The impact of the COVID-19 pandemic on procurement regulation will be deep and long-lasting and will affect both general policy issues, and specific issues of statutory interpretation and regulatory enforcement. I have published some high-level thoughts on the University of Bristol Law School’s blog today. Here, I would like to concentrate on specific issues of interpretation.
Following up on our debate about the interpretation of the extreme emergency procurement exemption under Art 32(2)(c) of Directive 2014/24/EU (and the equivalent reg.32(2)(c) of the Public Contracts Regulations 2015), Dr Pedro Telles has published some ‘Further reflections on the ventilators saga‘. There, he develops in more detail his arguments on the implications of government (in)action and the use of benchmarks to assess it and its implications. Pedro has argued that the UK Government cannot rely on the exemption because its own inaction—including delay in kick-starting procurement and its decision not to participate in the EU’s Joint Procurement Agreement (JPA, on which see here)—make the exemption inapplicable.
The core of our disagreement concerns whether the requirement that ‘The circumstances invoked to justify extreme urgency shall not in any event be attributable to the contracting authority‘ (emphasis added) holds in the UK Government’s case. Pedro’s argument is that the extreme urgency in the need for ventilators ‘is the crucial fault with the Government approach, ie the lack of action on ventilators since the end of January/beginning of February.’ Given that the UK Government is (presumed to be) the contracting authority, that prevents them from relying on the exemption. He dismisses my earlier argument that these were political decisions by arguing that ‘the decision(s) are not only political but also technical/administrative due to the practical implications they have on operational matters.‘
As I said before, this is a rather difficult issue of imputability of decisions. Here I sketch how I would approach it, although I am conscious that I would need more time and deep-thinking to come up with some more definitive. These are thus just some tentative ideas.
I would take this issue in abstraction of the specific situation in the UK to attempt a statutory interpretation of the rule. To my mind, the rule is intended as an anti-circumvention provision to stop contracting authorities from setting aside procurement requirements that they should and could have complied with. As in other areas, the intention of the contracting authority is in my view irrelevant (see here), so the analysis should be objective. The objective analysis needs to concern whether a reasonably informed and diligent contracting authority would have been able to avoid the extreme urgency or, in other words, whether the extreme urgency is attributable to the contracting authority’ actions or omissions, and not to external factors or third parties.
I also think that the analysis needs to concentrate on what the contracting authority could have done as a contracting authority, and not in its capacity as a political entity. As I said earlier, 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. Otherwise, we would risk the tail wagging the dog and procurement rules could become a constraint on legitimate political action. Moreover, I do not think that the political positions (or the time taken to adopt them) can lead to an internalisation of the extreme uncertainty in which some situations evolve, such as the COVID-19 pandemic and our understanding of it—in a way that makes reacting to those circumstances more difficult. The only exception to the general approach here would be where the political decision has as its main object the procurement itself.
Going back to the case, I do not think that the UK Government’s delay in activating ventilator procurement and its decision not to participate in the JPA must necessarily translate into an interpretation that the urgent need for the ventilators was attributable to the contracting authority. The real need for ventilators was as unforeseeable in January as it remains in April. All we can go by is some extremely complicated modelling, on which there are reasonable disagreements amongst experts—although the emergence of more data is creating more certainty and knowledge.
I do not think it suffices to say a Pedro does that ‘it was not unpredictable that PPE and ventilators in excess of current stocks would be needed since at least the end of January and early February‘. That is not the issue. The issue here is whether the volume of need and its timing was predictable (which I would argue it was not) and whether the urgency in the need is attributable to the contracting authority. On the later point, I do not think a negative approach (not unattributable) is satisfactory at all. I think a more stringent approach needs to be taken, to at least require evidence of a positive contribution to worsening the situation by the contracting authority. Again, I do not think there is information to point in that direction in a way that does not imply an ex post facto reassessment of the circumstances under which those decisions were taken.
I guess this raises the additional requirement for the analysis to be contemporaneous to the decision-making, rather than based on facts that emerged later on. In that connection, it should also be acknowledged that the UK Government’s initial reaction was based on a herd immunity strategy that had not factored in the need for critical treatment resulting from the ‘natural spread’ of COVID-19. Once again, as wrong and reprehensible as that approach may be, this was not something related to the core of a procurement decision on whether or when to buy more ventilators, but a much broader and complicated public health decision.
Moreover, we do not know and cannot know if a UK Government’s attempt to directly acquire ventilators would have been more successful in January than later on. We can also not know whether the current contracts (in the UK, but also under the JPA) will be sufficient or not.
Under so many unknowns, it seems inappropriate to me to negate effectiveness to the extreme emergency exemption from the procurement rules. Taken to the extreme, Pedro’s argument would prevent the governments of any other EU/EEA/candidate countries that had/have not signed the JPA and/or participated in it, or that may have activated ventilator procurement later than in the UK, from relying on the possibility for direct awards of that much needed equipment. That cannot be the right outcome.
A separate issue, which should not be conflated here, is that the UK Government decided to award one of those contracts to a supplier that, as of today, is in no position to deliver. In doing so, the UK Government likely infringed the boundaries of the exemption, but not due to the attributability of the circumstances, but due to the inadequacy of the chosen supplier.
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I am sure Pedro will have more to say about this. So stay tuned.