When should Regulation 32(2)(c) be used?

When should Regulation 32(2)(c) be used?

16 November 2020 By Raoul Robinson - Contracts Manager at YPO

woman working through contracts

Issues created by the rise of COVID -19 in the UK has resulted in public sector contracting authorities and their supply chains, facing unprecedented difficulties to quickly meet urgent stakeholder requirements.

This may be exacerbated by requirements to procure goods and services in accordance with the most commonly used procedures set out in the Procurement Regulations 2015.

To help relieve challenges, the Cabinet Office issued PPN 01/20 in March which provided valuable advice to all contracting authorities on the use of Regulation 32 to procure goods and/or services quickly in emergency situations. Although highlighted by the Cabinet Office its notice, Regulation 32 was not introduced in response to COVID-19 but has been available for use in its current form since the introduction of the Regulations in early 2015 and has been enshrined in some form within EU Directives for decades.

Under the specific circumstances set out within the regulation, a contracting authority can simplify the procurement process to award a public contract without prior notification in order to reduce the time and administrational requirements in conducting an award. This includes circumstances such as an absence of competition, where the supplies, services or works can only be procured by a particular economic operator for a unique, technical or exclusivity reason.

In particular for this article, Regulation 32(2)(c) states a procurement can be streamlined “insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with.”

The wording provided by the Regulation therefore suggests a number of conditions that must be met when utilising this procurement route:

1. The procurement must be strictly necessary

What makes a procurement “strictly necessary” is not defined but it may be reasonably argued that any procurement required to ensure the health and safety of the public would be considered necessary. This would likely include personal protective equipment, ventilators, testing kits amongst other products, services or works but may exclude procurements ancillary to the requirements of extreme urgency.

However, how far a procurement may be strictly necessary will be contestable in any event and shall be determined by the particular facts of each requirement. Contracting Authorities should be able to justify the necessity of the procurement by distinguishing the circumstance from procurements that are merely convenient or preferable to those that achieve a necessary outcome.

2. The procurement must be for reasons of extreme urgency.

There is no exact definition of “extreme urgency” within the Regulations but the European Parliament and Council within Directive 2014/24/EU from which the current Regulations are derived, cited “natural catastrophes require(ing) immediate action” as an example.

In addition, where the Regulation states that the exception may be used where time limits for the other procedures cannot be complied with may suggest that the commencement of the service or process required for supply should begin immediately or almost immediately following conclusion of the procurement in order for it to have been urgent.

Undoubtedly, the speed at which the coronavirus pandemic became a national issue would indicate that procurements linked to curbing the pandemic or protecting public health would in most if not all circumstances have satisfied a test of extreme urgency as a natural catastrophe as it unfolded in spring.

However, such interpretation of urgency does have its limits. In 1994, Case C-328/92, Commission v Kingdom of Spain, the Spanish Crown partially attempted to defended its use of the negotiated procedure without prior publication for the procurement of pharmaceutical products in order to secure supply in the event of a shortage. The defence was ultimately unsuccessful where the European Court of Justice determined that, although procurement of pharmaceuticals in an urgent situation could be a reasonable use of the procedure, it may only be used where the event creating extreme urgency has or is occurring, not where it is anticipated it may occur.

Therefore, the difference between perceived or anticipated urgency and an actual urgency is an important distinction that should be identified, evidenced and recorded in the procurement notes created by the contracting authority when using the procedure.

3. The event that brought about the requirement for extreme urgency must have been unforeseeable.

This requirement is of particular note as the timeframes between the introduction of COVID-19 as a recognised threat to the UK and forward procurements lengthens, forward or ongoing requirements linked to the virus may no longer be “unforeseeable” where the contracting authority may have reasonably identified ongoing requirements at an earlier stage.

This has been seen multiple times in cases at the European Court of Justice where although there was an arguable ‘extreme urgency’ such urgency was reasonably foreseeable. By way of example, in 1993, Case C-107/92, Commission v Italy, Italian Authorities were found to have wrongfully applied the procedure to construct an avalanche barrier in preparation for heavy snow where it was evidenced to have been aware of the requirement in a report created months earlier.*

Contracting authorities seeking to rely on this exception should therefore be prepared to evidence that the requirement for the procurement under this route is indeed because the circumstances were unforeseeable as opposed to simply not addressed at an earlier time. This particular requirement may prove harder to prove for new procurements linked to addressing the virus threat where contracting authorities have been aware of the COVID-19 and the potential supplies or services required to combat the virus since spring, if not before.

Conclusion

This procurement procedure can be extremely useful when used in the right conditions. We’ve recently seen its effective use in response to the coronavirus to procure essential supplies, but caution is advised as future, urgent procurements may no longer be “unforeseeable” where COVID-19 is used as general justification to avoid other routes to market.

In determining the suitability of regulation 32(2)(c) for undertaking over threshold procurements, contracting authorities should consider its use only in the most extreme of cases and record and retain evidence as to how the conditions are met to reduce the risks of meeting legal challenges later on.

Finally, where a contracting authority has concerns regarding the use of Regulation 32 but it does still require a quick turnaround, it should also be reminded of the opportunities afforded by the open and restricted procedures at Regulations 27 and 28 to reduce procurement timescales in states of “urgency” which provides a lesser standard of evidence required as there is no “unforeseeable” requirement, but allowing a contracting authority to reduce tender timeframes by just over 2 weeks.

These other options may provide a suitably quick procedure to be compliantly conducted, reducing risks posed by using Regulation 32(2)(c) whilst maintaining the principles of open, fair, and transparent competition enshrined in the Regulations.

 

Due to the upcoming IR35 reforms in April 2021, it is crucial for contractor works to understand government legislations and how these are responsible for determining rules of procurement.

If you would like further guidance or procurement advice please contact the team. For more information on the procurement procedure, our previous blog 'Negotiated procedure without prior publication' summarises regulations in the provision of procurement.

Categories: Procurement , Public Sector

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