As part of responses to the current pandemic, authorities may need to urgently procure goods, services and works which in more ordinary times would require a competitive procurement process to be run.
The Cabinet Office has just released a procurement policy note reminding authorities of the various ways in which they might meet an extremely urgent requirement related to the pandemic. The note focusses on the situation where this might be done directly with one supplier under Regulation 32 PCR 2015 or where an extension/variation to an existing contract is permitted by the “safe harbours” of Regulation 72 PCR 2015.
Regulation 32 permits authorities to direct award to one supplier (to paraphrase):
- where for reasons of extreme urgency that the authority could not foresee it is not possible to run a procurement with accelerated timescales; or
- where there is only one supplier who for technical reasons could meet the requirement (in the current context, says this PPN, this is for reasons likely to be connected to the scale of the requirement).
Regulation 72 permits (to paraphrase) an extension/variation to a contract of up to 50% of the contract’s value where the overall nature of the contract is not changed and the extension/variation is needed for a reason that could not have been foreseen by a diligent contracting authority.
Establishing a justification for reliance on Regulation 32/72
The derogations at Regulation 32 are narrow in scope and so authorities must be confident they can demonstrate that the tests are met. The bar is probably set a little lower for Regulation 72 but authorities are still advised to ensure they can show robustly that the need for an extension could not have diligently been foreseen.
The PPN gives some guidance on how authorities might put this Regulation 32 justification together, as follows:
- Can you show there are genuine reasons for extreme urgency?
You can show that you need to respond to the COVID-19 consequences immediately because of public health risks, loss of existing provision at short notice, and that you are reacting to a current situation that is a genuine emergency – not merely planning ahead for one.
- Can you show that the events that have led to the need for extreme urgency were unforeseeable?
The PPN notes that the justification here is that the COVID-19 situation is so novel that the consequences are not something authorities should have predicted.
- Can you show that it is impossible to comply with the usual timescales in the PCR 2015?
In particular can you show you have concluded there is no time to run an accelerated procurement under the open or restricted procedures or competitive procedures with negotiation, nor is there time to place a call off under an existing framework or DPS. If you decide that it is in fact possible to rely on an accelerated process, the PPN includes some useful example wording justifying this.
- Can you show that the situation is not attributable to you as a contracting authority?
In particular, that you have not caused or contributed to the urgency by your failure to plan reasonably ahead for your requirements.
Written justifications in the Regulation 84 Report/OJEU Contract Modification Notices
Contracting authorities should keep a written justification of their decision to rely on a Regulation 32/72 derogation, not least as this is expressly required by Regulation 84 to be included in the Regulation 84 report. If you have not seen it yet, you might like to use our free to access online Regulation 84 report tool at www.regulation84.co.uk to assist with this.
A reminder too that a reliance on the Regulation 72 derogation will require the publication of a contract modification notice in the OJEU.
Reassessment of justifications and contract term
The PPN reminds authorities of the need to continue to reassess whether the justifications continue to apply, not least as what might qualify as unforeseeable now may not qualify as unforeseeable a couple of months further down the line. Likewise, contract terms must be proportionate to the urgency of the need and authorities should not enter into longer contracts/contract extensions than are absolutely necessary.
We will continue to keep you updated – but do get in touch if you have any matters you would like to discuss.