The UK Government has issued guidance on using public procurement to respond to the COVID-19 emergency earlier today (see PPN 1/20). This follows other EU countries’ introduction of emergency legislation and guidance on the same topic (see eg Pedro Telles’ discussion of Portugal’s).
If any EU country is yet to issue guidance or legislation, they should not necessarily be expected to do so as, strictly speaking, that should not be necessary because EU law (and, implicitly, most domestic transpositions) already contains the necessary escape valve to allow for the setting aside of most constraints on the contracting authority’s discretion through extensive use of direct awards where extreme urgency makes them indispensable eg to protect human health or orderly social functioning. Domestic emergency legislation may only be necessary where domestic rules impose other constraints (eg budgetary authorisation, legal compliance checks) that also need to be waived or suspended.
From an EU law perspective, it is worth reminding ourselves that Art 32(2)(c) of Directive 2014/24/EU clearly establishes that contracting authorities can resort to the negotiated procedure without prior publication ‘in so far as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with. The circumstances invoked to justify extreme urgency shall not in any event be attributable to the contracting authority.’ That is, contracting authorities facing extremely urgent needs can carry out either a negotiated procedure with limited competition on the basis of direct approaches to potential contractors, or a direct award of a contract to a specific supplier without any competition.
The UK guidance is particularly relevant to understand the limits of this exception, as the domestic transposition had followed a strict copy-out approach and reg.32(2)(c) of the Public Contracts Regulations 2015 has the same content as Art 32(2)(c) Dir 2014/24. In that regard, the content of PPN 1/20 usefully explains that:
… in responding to COVID-19, contracting authorities may enter into contracts without competing or advertising the requirement so long as they are able to demonstrate the following tests have all been met:
1) There are genuine reasons for extreme urgency, eg:
you need to respond to the COVID-19 consequences immediately because of public health risks, loss of existing provision at short notice, etc;
you are reacting to a current situation that is a genuine emergency - not planning for one.
2) The events that have led to the need for extreme urgency were unforeseeable, eg:
the COVID-19 situation is so novel that the consequences are not something you should have predicted.
3) It is impossible to comply with the usual timescales in the PCRs, eg:
there is no time to run an accelerated procurement under the open or restricted procedures or competitive procedures with negotiation;
there is no time to place a call off contract under an existing commercial agreement such as a framework or dynamic purchasing system.
4) The situation is not attributable to the contracting authority, eg:
you have not done anything to cause or contribute to the need for extreme urgency.
In assessing whether these tests are met, it will be important to remember that the CJEU has not imposed a threshold of absolute impossibility of alternative procurement approaches (in particular if they are evidenced ex post). In that regard, even if the interpretation of the grounds for access to extreme urgency procedures need to be interpreted narrowly and the CJEU has stressed that recourse to direct awards need to be subjected to a strict assessment of whether the contracting authority “acted diligently and whether it could legitimately hold that the conditions [for recourse to this procedure] were in fact satisfied” (Fastweb, C-19/13, EU:C:2014:2194, para 50), which make it clear that this procedure must be understood as exceptional (Fastweb, para 106)—in my opinion, there is little doubt that contracting authorities working to react to the challenges of COVID-19 can broadly rely on this exception for the first wave of reactive measures that require emergency supplies or services, provided only that they make sure that they respect the proportionality of the measures and that they document their decision-making adequately.
In that regard, the UK guidance is once again helpful when it establishes that
Contracting authorities should keep a written justification that satisfies these tests. You should carry out a separate assessment of the tests before undertaking any subsequent or additional procurement to ensure that they are all still met, particularly to ensure that the events are still unforeseeable. For example, as time goes on, what might amount to unforeseeable now, may not do so in future.
You should limit your requirements to only what is absolutely necessary both in terms of what you are procuring and the length of contract.
Delaying or failing to do something in time does not make a situation qualify as extremely urgent, unforeseeable or not attributable to the contracting authority. This is because:
the PCRs expect a contracting authority to plan its time efficiently so that it is able to use a competitive procedure;
competitive alternatives (eg. an accelerated open procedure) can be completed quickly;
case law has held that knowing that something needs to be done means it is foreseeable;
a contracting authority’s delay or failure to do something is likely to mean that the situation is attributable to the contracting authority.
The guidance strikes an adequate balance when stressing the relevance of the passage of time in terms of unforeseeability of the need, which should make contracting authorities think about phased approaches involving eg extreme urgency direct awards for short-term supplies or services (eg the next three to six months), and urgent procedures for the following period/s. However, in the opposite direction, it could be that the passage of time and the impact of the emergency measures on public contractors trigger the need for further access to extreme urgency procedures due to the possible future breakdown of procurement mechanisms currently in place — eg if suppliers fail to deliver (eg due to lockdown of their premises, supply chain breakdown or any other problems), or demand is such that they cannot fill in the requirements of all contracting authorities placing orders (eg in the context of a framework agreement). This is also covered by the notice, which shows great commercial awareness to the fact that the unforeseeability does not only refer to the public health situation generating the relevant need, but also to the material availability of the requirement.
These are uncertain times and flexibility and adaptability will be crucial in providing the best possible responses to the mounting challenges of the pandemic and the socio-economic implications of the measures being adopted (or not) by national Governments. Luckily, for once, procurement law is not in the way. The only requirement that should currently be on procurement officers’ minds is to keep adequate records of their decisions and apply sanity checks to the acceptable default position to directly award contracts for extremely urgent needs. At least for the next few months.
As we learn more of the virus, observe the effects of the pandemic and, hopefully, start to see the impacts of governmental intervention, there will be time to start to consider the end point at which the extreme urgency procurement genie should be put back in the bottle. For now, I would not worry about that at all.