Call for competition using a standard procedure with accelerated timescales
In cases of urgency duly substantiated by the contracting authorities, which makes it impossible to comply with the regular deadlines, the public procurement act of 17 June 2016 allows contracting authorities to award public contracts within the following accelerated timescales:
- For open procedure, the deadline for the submission of tenders may be reduced to 15 days as of the publication of the contract notice (instead of the regular 35 days).
- For restricted procedure, the deadline (i) for the submission of requests to participate may be reduced to 15 days as of the publication of the contract notice (instead of the regular 30 days) and (ii) for the submission of an offer to 10 days as of the publication of the invitation to tender (instead of the regular 30 days).
The use of such shortened timescales must be justified in the tender documents, notably referring to the COVID-19 outbreak and the reasons for the consequential urgency meaning that the standard minimum timescales could not be observed for the procurement in question.
Direct awards due to extreme urgency
In case of extreme urgency (“urgence impérieuse/dwingende spoed“), contracting authorities may choose to award contracts in accordance with the negotiated procedure without publication provided that the following conditions are met: (i) the events leading to the need to opt for the extreme urgency award were unforeseeable; (ii) there is a causal link between the urgency and the unforeseen event; (iii) it is impossible to comply with the usual timescales; and (iv) the situation is not attributable to the contracting authority.
In addition, the contracting authority must, in principle, justify its decision to opt for the negotiated procedure without publication when taking the said decision. Where impossible or inapplicable, the contracting authority may provide such justification in the award decision or if such decision cannot be drafted immediately, it shall be drawn up a posteriori and at the latest within fifteen days of the decision to award the contract. It is noteworthy that, regardless of when the justification is provided for, the reasons justifying the negotiated procedure without publication must exist on the day the contracting authority chose to opt for the said procedure.
Whether the current COVID-19 crisis may justify opting for this procedure will ultimately depend on the specific circumstances of each tender. The European Commission guidance on COVID-19 clearly indicates that the COVID-19 pandemic will likely create situations whereby access to supplies and services is urgent, and under which the normal requirements of the procurement regime may not be appropriate to respond to the crisis.
The European Commission, however, also flagged that the use of the direct award procedure must remain exceptional and that the conditions for using this procedure should be interpreted restrictively, as it deviates from the general public procurement principles including fair competition, transparency and equality of treatment. This EU guidance suggests that contracting authorities should first consider whether pursuing the standard procedure with accelerated timescales (as described under 1.1) would be sufficient for its purposes and, in any event, use direct awards procedure only to cover the gap until more stable solutions can be found to meet the authority’s needs.
Other options available to contracting authorities
The following other options may also be useful to contracting authorities to meet their needs during the COVID-19 crisis:
- Modification of an ongoing contract without launching a new procurement procedure:
- due to unforeseeable circumstances, provided that the contemplated modification:
- is necessary due to unforeseeable circumstances
- does not modify the global nature of the contract
- does not result in an increase of the initial price greater than 50% of the contract value
- in accordance with the de minimis rule (i.e., the contemplated modification is below (i) the threshold for European advertising and (ii) 10% of the initial contract value for service and supply contracts or 15% of the initial contract value for works contracts)
- in accordance with a price revision clause
- in accordance with the hardship clause
- provided that the contemplated modification is non-substantial, i.e., does not, without limitation:
- add new conditions that, had they been included in the initial contract, would have allowed other economic operators or would, at the very least, have attracted more participants
- alter the economic balance of the contract in favor of the successful bidder in a way that is initially not foreseen
- considerably broaden the scope of the contract
- Direct award procedure is available where the works, goods, or services needed to respond to the COVID-19 pandemic can only be obtained from a particular supplier due to the absence of competition or due to protection of exclusive rights; in this case, there must be no reasonable alternative or substitute available and the contracting authority must not artificially narrow the scope of the procurement in order to rely on this option.
- Direct award procedure may also be opted for by the contracting authority in the event of an additional supply of goods with same characteristics as initial contracts already awarded provided that: (i) the need for additional supply is due to an unforeseeable circumstance; (ii) the additional contract is awarded to the supplier of the initial contract; (iii) the cumulative amount of the additional contracts does not exceed 50% of the initial contract; and (iv) the cumulative amount of the initial and additional contracts does not exceed thresholds for European advertising.
