CCS issues guidance on public procurement for COVID-19-related requirements

On 18 March 2020, the UK government published a procurement policy note setting out guidance and useful information on how contracting authorities may approach procurement activities as they respond to the challenges posed by COVID-19. The guidance does not create new law, but it summarises the key provisions that may allow for an expedited procurement. These will be relevant not just to authorities responsible for healthcare (including DHSC, NHS England, Trusts and CCGs) and healthcare providers, but for any contracting authority and suppliers that are responding to the current situation. The approaches include:

• Direct award due to extreme urgency (please see in more detail below).
• Direct award due to absence of competition or protection of exclusive rights – Regulation 32(2) allows for the use of the negotiated procedure without prior publication due to absence of competition or protection of exclusive rights but only if there is not reasonable or substitute alternative and the contracting authority is not doing something which artificially narrows down the scope of the procurement. A written justification should be kept.
• Call off from an existing framework or dynamic purchasing agreement – the guidance sets out the criteria for being able to call off from an existing framework agreement or DPS.
• Call for competition using a standard procedure with accelerated timescales – Regulations 27(5), 28(10) and 29(10) allow for the reduction of timescales if a state of urgency renders the standard timescales impracticable. A clear justification must be set out in the OJEU.
• Extending or modifying existing contracts during their term – the guidance refers to Regulation 72(1) and the various requirements that need to be met. This remains unchanged and contracting authorities are advised to document and record the reasons for the decision to extend or modify an existing contract.

Direct award due to extreme urgency

The government’s guidance clarifies what constitutes an 'extreme urgency' and provides four cumulative tests which should be met and recorded. The full extract from the note is as follows:

Direct award due to reasons of extreme urgency COVID-19 is serious and its consequences pose a risk to life. Regulation 32(2)(c) of the PCRs is designed to deal with this sort of situation.  Regulation 32(2) sets out the following: The negotiated procedure without prior publication may be used for public works contracts, public supply contracts and public service contracts in any of the following cases: ... (c) 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 must not in any event be attributable to the contracting authority.

Therefore, 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 determining whether these tests are met, contracting authorities must ensure that they consider and respect the proportionality of the measures and adequately record their decision-making. With that being the case, the government’s guidance goes one step further by establishing 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.

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.

Conclusion

This policy note does not change the law but it does provides useful guidance on the existing provisions of the Public Contracts Regulations and how they should be applied in the current circumstances.

However, it is important that authorities understand that the exemption does not provide a legally compliant route to dispense with a full procurement case unless the requirements for the exemptions are met. For COVID-related procurements, it remains necessary to step through the criteria and maintain a full record of the decision making process.

If you would like to discuss any of the issues in this note, please contact John Houlden, Patrick Parkin, Laura Wisdom, or your usual Burges Salmon contact.