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The UK Government publishes a Procurement Policy Note which sets out guidelines to contracting authorities on responding to the impact of COVID-19 when carrying out regulated procurement activities

Introduction

In the light of the global outbreak of Covid-19, contracting authorities will need to procure goods, services and works in truly exceptional circumstances and, potentially, their requirements will be extremely urgent. Therefore, contracting authorities may have legitimate reasons not to comply fully with the usual advertising and competitive tendering requirements foreseen by the UK Public Procurement Regulations. Those Regulations already envisage a number of exceptions to and exemptions from the usual advertising and competitive tendering requirements in exceptional circumstances. The UK government has published a Procurement Policy Note, which sets out guidelines to contracting authorities on responding to the impact of Covid-19 when carrying out regulated procurement activities (Procurement Policy Note 01/20: Responding to Covid-19, the "PPN").

This briefing sets out a summary of the PPN, including the types of measures contracting authorities may adopt in order to respond to the challenges brought about by Covid-19 when procuring relevant goods, services and works contracts.

Whom will it affect?

  • Local authorities.
  • Central government departments.
  • Executive agencies.
  • Non-departmental public bodies.
  • NHS bodies.
  • Bidders for public contracts.
  • The wider public sector.

What procurement measures may be adopted in situations of extreme urgency?

If goods, services or works need to be procured urgently, the Public Contracts Regulations 2015 ("PCR") provide a number of options to contracting authorities to avoid carrying out a regulated competitive procurement exercise subject to the ordinary minimum timescales. In particular, contracting authorities should consider whether grounds exist:

  • to make a direct award to a chosen supplier without first carrying out an fair, open and transparent competitive tender (e.g. due to extreme urgency);
  • to award a call off contract from an existing framework agreement or dynamic purchasing system;
  • to use one of the competitive tendering procedures foreseen by the PCR, but subject to accelerated timescales;
  • to extend or modify an existing contract;
  • to seek additional supplies, works or services from an existing supplier, which are similar to those that have previously been procured; and
  • to contract directly with an "in-house" supplier (i.e., a related contracting authority).

The sections below focus on those measures which are most likely to be relevant to contracting authorities when seeking to respond to the challenges posed by the global outbreak of Covid-19.

Direct awards due to extreme urgency

The Covid-19 pandemic is an unprecedented and unforeseeable event. In these exceptional circumstances, there are expected to be legitimate reasons for contracting authorities not to comply with their advertising and competitive tendering obligations under the PCR when procuring goods, services and works which are urgent in nature. The possibility of not complying with those obligations in cases of extreme urgency is foreseen by Regulation 32(2)(c) of the PCR. In order to rely on this exception, the contracting authority is required to demonstrate that:

Genuine reasons for extreme urgency exist. This is likely to require the contracting authority to be able to prove that it needs to respond to Covid-19 consequences immediately because of public health risks or loss of existing provision at short notice and it is reacting to a genuine emergency.

Unforeseeability of events leading to the emergency. This limb should be easily established on the basis that the consequences of Covid-19 are so novel that they could not have been predicted by contracting authorities.

Impossibility of complying with the usual timescales. Meeting this limb depends on how quickly the goods, services or works are required. In particular, the contracting authority needs to be able to show that there is no time to run an accelerated procurement under the open or restricted procedures or no time to place a call off contract under an existing framework/dynamic purchasing agreement.

Non-attributability of the contracting authority. The contracting authority needs to be able to show that it has not done anything to cause or contribute to the extreme emergency, e.g., by delaying the decision to commence a procurement exercise.

The PPN advises:

  • procuring authorities to keep a record of the reasons why they were justified in using the extreme urgency exception; and
  • that the scope and duration of directly awarded contracts should be limited to what is absolutely necessary.

The PPN notes that delay or failure to do something in time does not render a situation "extremely urgent" since:

  • contracting authorities are expected to plan their time efficiently so that they have enough time to use a competitive procedure;
  • accelerated competitive award procedures can be completed quickly;
  • knowing that something needs to be done means it is foreseeable;
  • delay or failure by the contracting authority to do something is likely to mean that the situation is attributable to it.

If a direct award is made a contract award notice should be published within 30 days of awarding the contract.

