the need for extreme urgency.
Contracting authorities should:
- keep a written justification to show that they have satisfied the above tests;
- carry out a separate assessment of the above tests before undertaking any subsequent or additional procurements to ensure that the tests continue to still be met - particularly to ensure that the issues being addressed by the emergency procurement remain unforeseeable.
- monitor requirements to ensure that they only procure what is absolutely necessary both in terms of quantity and the length of contract.
This seems the most likely procedure to invoke when authorities are making emergency purchases and have no time to consider open competition of any sort. While exceptions to the usual rules are normally interpreted restrictively it is difficult to imagine that the present circumstances of COVID-19 emergency would not qualify as a relevant case of extreme urgency for a variety of commodities that will be required. Procuring authorities would still be well advised to document the basis for invoking such procedures every time, even if apparently self-evident.
2. Direct award due to absence of competition or protection of exclusive rights (Regulation 32(b): Contracting authorities may rely on this exemption in the following circumstances:
- where the works, goods or services needed e.g. due to special COVID-19 considerations, can only be supplied by a particular supplier because:
- competition is unavailable for technical reasons; or
- it is necessary to ensure the protection of exclusive rights, including intellectual property rights; and
- where in addition the above circumstances:
- there is no reasonable alternative or substitute available; and
- the contracting authority is not doing anything which artificially narrows the scope of the procurement e.g. by over-specifying the requirement
As per regulation 32(c) above.
3. Call off from an existing framework agreement or dynamic purchasing system: Central purchasing bodies, such as the Crown Commercial Service, offer public bodies access to a range of commercial agreements including framework agreements and dynamic purchasing systems (DPS). Contracting authorities are free to use one of these commercial agreements as long as:
- they were clearly identified as a permitted customers in the original OJEU notice or the invitation to confirm interest;
- the goods, services or works to be procured fall within the scope of those covered by the contract, framework agreement or DPS;
- the contract, framework agreement or DPS was procured in accordance with the PCRs; and
- the terms of the contract, framework agreement or DPS are suitable and meet the contracting authority's requirements without the need for significant changes.
Framework agreements provide for direct awards, mini-competitions or both:
- Contracting authorities must follow the procedure for awarding a call-off contract set out in the relevant framework agreement; and
- An award under a DPS has to be by mini-competition and the minimum time for receipt of tenders is 10 days.
4, Call for competition using a standard procedure with accelerated timescales (Regulations 27, 28 & 29):Contracting authorities can reduce the minimum timescales for the open procedure, the restricted procedure and the competitive procedure with negotiation where a state of urgency e.g. where COVID-19 related issues render the standard timescales impracticable:
- For procurements under the open procedure, restricted procedure, and competitive procedure with negotiation, timescales can be reduced to 15 days for receipt of tenders plus the minimum 10 days for the standstill period;
- There is no express requirement for the situation to be unforeseeable or not attributable to the contracting authority but contracting authorities should set out in their contract notice a clear justification.
- Contracting authorities can also consider the use of the Light Touch Regime for specific health and social care related services (see regulation 74-77 of the PCR). While contracting authorities are required to advertise contracts in OJEU and publish contract award notices, they are not required to use the standard procurement procedures (open, restricted etc.) and are also free to set their own timescales provided they are reasonable and proportionate.
Contracting authorities must ensure that they carry out any expedited procurement procedures within the boundaries set out in the above provisions.
5. Extending or modifying a contract during its term: Regulation 72 of the PCR allows contracting authorities to extend or modify existing contracts in the following circumstances:
- where pursuant to Regulation 71(1)(a) the proposed modifications have been provided for in the initial procurement documents in clear terms and any such modifications do not alter the overall nature of the contract or the framework agreement;
- where pursuant to Regulation 72 (1)(b) additional works, services or supplies have become necessary but a change of contractor:
- cannot be made for economic or technical reasons;
- would cause significant inconvenience or substantial duplication of costs; and
- any increase in the original contract price does not exceed 50%; or
- where pursuant to Regulation 72(1) (c), a contracting authorities needs to extend or modify the existing contract in an emergency situation and any increase in the contract price does not exceed 50% of the value of the original contract or framework agreement.
- Contracting authorities should keep a written justification showing compliance with the above conditions. The justification should demonstrate that the decision to extend or modify the particular contract(s) resulted from the COVID-19 outbreak with reference to specific facts, e.g. the contracting authority's staff being diverted by procuring urgent requirements to deal with COVID-19 consequences, or staff being off-sick and cannot therefore complete a new procurement exercise;
- Contracting authorities should publish the modification by way of an OJEU notice stating that they have relied on Regulation 72(1) (c).
- Although multiple modifications are permissible, each one should not exceed the 50% of the original contract value;
- Contracting authorities should consider limiting the duration and/or scope of the modification and running a procurement for longer-term/wider scope requirements alongside; and
- where more than one ground for a modification under Regulation 72 is applicable, this may lower the legal risk and therefore contracting authorities should ensure all relevant grounds are set out in their written justification.
Contracting authorities procuring under the Defence and Security Public Contracts Regulations 2011, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 will need to check similar provisions in those Regulations.
The above offers very helpful guidance to procuring authorities to enable them to proceed with emergency purchasing designed above all to provide quick results, with less fear of being caught up in procurement wrangles. While the guidance is by no means a carte blanche to "ride roughshod" over the existing procurement rules on account of the COVID-19 crisis (and indeed the guidance does not change the law, it merely highlights the flexibility already within it to deal with a crisis), it does offer a reassuring basis from which authorities may proceed, whilst reminding them of the steps to take in order to safeguard that they remain within the law and invoke the exceptions only when the facts justify it.
As a related point suppliers to public authorities should not normally be concerned by State aid as an issue when answering the call from government to supply particular goods, services or works. There is a usual presumption of no subsidy to the seller when purchasing anything at arm's length and at market value. While a lack of competition takes away an automatic presumption of market price this can still be readily established by reference to usual market benchmarks.
DWF Law LLP has a breadth of expertise in public procurement and State aid law matters. We are able to draw upon a team of leading experts, in our UK, Brussels and other international offices, who have extensive experience in this area, including working within the UK Government on high profile funding matters, defending projects from recovery and designing projects to meet the rules.
This article was authored by Colin Murray, Jonathan Branton and Adelani Ayoola
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