April 29, 2020

Covid-19 and public contracts: the English experience of Procurement Policy Notes.

by Studio Valaguzza in Deepening

Other countries, like Italy, have provided special measures for managing the public procurement system in response to the health emergency caused by Covid-19.
In the UK, the Procurement Policy Notes (PPN) issued by the Cabinet Office, a public body supporting the UK Government and promoting good practices and vademecum in favour of tendering authorities, is a case in point.
Pragmatism, simplification, and flexibility have always inspired the UK’s regulatory action on procurement as a consequence also of a virtuous interaction between the academic world and political bodies.
The approach adopted by 18th and 20th of March Notes is strategically different from the Italian approach.
In Italy, MIT and ANAC have decided to focus mainly on the possibility of suspending proceedings already banned or to be banned not referable to the health emergency (see https://www.studiovalaguzza.it/en/after-mit-also-anac-intervenes-on-art-103-of-the-law-decree-cura-italia-excess-of-zeal/).
On the other hand, in the UK, it has been decided to mainly support the administrations with regard to urgent procurement, identifying the ways allowed to accelerate proceedings and ensure quality even during the health emergency.
In particular, the Cabinet Office, illustrating the tools that tendering authorities can use to procure goods, services and supplies they need during the emergency, refers to: (i) direct award due to extreme urgency; (ii) direct award due to absence of competition or protection of exclusive rights; (iii) call off of from an existing framework agreement or dynamic purchasing system; (iv) call for competition using a standard procedure with accelerated timescales; (v) extending or modifying a contract during its term.
The indications provided, which constitute an operative vademecum not binding on the tendering authorities, analytically explore every possible option for the benefit of all tendering authorities and clarify that Covid-19 emergency situation legitimates the use of proceedings that presuppose urgency. Moreover, it is significant that according to the Cabinet Office’s approach even pre-filled templates of justifications are provided to the tendering authorities, suggesting keeping them as proof of the existence of the derogation requirements.
On the other hand, as far as contracts that have not been concluded to deal with Covid-19 emergency are concerned, the English system aims to introduce elements of flexibility, plausibly justified by force majeure, benefiting the system as a whole.
While in Italy lawyers and operators are questioning the consequences of the identification of the Covid-19 as a force majeure and who should support the higher cost of the contracts, the Cabinet Office authoritatively endorses a collaborative approach. Among other things, this approach evaluates possible changes to the object of the ongoing contracts (including the extension of the fulfilment terms or changes in the delivery methods), also in favor of enterprises, which will allow operators to continue its activities keeping its remuneration and making itself useful during this critical moment. Thus, for example, a contract for the transport of children to schools could legitimately be transformed into the transport of doctors to hospitals.
In addition, the Cabinet Office specifies the possibility for administrations to renounce to exercise rights established in their own favor in stipulated contracts and/or to grant extensions or other facilities to operators. Moreover, tendering authorities are urged not to interrupt or delay the payment of their suppliers in order to avoid that the liquidity crisis could lead to the bankruptcy of the weakest economic operators in the supply chain. Consequently, advances payments, payments on account and shortened timing of payment are allowed.
The English system represents a very different approach to procurement from our approach, which seeks a loyal collaboration between clients and contractors in the clear interest of everyone. We should always keep in mind that flexibility is not synonymous with illegality.