COVID-19: Options for Regulated Procurement in the Utilities Sector

Article by Achilles

In these unparalleled times, Authorities and Contracting Entities more than ever need to be aware of the provisions for direct award of services and supplies to meet swiftly and efficiently the pressures and demands of continuity of supply to help meet organisational and public needs.

Date: 3 April 2020 |  Time to read: 5 minutes

The Cabinet Office has published a Procurement Policy Note (PPN) 01/20 that advises and clarifies a range of legitimate options for direct award of contracts, although PPN 01/20 is applicable to all contracting authorities in the Public Sector it is also useful guidance for the Utility Sector.

Options

Direct Award via Framework Agreements – UCR 51

Award of Contracts via Framework Agreements can be facilitated by Direct Award and/or Mini-competition methodologies.  If a Framework Agreement has been set up and there is an option to use a Direct Award methodology, then this provides a quick direct route to market. Contracting authorities must follow the objective methodologies and timescales for the award of contracts as provided for in the Framework Agreement documentation.

Direct Award via Dynamic Purchasing Systems (DPS) – UCR 52

Award of Contracts via a DPS requires a mini competition, for Central Authorities a minimum of 10 days for receipt of tenders is required. Sub-central authorities have the option, provided that all the selected DPS providers agree to shorten these timescales further to meet demand.

Where Frameworks and DPS have been set up for light touch regime services, such as ‘Health and Social, legal services etc.  may afford more flexibility and potentially shorter tender timescales.

Direct Award – UCR 50

PPN 01/20 clarifies that COVID-19 is a threat to life and that PCR 32(2)(c) is intended to deal with this type of situation.  The equivalent for the Utility sector is Regulation 50(1)(D): Direct award due to Extreme Urgency.  This exemption is available where for reasons of “extreme urgency” which are brought about by events which the Contracting Authority could not foresee or the time limits for the Open, Restricted or Competitive Procedure with Negotiation cannot be complied with.  The exemption can only be relied on where it is “strictly necessary”.  PPN 01/20 also clarifies where justified a direct award due to absence of competition for technical reasons or exclusive rights can also be made.  Furthermore, the EC explained, ‘’Eventually, even a direct award to a preselected economic operator could be allowed, provided the latter is the only one able to deliver the required supplies within the technical and time constraints imposed by the extreme urgency,”

Modifications to Existing Contracts – UCR 88

UCR 88 provides that you may add additional supplies and services to an existing contract where the need has been brought about by circumstances which a normal diligent purchaser could not have foreseen, but the additional supplies or services must not alter the overall nature of the contract.  A Modification Notice should also be published in OJEU.  Other modifications to Contracts are available as per UCR 88 as set out below

Where the modifications are not substantial

Where the cumulative value of modification is:

i) below the directive’s threshold; and

ii) below 10% of the initial contract value for service and supply contracts, or 15% for works:

Where the modification is provided for in clear, precise and unequivocal review clauses

For additional works, services or supplies by the original contractor, irrespective of their value, that have become necessary and were not included in the initial procurement where a change of contractor

  • cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, software, services or installations procured under the initial procurement; and
  • would cause significant inconvenience or substantial duplication of costs for the Utility.

Accelerated Open Procedure – UCR 45

The Accelerated Open procedure, where justified, the timescale for receipt of tenders can be reduced to 15 days, which is quite a quick turnaround and a faster route to market.  Please note that the 10-day standstill period will still apply to all procedures except a legitimate Direct Award.

Changing Procurements to Take Account of COVID-19

Utilities may be able to change Procurements that are already in progress provided that there is no distortion of competition and the Treaty Principles of Transparency and Equal treatment are complied with.  Changes that are not substantial in the interests of Transparency should be communicated to all bidders, therefore providing an opportunity for them to respond and raise any issues at that point, hence further on in the Procurement the risk of bidder redress is significantly reduced.  Where the changes are substantial consideration should be given to the impact of the anticipated changes on potential bidders who decided to not to bid and on any deselected bidders.

Note: Audit Trail

In these uncertain times Utilities must have a robust audit trail of all actions and decision made, and the reasons and reasoning behind these decisions and actions.

Disclaimer 

Readers understand that Achilles provides information relating to EU procurement legislation for general information purposes only and does not provide legal or other professional advice.  Achilles is not responsible for any damages resulting from any decisions of the reader that are made in reliance on the information provided through the blog post, including legal, compliance and/or risk management decisions.

Written by Debbie Metcalfe LLM MSc MCIPS, 14.04.2020



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