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COVID-19 and public procurement: advice for contracting authorities


Wednesday, March 25, 2020

As the world reacts to the COVID-19 pandemic, the public sector may be required to purchase essential goods and services more quickly than usual (or will experience substantial demand for particular goods and services). This may be complicated by supply chain difficulties with previously procured suppliers being unable to provide the level of goods or services required by the public sector due to stock/resource issues. Thankfully, the European Union (Award of Public Authority Contracts) Regulations 2016 (the 2016 Regulations) – the legislation governing public procurement in Ireland – permit contracting authorities to purchase goods or services via accelerated public procurement procedures in certain limited circumstances and in some specific cases via direct award of contracts without a full tender procedure.

In this note, we look at:

  • the options open to contracting authorities procuring in the short term;
  • the options open to contracting authorities procuring in the short to medium term;
  • the ability of contracting authorities to potentially modify existing public contracts; and
  • some considerations for contracting authorities currently running tender processes.

What happens if you need to purchase essential goods and services immediately?

The 2016 Regulations acknowledge that in certain circumstances contracting authorities are unable to follow standard public procurement procedures and will need to make direct awards to particular suppliers. Regulation 32 of the 2016 Regulations sets out the circumstances in which a contracting authority can use the “negotiated procedure without prior publication”, and in the current circumstances Regulation 32(2)(c) is particularly relevant:

insofar as is strictly necessary where, for reasons of extreme urgency not attributable to the contracting authority and brought about by events unforeseeable by the contracting authority, the time limits specified for the open procedures or restricted procedures or competitive procedures with negotiation cannot be complied with.” (emphasis added)

This is far from a “get out of jail” card for contracting authorities – it requires exceptional circumstances and it is important to note that the burden of demonstrating compliance on this particular provision rests on the contracting authority. Helpfully, the bar is not absolute impossibility, but a contracting authority is expected to conduct due diligence and assess the circumstances in each and every case.

If a contracting authority intends to use this provision, it should maintain a written justification of how it meets the following tests:

  • What are the objective reasons for extreme urgency?
    • These should be properly detailed – a contracting authority should maintain a written record of the reasons why the particular goods/service are required as a result of COVID-19.
  • How were these events unforeseeable?
    • If the urgency is a result of COVID-19, it is legitimate to suggest that the events were unforeseeable for contracting authorities.
  • Is the reason behind the urgency attributable to the contracting authority?
    • Contracting authorities cannot rely upon Regulation 32 if they failed to properly plan a procurement procedure or failed to carry out a procurement procedure at an earlier stage of the year – the 2016 Regulations will not permit contracting authorities to benefit from their own failure to act.
  • Are there any alternatives? Can the contracting authority run an open procedure/restricted procedure/competitive procedure with negotiation in time?
    • An accelerated open procurement procedure can in urgent situations be conducted in 30 days from start to finish and an accelerated restricted procedure can be run within 40 days from start to finish (in both cases including the standstill period). This will need to be considered by the contracting authority.
    • Whilst it is not required by the 2016 Regulations, we strongly recommend that the contracting authority also considers whether there are any existing frameworks that it could use and record why it cannot run a mini-competition in time if a relevant framework exists.
  • Is the size of the order reasonable and proportionate?   
    • It is inappropriate to purchase several years’ worth of particular goods/services or enter a long term contract by using Regulation 32.

It is important to note that even though a contracting authority may not have to follow standard public procurement procedures, it is still required to publish a contract award notice detailing the order within 30 days of signing the contract.  Contracting authorities are also required to provide an Annual Report by 31 March each year detailing all of the contracts above €25,000 ex VAT awarded without a competitive process.

What happens if we need to purchase essential goods and services as our stocks are running low?

A contracting authority may be in a scenario where it needs to purchase additional goods and services in the short to medium term (e.g. within the next 60 days). The 2016 Regulations acknowledge that in certain circumstances the minimum time limits can be reduced and open and restricted procedures can be “accelerated” where a state of urgency exists. Similar to the negotiated procedures outlined above, a contracting authority cannot rely on circumstances of its own making to accelerate these time procedures.

We have set out the accelerated time periods below:

  • Open Procedure – Regulation 27 – the minimum time limit for the receipt of tenders of 30 days[1] is reduced to 15 days;
  • Restricted Procedure – Regulation 28 – the minimum time limit for requests to participate is reduced from 30 days to 15 days and the minimum time limit for the receipt of tenders is reduced from 30 days to 10 days from the date on which the invitation to tender was sent.

Contracting authorities should maintain a written record to prove that the urgency is caused by an unforeseeable event (in this case COVID-19) and evidence of the effect it had on the contracting authority.

We have tender processes currently running – what should we do?

Contracting authorities may be forced to delay, alter or even cancel existing procurement processes as a result of COVID-19. Almost every procurement process has its own individual circumstances, but we have set out a number of points to note for contracting authorities below:

  • Contracting authorities have a great deal of discretion to cancel a procurement process, but they are required to inform each candidate and tenderer of a decision to cancel a procurement process as soon as possible;
  • Where contracting authorities intend to reduce the scope of their procurement, they should release updated documents as soon as reasonably practicable for review by tenderers and allow the market sufficient time to review the amended documentation (including, in some cases, extending the deadline for receipt of tenders);
  • Contracting authorities may decide not to hold interviews or presentations for tenderers to adhere to the national and WHO guidance on social distancing – alternative solutions, such as the use of videoconferencing or webinars, should be considered by contracting authorities and discussed with tenderers via eTenders; and
  • Contracting authorities are not under an obligation to extend tender deadlines if a request is received from tenderers, but any request should be considered seriously as compliance with the general principles of equal treatment and non-discrimination continue to apply and some tenderers may be struggling with meeting deadlines due to resource constraints.

Can I modify an existing contract because of COVID-19?

Regulation 72 of the 2016 Regulations governs the modification of public contracts during their term in a variety of circumstances.

Regulation 72(1)(c) of the 2016 Regulations allows for the modification of contracts and framework agreements without a new procurement procedure when:

  • the need for modification has been brought about by circumstances which a diligent contracting authority could not foresee; and
  • the modification does not alter the overall nature of the contract; and
  • the modification does not exceed 50% of the value of the original contract.

Depending on the particular contract, it may be possible for the contracting authority to justify the modification of a public contract in the current circumstances. Regulation 72(1)(c) is not frequently used by contracting authorities in Ireland as it is often a difficult test to meet  – as a consequence, we would strongly recommend obtaining legal advice before proceeding with any such modification as there may be a more suitable route to justify an extension of a contract.

If a contracting authority modifies a contract under Regulation 72(1)(c), it is required to publish a contract modification notice within 30 days of the modification.

Is there any useful further guidance produced to assist contracting authorities?

The Office of Government Procurement has issued an information note on COVID-19 and public procurement that should be reviewed by all contracting authorities. Whilst it does not apply to Irish contracting authorities, the UK’s Cabinet Office has published a Procurement Policy Note that contains much of the advice provided above in addition to some further practical tips.

 

[1] Presuming that the contract notice is sent electronically

 

For further information or advice in relation to COVID-19 and public procurement, please contact our Procurement team.

Article written with the assistance of Hazel Murphy.


Author

Kerri Crossen

PARTNER


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