For completeness, we note that there are other legal justifications for making direct awards pursuant to Regulation 32 of the PCR. Those justifications include where only one contractor could be awarded the contract due to technical reasons or in order to protect exclusive rights. It is often difficult to establish that direct awards are justified on this basis. However, there may be additional scope to rely on this exception to competitive tendering requirements if the Covid-19 outbreak results in only one supplier with the expertise to perform the contract, or the capacity to perform the contract.

Call off from an existing framework or dynamic purchasing system

The PPN reminds contracting authorities that central purchasing bodies, such as the Crown Commercial service, offer public bodies access to a range of framework agreements and dynamic purchasing systems.

Contracting authorities should consider:

  • whether the goods, services or works that they wish to procure are covered by any framework agreements or dynamic purchasing systems; and
  • whether they are eligible to use those framework agreements or dynamic purchasing systems.

Using accelerated timescales

The minimum timescales for the open procedure, restricted procedure, and competitive procedure with negotiation may be reduced where there is a legitimate reason why the standard timescales are impracticable.

Under the open procedure, timescales can be reduced to 15 days for receipt of tenders plus the minimum 10 days for the standstill period.

There is no requirement for the situation to be unforeseeable or not attributable to the contracting authority, but a clear justification should be set out in your OJEU notice. The following example has been provided in the PPN:

“The Covid-19 outbreak has given rise to an urgent need for the supply of [description of what is being procured] because [explanation of urgency]. This does not give [name of contracting authority] sufficient time to comply with the standard [open procedure / restricted procedure / competitive procedure with negotiation] timescales for this procurement. [Contracting authority] considers this to be a state of urgency which it has duly substantiated. Accordingly, [contracting authority] is using the accelerated time limits permitted under the Public Contract Regulations 2015 (regulation [27(5) for the open procedure / 28(10) for the restricted procedure / 29(10) for the competitive procedure with negotiation]) in respect of this procurement”.

The PPN reminds contracting authorities that the Light Touch Regime applies to specific health and social care related services. If the Light Touch Regime applies, there are no express rules on the design of the award procedure, other than a requirement to ensure that any timescales are reasonable and proportionate.

Contract extensions and modifications

Grounds for extensions and modifications

Contracts may be extended and/or modified without a new procurement procedure in certain situations set out in Regulation 72(1) of the PCR. Those situations include unforeseen circumstances.

It is permissible to extend or modify a contract on account of unforeseen circumstances where all of the following conditions are satisfied:

  • the need for modification has been brought about by circumstances which a diligent contracting authority could not have foreseen;
  • the modification does not alter the overall nature of the contract;
  • any increase in price does not exceed 50 per cent of the value of the original contract or framework agreement.

The PPN advises contracting authorities to:

  • limit any extension or other modification to what is absolutely necessary to address the unforeseeable circumstances; and
  • keep a written record of the justification for extending or modifying a contract.

This justification should demonstrate that the decision to extend or modify the particular contract(s) was related to the Covid-19 outbreak referring to specific facts (e.g. staff are off sick so they cannot complete a new procurement exercise). There is also a requirement to publicise the modification by way of an OJEU notice confirming that the contracting authority has relied on regulation 72(1)(c).

Limitations on any extensions/modifications

Multiple extensions and/or modifications are permissible pursuant to regulation 72(1)(c) of the PCR, however the value of each modification or extension should not exceed 50 per cent of the original contract value.

The PPN advises contracting authorities to consider:

  • limiting the duration and/or scope of any extensions and modifications; and
  • running a procurement for longer-term/wider scope requirements at the same time as they negotiate an extension or modification.

Other grounds for extending contracts

Contracting authorities should also consider whether any of the other permissible modification grounds under Regulation 721(1) apply (e.g., has the proposed variation been provided for in the contract? Are there economic or technical reasons preventing the contracting authority appointing a new contractor to provide additional goods, services or works? Are the modifications not substantial?).

If more than one permissible modification ground is applicable, the legal risk may be lower. Therefore, contracting authorities should ensure all relevant grounds are included in their written justification.

PDF Version

Authors

  • Ashurst (London)
  • Ashurst (London)

Quotation

Euan Burrows, Steven Vaz, The UK Government publishes a Procurement Policy Note which sets out guidelines to contracting authorities on responding to the impact of COVID-19 when carrying out regulated procurement activities, 18 March 2020, e-Competitions Preview, Art. N° 93854

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