In recognition of the unique circumstances facing governments and their citizens globally at this present time, there is a recognition that public authorities will need to purchase goods, services and works with extreme urgency.
In this vein the Cabinet Office has published policy guidance for contracting authorities highlighting the various ways in which they may, legitimately, meet an urgent purchasing requirement in relation to the Covid-19 pandemic.
The procurement policy note focuses in one part on Regulation 32(2)(c) which, to paraphrase, allows contracting authorities to directly award a contract to one supplier. Examples given include:
- direct award due to extreme urgency (Regulation 32(2)(c) refers)
- direct award due to absence of competition or protection of exclusive rights;
- call off from an existing framework agreement or dynamic purchasing system;
- call for competition using a standard procedure with accelerated timescales; or,
- extending or modifying a contract during its term.
Whereas this is a very timely, and helpful, restatement of policy guidance, it does overlook a far more common scenario of a public authority having an existing supply chain in situ but where significant satisfactions to value or length of the contract may now, urgently, be required in light of the COVID-19 pandemic.
Occasionally overlooked, but tailored for the situation, the note also highlights the so-called “safe harbour” Regulation 72 which permits an extension or variation of a public contract of up to 50% of a contract’s value where the nature of the original contract has not changed and the extension or variation of the contract is needed for a reason that could not have reasonably been foreseen by a diligent contracting authority.
Almost irrespective of which Regulation a public authority chooses to deploy, it is not only best practice but a regulatory requirement (#84 this time) to record and justify the rationale behind the use of the extreme urgency and/or safe harbour provisions.
Fundamentally, a public authority should consider the following four questions:
- Are there genuine reasons for extreme urgency? An authority must be able to demonstrate that the purchasing requirement is directly related to the COVID-19 pandemic (for example, because of public health risk or loss of existing provision at short notice) and that the Authority is reacting to the current emergency situation – as opposed to be a failure to plan ahead for a known requirement;
- Can you demonstrate that the events that have led to the need for extreme urgency were reasonably unforeseen? Given that COVID-19 has been medically designated as a ‘novel’ (new) virus, the Cabinet Office’s guidance notes that this situation is not something that public authorities could have predicted.
- Can you show that it is impossible to comply with the usual public procurement timescales? Not only must an Authority be able to satisfy itself that there is no realistic prospect of undertaking an accelerated procurement under the Open, Restricted or Competitive [with negotiation] procedures. [Note that this stipulation also includes utilising an existing frameworks or Dynamic Purchasing Systems which, of course, benefit from having previously been competitively competed in accordance with the procurement regulations]
- Can you demonstrate that the situation is not attributable to you as a Contracting Authority? Contracting authorities must have not caused or contributed to the urgency of the requirement by its failure to plan, reasonably, ahead for its requirements.
The answers to the above questions should be written down and recorded/stored appropriately in order for a contracting authority to be able to rely on a Regulation 32 (extreme urgency) or 72 (safe harbour) derogation. Not least as Regulation 84 specifically requires this to be done.
Where a contracting authority is relying upon a Regulation 72 derogation, it must publish a contract modification notice to their national public procurement portal and the Official Journal of the European Union as appropriate.
Arfon Consulting Ltd is a specialist firm with extensive experience in providing advisory and consultancy services to public authorities in both the United Kingdom and the European Union.