Public procurement and extreme urgency

When it comes to public procurement, what constitutes "extreme urgency"? Kuldip Dhanoya looks at the Government’s attempt to provide clarification.

Public procurement was at the forefront of the UK Government’s response to the pandemic.

At the time, there was global competing demand for the vital goods and services needed to tackle Covid-19. The European Commission (EC) recognised these pressures. In its Guidance published in April 2020, it said that the nature of the pandemic would require an unprecedented response based on “swift and smart solutions and agility in dealing with an immense increase in demand for similar goods and services whilst certain supply chains are disrupted”. Essentially, the EC gave a ‘green light’ to the immediate use of Article 32(2)© of 2014/24/EU, or in the UK’s case, Regulation 32(2)(c) of the Public Contracts Regulation 2015.

Yet even before the publication of the EC Guidance, the UK Government had helpfully set its stall under PPN01/20, which clarified the range of options available under PCR 2015. These included direct awards, call offs from existing frameworks or DPSs, use of accelerated procedures, or contract modifications. Procuring bodies were clear on the range of options, even without this guidance. At the outset of the pandemic, the challenge these bodies faced was in applying those mechanisms to a very fluid and evolving emergency.

Another complication of Covid-19 was that it was an unparalleled event, and unfamiliar to those dealing with its volatile and unpredictable nature. It was arguably not a single “urgent” event, either. It spiked several times, mutated and then re-emerged in geographical areas where it was previously considered to be under control. Given this context, procuring officers repeatedly asked the same questions throughout the life of the pandemic:

• How was Regulation 32(2)(c) to be applied to a crisis which was evolving over a significant period of time?
• When did an event become foreseeable?
• What was a reasonable “contract term” to pass the test of any award being “insofar as strictly necessary” particularly in an unforeseeable crisis situation?

More clarity comes from the Procurement Bill

The Cabinet Office has since looked to provide clarification under the draft Procurement Bill. Regulation 42 now permits a Minister of the Crown, if he or she “considers it necessary,” to make regulations in order to permit certain contracts to be directly awarded. In this instance, the term “necessary” means it is needed to “(a) protect human, animal or plant life or health, or (b) protect public order or safety”. Explanatory notes make this even clearer: “The purpose of this clause is to ensure procurements during an emergency event (like the Covid-19 pandemic) can be made as quickly and transparently as possible, even if the circumstances leading to the event are foreseeable...”, which would currently rule out the application of Regulation 32(2)(c).This guidance removes some of the uncertainty around applying Regulation 32(2)(c), particularly where a situation is prolonged or evolving, as COVID-19 has been. 

What this guidance means

Applying Regulation 32(2)(c) to the award of urgent contracts has not always been a straightforward task during the pandemic, especially given the volatile and unpredictable nature of the virus. Contracting authorities have applied significant resource in interpreting the rules, developing the necessary arguments to justify its use, and maintaining a sufficient audit trail throughout the procurement process. So, the changes proposed by the Procurement Bill should be welcomed by those tasked with making the decision to proceed with a direct award. These decisions are often difficult, particularly in cases where there is a debate about whether the circumstances are still unforeseeable and therefore applicable to a direct award. Although the guidance provides a degree of clarity, further practicalities will need to be ironed out during implementation. For example, when direct awards become “necessary”, how quickly the decision takes effect, how long the ability to direct award remains in place, and at what point the decision should be reviewed, or indeed reversed.

Kuldip Dhanoya is a Partner at TLT.