COVID-19: European Commission publishes guidance on Public Procurement
Public bodies across the globe urgently require essential goods and services to combat the COVID-19 outbreak. The European Commission has published helpful guidance which acknowledges that direct award of contracts to suppliers without tender competitions may be justified at this time.
On 1 April 2020, the European Commission published welcome guidance on using the public procurement framework in the "emergency situation related to the COVID-19 crisis".
The Commission's Communication is particularly useful in its guidance on the circumstances justifying the use of the negotiated procedure without a prior call for competition. This procedure effectively permits a direct award of contract without a tender competition.
The Communication also encourages public buyers to procure jointly and to take advantage of the Commission’s joint procurement initiatives. Ireland is already participating in the Commission's joint procurement arrangements for the supply of personal protective equipment.
Options and flexibilities
The Communication recognises that COVID-19 is a health crisis that requires "swift and smart solutions and agility in dealing with an immense increase of demand for similar goods and services while certain supply chains are disrupted". Public buyers have to ensure "the availability of personal protective equipment such as face masks and protective gloves, medical devices, notably ventilators, other medical supplies, but also hospital and IT infrastructure, to name only a few". Various options are outlined including use of accelerated procedures and use of the negotiated procedure without prior publication (see also our previous note COVID-19 and Public Procurement in Ireland: Not so novel). The guidance urges public buyers to look at "alternative solutions" and to engage with the market noting that the current framework provides all necessary flexibility to public buyers purchasing goods and services directly linked to COVID-19 as quickly as possible. Public buyers are encouraged to explore innovative solutions to meet their needs including working with innovation ecosystems or entrepreneur's networks which could propose solutions.
The guidance outlines the "substantial reduction" which can be applied to open and restricted procedures where there are grounds for acceleration on the basis of urgency. While not mentioned in the Commission's guidance, it should be borne in mind that there is a 14 day standstill period under Irish law which must be adhered to between announcement of the contract award decision and execution of the contract or framework agreement. The 14 day standstill period applies even for accelerated procedures which means that in reality, the fastest accelerated procedure - i.e. the open accelerated procedure - in Ireland would still involve a timeframe of approximately one month (i.e. 15 days for tenders + 14 day standstill period). Given the pace of the COVID-19 outbreak, a timeframe of a month may still be too long for urgent supplies and services. It is therefore likely that in the short term public buyers will be considering use of a negotiated procedure without prior publication.
Negotiated procedure without prior publication - extreme urgency
Under procurement rules, public buyers are permitted to use the negotiated procedure without prior publication in certain limited circumstances including:
- insofar as is strictly necessary where, for reasons of extreme urgency not attributable to the contracting authority and brought about by events unforeseeable by the contracting authority, the time limits specified for the open procedures or restricted procedures or competitive procedures with negotiation cannot be complied with
The case law of the Court of Justice of the European Union has clarified that the use of this procedure is exceptional and the circumstances justifying the use of the procedure will be interpreted narrowly. Contracting authorities must also be able to establish a "causal link" between the unforeseen event and the extreme urgency.
At the outset of the Communication, the Commission confirms the lack of procedural requirements which apply to the negotiated procedure without prior call for competition i.e. "public buyers may negotiate directly with potential contractor(s) and there are no publication requirements, no time limits, no minimum number of candidates to be consulted, or other procedural requirements". This effectively means that public bodies can make direct contract with suppliers, negotiate the terms of supply and award a contract without following any specific procedure.
Given the exceptional nature of the procedure, contracting authorities must be able to justify their choice of the negotiated procedure in an individual report. In this regard, the Communication provides helpful guidance on the unforeseeable nature of the COVID-19 outbreak i.e.:
"The number of COVID-19 patients requiring medical treatment is rising daily and, in most Member States, is expected to increase further until the peak will be reached. These events and especially their specific development has to be considered unforeseeable for any contracting authority. The specific needs for hospitals, and other health institutions to provide treatment, personal protection equipment, ventilators, additional beds, and additional intensive care and hospital infrastructure, including all the technical equipment could, certainly, not be foreseen and planned in advance, and thus constitute an unforeseeable event for the contracting authorities."
The Communication helpfully observes that for the satisfaction of the "immediate needs of hospitals and health institutions within a very short timeframe the causal link with the COVID-19 pandemic cannot reasonably be doubted". Further comfort is provided by the Commission's recognition that the immediate needs of health authorities will most likely make it impossible to respect the accelerated procedure timeframes "at least as regards the significantly increased short-term needs as the infection curve rises".
This recognition of the unforeseeable circumstances that have arisen with COVID-19 and the causal link between the outbreak and the extreme urgency will be particularly welcomed by health authorities. While contracting authorities must still assess whether the circumstances justifying use of the negotiated procedure exist on a case-by-case basis, the Communication will provide useful guidance in making that assessment.
The Communication concludes with the salutary warning that negotiated procedures without prior publication can only be used to "cover the gap until more stable solutions can be found, such as framework contracts… through regular procedures (including accelerated procedures)".
For more information on this topic please contact Anna-Marie Curran, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.
Date published: 2 April 2020