On 1 April 2020, the European Commission published its Guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis [2020] OJ C108I/1. In this Guidance, the European Commission explains ‘which options and flexibilities are available under the EU public procurement framework for the purchase of the supplies, services, and works needed to address the crisis‘. For a good critical first stab at the Guidance, see the comments by Dr Pedro Telles in his blog. My take on the guidance—and some of its implications in the UK are different from Pedro’s (see end of post).
The Guidance stresses that the EU public procurement framework ‘allows and encourages public buyers to pursue a multi-stage strategy. First, for their immediate and projected short-term needs, they should fully exploit the flexibilities of the framework. As a complementary tool, they are encouraged to procure jointly and to take advantage of the Commission’s joint procurement initiatives. Procedures with reduced deadlines serve their needs in the medium term, as they are in principle more reliable means of getting better value for money and [ensuring] wider access of companies to the business opportunities and a wider range of available supplies.‘
What I find extremely reassuring and apt is to see the Commission take the same extremely flexible and pragmatic approach already hinted in the earlier guidance issued at domestic level, eg in the UK (see here). Indeed, the Commission Guidance stresses that it ‘focusses especially on procurements in cases of extreme urgency, which enable public buyers to buy within a matter of days, even hours, if necessary. Precisely for a situation such as the current COVID-19 crisis which presents an extreme and unforeseeable urgency, the EU directives do not contain procedural constraints‘ (emphasis added).
The Commission’s Guidance confirms the view that the negotiated procedure without prior publication does not require any specific minimum level of competition between potential contractors — and should thus dispel any stringent approaches by the Member States, such as requiring at least three offers from potential contractors, as well as some negotiation with all of them.
The Guidance could not be clearer in stressing that under ‘Art. 32 of Directive 2014/24/EU (the ‘Directive’), public buyers may negotiate directly with potential contractor(s) and there are no publication requirements, no time limits, no minimum number of candidates to be consulted, or other procedural requirements. No procedural steps are regulated at EU level. In practice, this means that authorities can act as quickly as is technically/physically feasible – and the procedure may constitute a de facto direct award only subject to physical/technical constraints related to the actual availability and speed of delivery‘ (emphasis added).
The Commission also explicitly endorses ‘active buying’ techniques, which should reassure contracting authorities taking abnormal steps to try and secure emergency supplies of PPE, ventilators and any other needed equipment and consumables. The Commission Guidance explicitly mentions that: ‘In order to speed up their procurements public buyers may also consider to: contact potential contractors in and outside the EU by phone, e-mail or in person, hire agents that have better contacts in the markets, send representatives directly to the countries that have the necessary stocks and can ensure immediate delivery, [or] contact potential suppliers to agree to an increase in production or the start or renewal of production.‘ This is certainly welcome and will provide comfort to those taking a more commercial approach than they usually would to market engagement (or scouting).
Further than that, the Commission also endorses the use of urgent procurement to spur market innovation and matchmaking, thus dispelling doubts about the legality (under procurement rules) of even more active interventions in the market whereby the contracting authority is directly involved in structuring the collaboration between potential suppliers (and even potential competitors, although this will require careful competition law assessment), for example through COVID-19 challenges or hackathons.
In that regard, the Guidance is also clear that ‘To satisfy their needs, public buyers may have to look for alternative and possibly innovative solutions, which might already be available on the market or could be capable of being deployed at (very) short notice. Public buyers will have to identify solutions and interact with potential suppliers in order to assess whether these alternatives meet their needs … Public buyers are fully empowered under the EU framework to engage with the market and in matchmaking activities. There are various ways to interact with the market to stimulate the supply and for the medium term needs, the application of urgent procedures could prove a more reliable means of getting better value for money and wider access to available supplies’.
The Guidelines also stress the relevance of these approaches in terms of boosting the uptake of other strategic considerations so that ‘environmental, innovative and social requirements, including accessibility to any services procured, are integrated in the procurement process’. However, it is unlikely that contracting authorities will be able to concentrate efforts on this, even if they can obtain some of the benefits due to engaging in some ‘unconventional’ procurement approaches, including more digital procurement (and innovation related to 3D printing, for example).
Beyond these general policy and strategic guidelines, which clearly convey the basic message that procurement professionals should do all they can to obtain the urgently required supplies, as well as aim to transition to a more sustainable (and planned, and hopefully less expensive and more innovative) approach in the medium term, the Commission also offers more detailed and technical guidance. Of that, I would stress the specific analysis of the conditions for resorting to the negotiated procedure without publication on grounds of extreme emergency.