- Call-offs under pre-existing framework agreements or dynamic purchasing systems.
Additional specific COVID-19 related measures under Belgian law
The Belgian (regional) governments have recently published specific guidance to mitigate the consequences of COVID-19 measures on Belgian public contracts.
The Walloon government (in the Walloon Order) provides for measures such as:
- For future contracts: the postponement of the launch of a tender procedure, of deadlines for submission or on-going award procedures, the extension of the offers validity period, or the postponement of the execution of the public contract
- For ongoing contracts: a list of guidelines for contracting authorities to provide relief to contractors, such as:
- revision of deadlines and other time-limits for the performance/execution of the contract
- suspension or waiving of penalties for late performance
- suspension of the contract for a certain time period
- for critical cases, possibility to terminate the contract
For future contracts, the Flemish government (in the Flemish Order) adopted a stricter approach, as it emphasizes that the COVID-19 measures do not as such constitute a ground to postpone the launch of a tender procedure. They may only consider postponing the launch of a tender procedure until the relevant measures are eased or lifted in cases where contracting authorities are aware that they will be significantly affected by the COVID-19 measures.
For ongoing contracts, the Flemish Circular provides for guidelines similar to the Walloon Circular ones.
In addition, both orders refer to the possibility for any contractor experiencing difficulties performing their obligations as a result of the COVID-19 crisis to request the revision of its contractual conditions (including an extension of the deadlines and the compensation of additional costs under certain specific conditions), based on the “hardship clause” provided by article 38/9 of the Royal Decree of 14 January 2013 establishing the general conditions for the performance of public procurement contracts.
This request is, however, subject to the demonstration of the following elements:
- The revision has become necessary due to circumstances that impair the contractual balance of the public contract.
- Such circumstances could not reasonably have been foreseen at the time of the submission of the offer.
- It could not avoid their consequences, although it has taken all the necessary measures.
Additional comments
Contracting authorities do not have ‘carte blanche’: While it is clear that non-standard procedures will likely be more readily available to contracting authorities as a result of COVID-19, this does not mean that there is free reign to ignore EU procurement regulations. As such, for clients seeking to win a contract outside of the framework of a standard procurement procedure, it is important to be familiar with the relevant legislative requirements or seek professional advice to feel comfortable with the fact that the process is being run lawfully and that a future challenge to the contract is therefore unlikely. This is especially so if a direct award is being pursued, as the relevant tests are particularly strict.
Open communication is key: Open and constructive dialogue between contracting authorities and suppliers is more important than ever. Where contracting authorities more readily use direct awards, suppliers must ensure they are effectively communicating their capacities and offerings to contracting authorities, as there is less likelihood of having an open competition in which to do so. Moreover, in order for suppliers to feel comfortable that the procedure is being run lawfully, it will be critical to understand the authority’s reasons for pursuing a particular procedure and to have opportunities to raise any concerns. As part of this dialogue, suppliers should strongly encourage the contracting authority to keep a detailed record of the decisions it has made in relation to the contract. This could be invaluable in the event that the procurement process is challenged by a third party.
The fundamental principles of procurement continue to apply: Nevertheless, while the EU Commission’s message is clear that procurement regulation does not and should not hinder the response to the pandemic, the fundamental principles of public procurement — namely equal treatment, non-discrimination, proportionality and transparency — continue to prevail. Therefore, it is important that suppliers continue to hold contracting authorities to account. Accordingly, in these unusual and uncertain times, we strongly advise seeking legal advice and considering very carefully whether it is sensible to challenge the award of a contract made by way of an exceptional procurement procedure.
Reputational risk must factor into decision-making: In addition, should a tenderer be perceived as hindering or even delaying a contracting authority from responding to a health emergency (notably by challenging the award), it is very likely that the said tenderer would face reputational risks.
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Baker McKenzie’s Public Procurement World contains more information about the world’s most important public procurement laws and guidance in light of the global COVID-19 pandemic.
