Coronavirus COVID-19: Do the Public Contracts Regulations apply to urgent procurement needs?

Coronavirus COVID-19: Do the Public Contract Regulations apply to urgent procurement needs?
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In the context of the global coronavirus COVID-19 outbreak, public bodies may be concerned about the applicability and impact of the Public Contracts Regulations 2015 (PCR) on the urgent need to procure supplies or services.

Regulation 32 exemption

The good news for public bodies is that the PCR contain (albeit very limited) exemptions for the use of the negotiated procedure without prior publication. PCR Regulation 32 contains an exemption allowing contracting authorities to award public contracts by a negotiated procedure without prior publication and therefore without adhering to the usual procurement timetables (Regulation 32 Exemption).

One of the circumstances in which this exception applies is for reasons of extreme urgency.

Reasons of extreme urgency

If a public body is required to procure urgent supplies or services due to the outbreak of coronavirus COVID-19, it is possible that the Regulation 32 Exemption may apply.

Here’s the wording of this exemption:

“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… 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”.

This exemption is an extremely limited exception to the obligation to procure contracts using relevant procurement procedures when the object of the contract (i.e. the services or supplies) needs to be obtained in an immediate or almost immediate manner. Examples of what may constitute “extreme urgency” include the procurement of ICT capabilities to ensure business continuity and facilitate remote working (when business continuity is a key national interest).

There are three cumulative conditions to relying on the exemption:

  1. the reason for the extreme urgency must be brought about by an unforeseeable event;
  2. the extreme urgency must render the observance of the time limits under the procurement procedures impossible; and
  3. there must be a causal link between the unforeseeable event and the extreme urgency resulting from it.

In addition, the reasons for the urgency cannot be "in any event" attributable to the contracting authority. As the timescales for procurement under the PCR can be reduced significantly in cases of general urgency, it can be difficult to justify the use of the exemption unless time pressures are extreme.

The global outbreak of coronavirus COVID-19 is highly likely to fulfil the requirement that the extreme urgency must be brought about by an unforeseeable event. The scale and speed of the global spread of coronavirus COVID-19 and its impact on both public and private businesses is immeasurable and could not have been predicted.

The fulfilment of the requirement for the extreme urgency to render the procurement procedure timetables impossible to comply with is harder to apply to every scenario. However, there is a real urgent need for public bodies to ensure that sufficient infrastructure is in place to cope with the demands resulting from the outbreak of coronavirus COVID-19 and, subject to you obtaining relevant legal advice, it is likely that the urgent need for services and supplies to protect public health and security will satisfy this requirement.

Case law has established that a delay by the contracting authority in commencing work after recognising the need for it to act has been held to violate the requirement that the urgency should not be attributable to the authority and therefore any reliance on the Regulation 32 Exemption will require a prompt response of accelerated procurement activity by the relevant public body.

“Ferrygate”

Use of the Regulation 32 Exemption received a lot of scrutiny and challenge when the Department for Transport sought to rely on it in relation to the awarding of ferry contracts as part of no-deal Brexit contingency planning. The commentary on this case centred around two key facts, which suggest that the direct award under the exemption was not necessary (and therefore illegal).

First, it was argued that the Department could have easily foreseen a no-deal Brexit scenario and the Government itself had a degree of control over the implications of a no-deal Brexit.

Second, at the time the ferry contracts were awarded, there was still sufficient time for a procurement to be run prior to 29 March 2019 (at the time being “Brexit day”). Therefore, it was argued that the direct award failed the requirement under PCR Regulation 32 that the time limits for the procurement procedures could not be complied with. Although the Department for Transport was challenged, the claimant’s case was not fully explored as the matter settled.

Depending on the subject matter and the urgency of such supplies or services to the relevant public body, it is likely that reliance on the Regulation 32 Exemption in the context of coronavirus COVID-19 can be distinguished from the circumstances of the direct award of the ferry contracts. There is an extreme urgency to contain the spread of coronavirus COVID-19, and the procurement of services and supplies to mitigate public harm is unlikely to give rise to the same level of criticism as “ferrygate”. In the context of coronavirus COVID-19, there are real and justifiable reasons for applying the Regulation 32 Exemption and one hopes it will be in the best interests of the population to do so.

Expedited procurement process

An alternative approach, in the event there is an urgent need to procure services or supplies which are not immediately required, is to rely on the provisions under PCR regulations 27-29, which provide for an expedited procurement timetable in relation to the open, restricted and competitive procedure with negotiation.

However, as the global outbreak of coronavirus COVID-19 was not foreseeable and the need to protect the public is of critical national importance, there will be instances in which reliance on an expedited procurement timetable will not result in the applicable services or supplies being available in a suitable timeframe. Despite the high threshold which must be met to justify reliance on the Regulation 32 Exemption, in these circumstances public bodies should not be reluctant to rely upon the exemption when it is clearly appropriate to do so.

Next steps

If a public body does decide to rely on the Regulation 32 Exemption, it is recommended that the organisation begins to gather evidence, such as communications and guidance from central government and the public body’s regulatory authority in relation to preparations for responding to coronavirus COVID-19 (and where relevant, the urgent need for the applicable services or supplies). In the event a challenge is raised in relation to the use of the Regulation 32 Exemption, this evidence may be helpful in justifying the public body’s reliance on it.

For advice on the applicability of the Regulation 32 Exemption to your organisation, or advice on conducting an urgent procurement using the expediated procurement timetable, please get in touch with Mark Vipan (Partner) and Rebecca Walker (Associate).