Urgent procurement in a pandemic

Depending on the value and size of the contract, a typical procurement run in accordance with the requirements of the Public Contracts Regulations 2015 can take anything from a few months to more than a year to conclude.

Regulation 32(2)(c) does however provide an exception for contracts which are required for ‘reasons of extreme urgency brought about by events unforeseeable by the contracting authority’. Where this exception applies and it is not possible for the time limits for the open, restricted or competitive negotiation procedures to be used as a result of that urgency, a public body may award a contract using the negotiated procedure without advertising it and following the usual procurement processes.

The COVID-19 pandemic was unprecedented and many contracting authorities have, since March 2020, relied on the Regulation 32(2)(c) exception to award urgent pandemic-related contracts without running a full regulated tender. Providing the conditions of Regulation 32 are met, this is permitted. However, contracting authorities need to be very careful to ensure that they do not abuse the Regulation 32(2)(c) exception, the requirements of which are as follows:

1. There is extreme urgency;
2. The extreme urgency has been brought about by events which were unforeseeable by the contracting authority;
3. The time limits for regulated tenders cannot be complied with;
4. The extreme urgency is not attributable in any way to the contracting authority.

In addition, contracts may only be awarded insofar as they are strictly necessary.

During the course of the pandemic, contracting authorities have relied on Regulation 32(2)(c) to award a large number of contracts worth many billions of pounds, including in particular contracts for the supply of PPE and for lab testing. Both the size and scale of these direct awards, and the process adopted by contracting authorities in awarding them, have been subject to media scrutiny and, in some cases, legal challenge by bidders.

Whilst it may be legitimate for contracting authorities to use Regulation 32(2)(c) in the context of the COVID-19 pandemic, contracting authorities must be careful to ensure that their decisions are properly documented; that the contracts awarded do not go further than strictly necessary; and the process adopted complies with general EU Treaty principles of equality, transparency and proportionality. Contracting authorities should also be aware that as the pandemic continues, reliance on Regulation 32(2)(c) will become more difficult as the effects of the virus can no longer be described as unforeseeable.

On the other side of the coin, bidders should keep under review the contracts directly awarded by contracting authorities, which must be published on Contracts Finder and in OJEU, currently, and post-Brexit on the new UK Find a Tender service, which will go live on 1 January 2021. If bidders feel they have missed out on a valuable opportunity, they should take early legal advice in order to determine whether they may have any grounds for challenging a direct award.