COVID-19: procurement and unforeseeable events
The Cabinet Office has published a Procurement Policy Note (PPN) highlighting that, in these exceptional circumstances, it is recognised that authorities may need to procure goods, services and works as a matter of extreme urgency. The PPN draws attention to regulation 32(2)(c) of the Public Contracts Regulations 2015, which permits contracting authorities to award contracts without competition or advertising due to circumstances of extreme urgency.
In Scotland, the equivalent provision (at regulation 33(1)(c) of the Public Contracts (Scotland) Regulations 2015) can be utilised by contracting authorities in the same way, where – if it is strictly necessary – for reasons of extreme urgency brought about by events unforeseeable by (and not attributable to) the contracting authority, the time limits for a regulated procedure cannot be met.
The PPN recognises that as coronavirus is serious and its consequences pose a risk to life – the ability to award contracts directly is designed to deal with this sort of exceptional, unforeseeable and urgent situation.
One word of caution is that contracting authorities should first ascertain whether there would be time to place a call-off contract under an existing commercial agreement such as a framework or dynamic purchasing system or perhaps to use a standard procedure with accelerated timescales due to urgency.
Further, while the current situation is clearly exceptional, there are still expectations on contracting authorities to:
- keep a written record of its justification for relying upon regulation 33(1)(c), demonstrating that it is satisfied that the tests have been met; and
- limit its requirements to what is absolutely necessary – consider the scope of what is being procured as well as the duration of the contract.
As an alternative, contracting authorities may consider extending or modifying an existing contract to allow it to respond to the challenges of COVID-19. Regulation 72(1)(c) provides a “safe harbour” for modifying a public contract without a new procurement procedure where:
(i) the need for modification has been brought about by circumstances which a diligent contracting authority could not have foreseen;
(ii) the modification does not alter the overall nature of the contract; and
(iii) any increase in price does not exceed 50% of the value of the original contract or framework agreement.
Authorities looking to rely upon regulation 72(1)(c) must publish details of the modification by way of an OJEU notice. It should, again, keep a written record of its justification for the modification with reference to the specific facts and circumstances – eg. resources have been depleted due to staff absence associated with the COVID-19 outbreak.
Given the capacity within procurement rules to accommodate exceptional circumstances; we do not anticipate the need for wholesale changes in response to the COVID-19 situation.
We do, however, see the potential need for emergency legislation to deal with the timescales for raising court proceedings. Currently, this is 30 days from the date on which the economic operator “first knew or ought to have known that grounds for starting the proceedings had arisen” unless “the court considers that there is a good reason for extending the period within which proceedings may be brought, in which case the court may extend that period up to a maximum of 3 months from that date”.
We assume that the current circumstances lend themselves to the courts exercising their discretion to extend the time-bar period to 3 months, but in the event that the COVID-19 outbreak impacts upon the ability to raise proceedings within that extended period, we anticipate the passing of secondary legislation to deal with this.
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