Public sector bodies and utilities are normally required to advertise opportunities and conduct public procurement competitions before entering into a contract.
These competitions usually take weeks or months to complete. This creates difficulties in light of the COVID-19 pandemic where certain goods, services and/or works are required urgently and in greater volumes, for example personal protective equipment and ventilators.
In this briefing, Dorit McCann explores the options available to public bodies to source goods, services and works urgently while complying with the procurement rules. The Office of Government Procurement (OGP) has also published a guide to COVID-19 and Public Procurement which can be accessed here.
- Public authorities may make direct awards without the need to run a competitive process in the case of extreme urgency or where there is an absence of competition
- Use of accelerated timescales may be permitted
- A light touch regime applies to health, social and other specific services
- Existing contracts may be extended or modified in certain circumstances.
Direct awards due to reasons of extreme urgency
Regulation 32(2) of the European Union (Award of Public Authority Contracts) Regulations 2016 (Regulations) allows contracting authorities to make a direct award without the need to advertise the contract or to run a competitive process, where this is strictly necessary due to reasons of extreme urgency and provided they can demonstrate the following:
- there are genuine reasons for the extreme urgency, for example the need to respond to COVID-19 immediately because of public health risks or the loss of existing supply of goods/services, and it is necessary to react due to a genuine emergency;
- the events leading to the extreme urgency were unforeseeable by the authority, which is currently the case with COVID-19;
- it is not feasible to comply with the usual timescales, for example there is no time to run an accelerated procurement and no time to place a call off contract under an existing framework or dynamic purchasing system;
- the situation is not attributable to the contracting authority, for example the authority has not done anything that could have led to or contributed to the need for extreme urgency.
The above tests make it clear that authorities cannot use the COVID-19 outbreak as a reason for circumventing the procurement rules where the urgency is not a direct result of COVID-19 or where the procurement is delayed for other reasons. The OGP has stressed that any direct award must be limited to what is absolutely necessary in terms of what is procured and the length of the contract. Authorities must also bear in mind that what might be unforeseeable now may be not be so in the future.
Authorities are still required to publish a contract award notice in the Official Journal of the EU (OJEU). In addition, the OGP advises that contracting authorities should keep a written justification which addresses each of the above tests and retain this for audit purposes. Any direct award above €25,000 must be reported in line with Circular 40/02.
Direct award due to absence of competition or protection of exclusive rights
Regulation 32(2) also allows a direct award where the works, supplies or services can only be supplied by a particular economic operator, either because competition is absent for technical reasons or for the protection of exclusive rights, provided:
- no reasonable alternative or substitute exists, for example where there is only one supplier with the required expertise or with the capacity to do so on the required scale or where the supplier has the exclusive right to exploit rights relating to the goods; and
- the authority has not artificially narrowed down the scope of the procurement, for example through over-specification.
Using a standard procedure with accelerated timescales due to urgency
Where contracting authorities do not meet the stringent requirements necessary to make a direct award in line with the above, they can reduce the timescales for the standard procedures where a state of urgency renders them impracticable. For example, the time limit for receipt of tenders can be reduced to 15 days. The accelerated procedure can be used in a wider set of circumstances as there is no requirement for the situation to be unforeseeable or not attributable to the contracting authority.
Light touch regime
The light touch regime applies to health, social and other specific services, for example the supply of nursing or medical personnel. This gives authorities significantly more freedom on how to procure these services. Contracts must still be advertised in OJEU and contract award notices must be published, but there is no requirement to use standard EU procedures and no minimum timescales (provided they are reasonable and proportionate).
Extending or modifying an existing contract
Regulation 72 of the Regulations allows for the substantial modification of a publicly procured contract without a new procurement procedure in several circumstances, including where:
- the need for the modification has been brought about by circumstances which a diligent contracting authority could not have foreseen, for example a new procurement process cannot be completed as staff are off sick;
- the modification does not alter the overall nature of the contract; and
- any increase in price does not exceed 50% of the value of the original contract or framework agreement.
As with direct awards, any extension or modification must be limited to what is necessary to address the unforeseeable circumstances and a written justification outlining how the modification is related to COVID-19 must be kept. In addition, a modification notice must be published in OJEU.
What about current procurement processes which are impacted by COVID-19?
Contracting authorities may decide to delay or cancel an award procedure or not to award a contract, for example where resources now need to be reallocated or diverted from the original procurement due to COVID-19. Authorities should also consider whether deadlines should be extended to allow sufficient time for tenderers to respond in the current circumstances.
Many public bodies and utilities are facing significant challenges as a result of the COVID-19 pandemic. The public procurement rules allow them to overcome these difficulties to ensure that essential services and goods can be delivered. However, while the use of direct awards is justified where there is extreme urgency, authorities must be careful to use these exemptions from the normal rules narrowly, ie only for short-term supplies or services. Where the procurement is not affected by COVID-19 issues, contracting authorities must continue to conduct competitive procurement processes to ensure value for money, transparency and equal treatment.
Communication with suppliers and tenderers is vital during this crisis to allow authorities to understand their supply chain and to understand any difficulties they are facing. This may prompt authorities, for example, to require a certain level of stock to be held within Ireland for Irish use.
For more information please get in touch with Dorit McCann (EU, Competition & Procurement).
To discuss any other COVID-19 related issues impacting your business, please get in touch with Barry Cahir (Litigation and Insolvency), Thomas O'Dwyer (Litigation), Sharon Delaney (Litigation), Dorit McCann (EU, Competition & Procurement), Damian Maloney (Corporate and Commercial), Aidan Marsh (Commercial Property), Gerry Gallen (Commercial Property), Sandra Masterson Power (Employment), Paul Gough (Employment), Edward Evans (Corporate & Commerical), Fidelma McManus (Housing) or your usual Beauchamps contact.