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Coronavirus - What it means for public purchasing - Ireland

  • Northern Ireland
  • Ireland
  • General

25-03-2020

Procurement lawyers are often asked by public sector clients to advise on fast ways of buying goods, works or services. The issue, from the client’s perspective, is that the public procurement rules lack agility, requiring the conduct of often elongated and bureaucratic procedures. Clients feel constrained by rules which impose onerous obligations on them in terms of advertising, conducting compliant competitions and debriefing suppliers. Only once all of the above requirements have been followed can a contract be lawfully awarded. Failure to comply with the rules can have serious - and costly - consequences for public sector buyers.

At a time such as this, when it’s essential for many public sector organisations to buy much-needed equipment, supplies and services quickly and efficiently, the public procurement rules are an additional headache.

Fortunately, there are mechanisms within the rules which do permit a public body to expedite the purchasing process. These include accelerated procedures, calling off under already established framework agreements, and using the negotiated procedure without advertising the contract in advance.

Use of the negotiated procedure without prior publication will no doubt be a very real and attractive option now for public sector buyers, given the current situation. The procedure allows the purchase of goods and services in situations of “extreme urgency” brought about by events which a public body could not foresee. In such cases, the public body can directly appoint a contractor to provide the essential equipment and supplies, such as beds or personal protective equipment or hand sanitisers, without advertising and competing the requirement.

Public bodies often seek to rely on this exception without understanding that it is only available in the narrowest of cases. For example, in 2018, the UK government directly awarded contracts worth £89m to ferry operators for additional freight capacity in the event of a no-deal Brexit. The justification given by the UK’s Department for Transport (DfT) at the time was that this was a case of extreme urgency brought about by events unforeseeable by the DfT.

In 2019, the DfT reached a £33m settlement with Eurotunnel after it sued the government, claiming the contracts were awarded in a “secretive” procurement process. Part of Eurotunnel’s case was that the consequences of a no-deal Brexit were not unforeseeable; the ferry contracts were ultimately cancelled by the DfT.

With Covid-19 now described in many countries as a national emergency, there should be significant scope for public bodies to directly award contracts, provided those direct awards can be properly attributed to the emerging and unprecedented public health crisis.

The OGP recently published an information note on responding to Covid-19, acknowledging the need for public bodies to urgently procure goods, works and services, and recognising that the direct award of contracts should be permissible in such circumstances. Public bodies making direct awards should however exercise a degree of caution, and carefully document the justification for awarding contracts without competing them.

Covid-19, whilst frightening and unprecedented, is not a blanket excuse for not running proper procurement processes and, with the passage of time, arguments about the unforeseeable nature of events may well lose cogency and begin to wane.

For more information, please contact:

Áine Smith, Consultant, Procurement and Projects - ainesmith@eversheds-sutherland.ie

For support on legal issues facing your business in light of the outbreak of Covid-19, please visit our Coronavirus hub to get our latest information and guidance.

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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