Procurement: COVID-19 Top Tips for Public Procurement and PPN 01/20

In these unprecedented times, public bodies are under immense pressure to ensure they have the supplies and services in place that they need to fulfil the expectations of the nation.  The Cabinet Office has recently published Procurement Policy Note (PPN) 01/20 “Responding to COVID-19” which is addressed to all contracting authorities.

PPN 01/20 confirms that there is a range of options available for procurement under the Public Contracts Regulations 2015 (PCR). These include: direct award, call-offs from framework agreements or dynamic purchasing systems and extending/modifying existing contracts. Contracting authorities need to ensure, in each case, that the conditions for use of those procedures or direct award are satisfied. They should also prepare a robust audit trail of the decision made, reasons for the decision and the subsequent process used to award, extend or modify a contract. Contracting authorities must publish relevant award notices in the Official Journal of the European Union (OJEU) and Contracts Finder, within statutory time limits.

None of the options referred to in PPN 01/20 and below is new. This is not a wholesale scrapping of red tape for the procurement of public contracts or the introduction of a new set of rules.  PPN 01/20 simply provides an explanation and some guidance on the procurement routes already available under the PCR, with particular focus on the circumstances where it may be possible to make a direct award without competition. It also explains the tests that must be met in order to legitimately rely on these provisions.

Here are some top tips for procuring quickly and efficiently in the face of COVID-19 pressures and demands.

1 Purchase from existing frameworks or dynamic purchasing systems (DPS)

These are pre-procured contracts/systems by which purchasers can “call off” certain supplies and services. They can be a quick and efficient way to purchase.  Awards under framework agreements may be by direct award or mini-competition, or both. This depends on how the framework agreement was set up. Contracting authorities will need to follow the procedure(s) and timescales for award set out in the framework agreement.

Award under a DPS requires a mini-competition and, in general, a minimum of 10 days for receipt of tenders. Sub-central authorities, such as local authorities, may reduce the minimum 10 day period for receipt of tenders by mutual agreement between the contracting authority and the selected candidates, provided that all selected candidates have the same time to prepare and submit their tenders. 

Frameworks agreements and DPS for light touch regime services may have been set up with more flexibility and different timescales. You will need to check the terms of the framework agreement or DPS.

Pause, check and record:  Check that: (a) you are clearly identified as a permitted customer/purchaser in the original OJEU notice or invitation to confirm interest; (b) the type of purchase you need is covered; and (c) the contractual terms are appropriate. You also need to be confident that the framework or DPS was procured in accordance with the PCR. 

2 Direct awards of contracts without advertising

As a general rule, contracts above the relevant EU thresholds  must be advertised in the OJEU. However, there are exceptions to this. 

Direct award due to reasons of extreme urgency under PCR 32(2)(c): In appropriate cases, purchasers can rely on “extreme urgency” to justify entering into a contract with a chosen provider without advertising it.  The exemption will apply, in summary, where for reasons of “extreme urgency”, brought about by events which the purchaser could not foresee,the time limits for the open, restricted or competitive procedures with negotiation cannot be complied with (see further below).  The exemption is narrowly interpreted and can only be relied on to the extent it is “strictly necessary”. The circumstances invoked to justify extreme urgency must not in any event be attributable to the contracting authority.

PPN 01/20 notes that COVID-19 is serious, its consequences pose a risk to life and that PCR 32(2)(c) is designed to deal with this sort of situation. PPN 01/20 runs through the tests to be met and provides some further explanation. It makes some particular points, which are worth highlighting:

• when making a direct award in these circumstances contracting authorities should limit their requirements to only what is absolutely necessary, both in terms of what they are procuring and the length of the contract 
• delay or failing to do something in time does not make the situation qualify as extremely urgent, unforeseeable or not attributable to the contracting authority
• what is “unforeseeable” now, may not be unforeseeable in the future. Contracting authorities should therefore undertake a new assessment for any subsequent or additional procurements, to ensure the tests are still met.

Pause, check and record:  For frontline purchases, you may need to make very rapid purchasing decisions in the next few days and weeks some of which may well fall within the above exemption.  Even so, take a moment to reflect and record your organisation’s rationale for relying on the extreme urgency exemption so that you have an audit trail should anyone query your decision. 

Other justifications for direct award or additional requirements: PPN 01/20 also refers to the possibility of direct award due to absence of competition for technical reasons or protection of exclusive rights and the tests which must be satisfied under PCR 32(2)(b). It also mentions the possibility of using provisions covering permitted additional supplies (PCR 32(5)) and additional similar works, supplies or services (PCR 32(9)). There is also reference to the possible use of in-house awards under PCR 12. In each case, this is subject to meeting specified conditions.

3 Modifications to existing contracts under PCR 72

There are six circumstances in which existing contracts can be modified, without having to re-advertise.  One of these is where the need for the change has been brought about by circumstances which a diligent purchaser could not have foreseen (PCR 72(1)(c)).  The change must not alter the overall nature of the contract. Multiple changes are permitted and the value of each change must not exceed 50% of the original value.  Successive modifications must not be aimed at circumventing procurement rules.

Again, a robust audit trail is essential. PPN 01/20 notes that the justification for reliance on this provision should demonstrate that a decision to extend or modify a particular contract is related to the COVID-19 outbreak and refer to contract-specific facts. In addition, it comments that contracting authorities should consider limiting the duration and/or scope of the modification and running a procurement for longer-term/wider scope requirements alongside it.

Even if you consider that you may not meet the above requirements, there are five other circumstances in which changes can be made to existing contracts without having to run a procurement – including where changes are “not substantial”.  These are set out in PCR 72.

Pause, check and record:  If relying on any of the circumstances in PCR 72, keep an audit trail of your decision-making and reasons.  Depending on which part of PCR 72 you rely on, you may need to publish a notice in the OJEU. 

4 Using accelerated procedures and fast track light touch regime procurements

The time period for running a procurement in urgent cases may be shorter than you might think. For example, under the accelerated open procedure the timescale for receipt of tenders can be reduced to 15 days, plus the 10 day standstill period.

PPN 01/20 also notes that for light touch regime procurements for specified health and social care related services, having complied with advertising requirements, contracting authorities are not required to use the standard procurement procedures and are free to set their own timescales so long as they are reasonable and proportionate.

5 Altering procurements that are already underway, to take account of COVID-19

In theory, this may be possible provided you comply with the principles of transparency, equal treatment and ensure that competition is not distorted.  If relatively small changes are required, you may be able to deal with these and keep the risks of successful challenge low by communicating them to bidders and giving them opportunity to respond and/or rewinding the procurement to an earlier stage.  For substantial changes, you should consider the impact of the proposed changes on potential providers who decided to bid or not to bid and on any shortlisting / down selection that has already occurred.

Pause, check and record: Think about this carefully. Consider the impact on the competition you have run to date.  A risk-based approach might be appropriate in certain circumstances. Remember to prepare an audit trail.

For further support and advice relating to the impact of COVID-19, please view our COVID-19 Advisory Service page.