20 March 2020 | Comment | Article by Emily Powell
The outbreak of the novel Coronavirus, COVID-19, is an ongoing pandemic that presents significant issues for the economy and in particular, the operations of businesses. Contracting authorities may be concerned about the impact this may have on ongoing tender procedures. With no indication as to how long this pandemic will continue or the possible lasting effects it may have, we take a look at the legal and procedural considerations which will need to be made by contracting authorities that may be unable to comply with the usual requirements under procurement law.
What does this mean for contracts currently being tendered?
What does the pandemic mean for the contracts currently being tendered, under a regulated procurement procedure? There is a very real risk that tenders currently under evaluation are now no longer commercially viable as a result of COVID-19. Whilst tender responses yet to be submitted may be amended by a tenderer, with the uncertainty of future business capability in mind, fewer or less competitive tender responses may be received.
What are the options?
The options available to public bodies in order to mitigate the effects on current tender procedures heavily depend on the nature of the contract and the terms of the Invitation to Tender (ITT). One option would be to temporarily suspend the procurement procedure. The contracting authority will need to confirm that there is nothing contained within the ITT that prevents it from pausing the tender process. If there is no such restriction contained within the ITT, a pause on the procedure will essentially give the contracting authority an opportunity to wait until the worst effects of the pandemic have passed before resuming – or re-winding and re-issuing if required. This will minimise any potential risk arising from awarding a contract in such uncertain times and may be a more favourable option if the public body intends to award a long-term contract.
What about delays in contract delivery?
In circumstances where a delay in delivery of the contract cannot be tolerated there may be some relief for public bodies under procurement law which would allow a public body to award a short-term contract on a single source basis to cover this interim period of uncertainty. Regulation 32(2)(c) of the Public Contracts Regulations 2015 (PCR) allows public bodies to award public contracts under a negotiated procedure but without the usual requirements (and therefore the associated timescales) of prior publication. It applies in limited circumstances and must arise by reasons of ‘extreme emergency’ brought by unforeseeable events by the contracting authority.
In the midst of an unprecedented and unforeseeable pandemic such as COVID-19, it is very likely that the grounds of ‘extreme urgency’ will be satisfied. This option will be more favourable in situations where there is an urgent need for contract performance despite the current risks and uncertainty brought by COVID-19. It will allow a short-term contract to be awarded with the current climate taken into consideration. Following this, a competitive procurement process may take place once the effects of the pandemic have passed.
Next steps for Contracting Authorities
In conclusion, it is essential that contracting authorities take a step back and consider the ongoing tender procedures which are currently in place. We strongly recommend weighing up the necessity of contract delivery against the possible risk of continuing with the tender procedure. Whilst this risk may be mitigated should a public body wish to rely on Regulation 32 PCR, it is vital that careful consideration is given before taking this measure.
For more information or advice surrounding the possible issues faced by public bodies during this time, please get in touch with our procurement and state aid team.
t: 029 2267 5540
e: [email protected]