knowledge | 24 March 2020 |
COVID-19: The Impact on Public Procurement
COVID-19 has led to unprecedented limitations on economic and other activity within Ireland and around the world. Each contracting authority should consider the associated risks to their procurements whether planned or on-going, and determine how to proceed. This short paper outlines the general position regarding the application of procurement law during the crisis, and highlights a number of issues that should be taken into account, depending on the stage that your procurement has reached.
Procurement law continues to apply despite the current crisis. That having been said, by way of exception the law does make provision for the award of contracts by direct negotiation and without competition, in cases of “extreme urgency”. However, even in times of crisis this exception is not broadly available, but only applies within certain limitations set out in Regulation 32(2)(c) of the European Union (Award of Public Authority Contracts) Regulations 2016 (and the corresponding provisions in the utilities sector). In the context of the present crisis, the key issue is whether there is a clear and urgent need for the works, services or supplies in question. The most obvious examples in the present time could include: the construction of additional hospital facilities, the services of specialist cleaning companies, the purchase of protective wear, test kits & medicines, all of which are directly linked to, and urgently needed for, the fight against COVID-19. Possibly of more interest to most contracting authorities is the provision that could allow you to extend or modify an existing contract where the need for modification has been brought about by “circumstances which a diligent contracting authority could not have foreseen”. This provision (subject to certain limitations), could allow you to extend an existing contract, where e.g., for logistical reasons related to the crisis, you simply were not in a position to run a procurement process.
Note that any derogation from normal procurement procedures needs to be justified, with the justification recorded in the formal record of the procurement process. The award of a contract without competition is one of the grounds on which an interested party could seek a range of remedies from the Courts, including a “declaration of ineffectiveness”, the impact of which would be to render the contract void if a challenger was successful.
If you are currently planning a competition:
- Consider whether it is necessary to delay the competition due to: disruption in your or tenderers' working arrangements (including travel restrictions, remote working, lack of access to IT, ill health, family circumstances, etc.) and/or the non-availability of key staff in either your or tenderers’ organisations (due to illness, etc.) and/or delay to statutory procedures, and legislation, where relevant to the project;
- If not delaying the competition, consider extending time limits, for the same reasons;
- Consider whether there is any risk to funding for the project due to pressure on the public purse;
- Consider streamlining & simplifying criteria and procedures as far as possible to facilitate tender preparation and tender evaluation. For example:
- Consider sole use of the ESPD for the purposes of the pre-qualification;
- Consider the use of the one-stage open procedure which rolls qualification (if any), and award into one step, requiring only one submission from tenderers;
- Make your pre-qualification and award criteria easy to evaluate. Under your pre-qualification criteria, pay particular attention to tenderers’ financial robustness. Under award criteria, pay particular attention to tenderers’ contingency plans and ability to weather the COVID19 crisis and to deliver the project, including e.g., approach to risk management, business continuity plans, supply chain resilience;
- Avoid procedures that require physical presence (negotiations, interviews), and which involve complicated technological arrangements that may not be accessible to remote users.
If you are currently running a competition, consider your approach to management of the following risks:
- Risks of delay due to: disruption in either your or tenderers’ working arrangements (including travel restrictions, remote working, lack of access to IT, etc.); the non-availability of key players in either your or tenderers’ organisations (due to illness, etc.); delays to statutory procedures and legislation, where relevant to the project;
- Risk of funding due to pressure on the public purse;
- Where tenders have been received:
- Consider whether tender validity period should be extended;
- Consider whether tenders received are fit for purpose in the new circumstances, for example: is pricing robust? is the delivery plan (where relevant), achievable taking into account potential problems with staffing, resources, supply-lines, sub-contractors etc.; is more information required to supplement the tender including contingency plans, business continuity? should tenderers’ qualifications be revisited, and in particular, their financial robustness?
- Consider asking tenderers to confirm their tenders and to supplement tenders with a business continuity plan addressing relevant aspects concerning supply chain etc.;
- Where, in your view, it is not possible to progress the procurement in the present circumstances, consider suspending the process for a reasonable period (e.g., 1 month), to allow you to take stock. The procedure could then be continued in line with previous plans, to contract award;
- Remember, you are not obliged to award the contract: you are perfectly entitled to suspend the procedure or abandon the competition if you are not satisfied with going ahead in the circumstances.
- In theory, it remains possible for an unsuccessful tenderer to challenge your decision on contract award. The Central Office of the High Court (which is where pleadings are filed and challenges commenced) is currently open, so the normal rule that a procurement challenge has to be initiated within 30 days remains in place;
- If a challenge is made within the 30 days, the current situation is likely to impact on the conduct of the case. Under current arrangements, proceedings can be expected to take longer to reach hearing, which will further delay the award of the contract, should the automatic suspension remain in place. The High Court has suspended all but urgent hearings, which include “injunction applications and their enforcement” and “Urgent judicial review applications”. Depending on the contract, an application to lift the suspension could still go ahead;
- We await further guidance from the court services as to the arrangements that would be put in place should the Central Office close. If the Central Office were to close, the challenge period could be extended to the first day on which the Central Office re-opened, or later;
- It should be noted that the Court always retains discretion to extend the 30 day challenge period where there is a good reason for doing so. As such, even in the event that the Central Office does not close, the Court may elect to extend the challenge period for certain claimants, if it finds that in light of the difficulties presented by the current circumstances, there is a good reason for doing so;
- There is a question mark over how the standstill period would work if challenges cannot be instituted. If there was correspondence stating a clear intention to challenge (and the only reason a bidder could not challenge was because the Central Office was not open), then it would be prudent to seek advice as to whether it is safe to proceed as this raises complex considerations.
Advice pertaining to the impact of Covid-19 has now been issued by the OGP and the GCCC and is available on their websites.
Also contributed by Eoin Creaner
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.
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