It will be recalled that Art 32(2)(c) of Directive 2014/24/EU allows for this ‘insofar 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’. The Commission’s Guidance offers useful interpretation on the three main requirements: unforeseeability, impossibility of an alternative approach and causal link or direct relation between the extremely urgent need and the scope of the procurement, which implies an element of temporality.
The Commission addresses each of them as follows:
‘Events unforeseeable by the contracting authority in question’
The number of COVID-19 patients requiring medical treatment is rising daily and, in most Member States, is expected to increase further until the peak will be reached.
These events and especially their specific development has to be considered unforeseeable for any contracting authority. The specific needs for hospitals, and other health institutions to provide treatment, personal protection equipment, ventilators, additional beds, and additional intensive care and hospital infrastructure, including all the technical equipment could, certainly, not be foreseen and planned in advance, and thus constitute an unforeseeable event for the contracting authorities.
Extreme urgency making compliance with general deadlines impossible
It cannot be doubted that the immediate needs the hospitals and health institutions (supplies, services and public works) have to be met with all possible speed.
Whether this makes it impossible to respect even the very short deadlines of the accelerated open or restricted procedure (15 and 10 days respectively to submit the offers) will have to be assessed on a case-by-case basis, but it is likely in most cases, at least as regards the significantly increased short-term needs as the infection curve rises.
As clarified in the Court’s jurisprudence, if extreme urgency is invoked, the procurement need has to be satisfied without delay. The exception cannot be invoked for the award of contracts that take longer than they would have taken if a transparent, open or restricted, procedure had been used, including accelerated (open or restricted) procedures.
Causal link between the unforeseen event and the extreme urgency
For the satisfaction of the immediate needs of hospitals and health institutions within a very short timeframe the causal link with the COVID-19 pandemic cannot reasonably be doubted.
Only used in order to cover the gap until more stable solutions can be found
Negotiated procedures without prior publication may offer the possibility to meet immediate needs. They cover the gap until more stable solutions can be found, such as framework contracts for supplies and services, awarded through regular procedures (including accelerated procedures) [emphases added and references omitted].
This is truly good, clear and actionable guidance by the European Commission and it should be most welcome.
A final word on the UK Dyson contract
Those following the daily developments on COVID-19 related procurement in the UK will be aware of the award of a contract to Dyson for the supply of 10,000 ventilators, despite the fact that its prototype still needs to receive regulatory approval and can thus not be immediately put into production or delivered for use in the NHS.
You will find an excellent analysis of the background in several posts by Dr Pedro Telles in his blog (starting 24 March). He has been putting forward the claim that the award of that contract (and, presumably, the rest of contracts for emergency supply of ventilators to the UK Government; although he has been trying to distinguish them) is illegal because the UK Government decided not to participate in the EU’s JPA ahead of the immediate need of the ventilators. We have been discussing this on twitter (see below), so it may be time to bring this discussion to the blog.
My view is that the specific need for ventilators (and PPE, and other supplies needed in this pandemic emergency) is and will remain unforeseeable for quite a while. I do not think that high level political decisions (however wrong) should deactivate the possibility of recourse to extreme emergency procurement at an operational level. I think today’s Commission Guidance supports this view when it stresses that ‘These events and especially their specific development has to be considered unforeseeable for any contracting authority‘.
Pedro disagrees (with the Commission): ‘The Commission argues regarding the lack of foreseeability by the contracting authority that the specific needs for medical equipment and infrastructure (including ventilators) could not be foreseen and planned in advance. On this I do not agree fully with the Commission. It is true that there is a moment when the need could not be foreseen and planned in advance, but if after that moment no action was duly taken (as the UK Government did with the ventilators) then the extreme urgency was actually brought about by the contracting authority.‘
I disagree with Pedro. I think the extreme urgency procurement procedure needs to be the conduit for the first effort to address the pandemic, which will still take a long period. This is not time to engage in new theories about the imputability to the procurement function of rather complicated political calculations (I sense there is a PhD thesis to be written on that, after the dust settles).
However, that does not mean that this is a free for all. The Commission has also clearly indicated that ‘if extreme urgency is invoked, the procurement need has to be satisfied without delay. The exception cannot be invoked for the award of contracts that take longer than they would have taken if a transparent, open or restricted, procedure had been used, including accelerated (open or restricted) procedures‘ (which are 15 and 25 days respectively). That is the reason why I think the award of the contract for 10,000 ventilators to Dyson is very likely illegal (on this overall conclusion, Pedro and I are agreed) and that the UK Parliament (when out of recess, or virtually active) and the National Audit Office need to take a very close look into this award. As I said on twitter, this starts to look very much like #ferrygate.