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Important temporary changes to Public Sector Procurement rules

The government has introduced two key public procurement changes that have been implemented with respect to COVID-19. I am writing to you to explain (as briefly as possibly), what these policies may mean for you, and what relief – but also opportunities – may be accessible during the crisis.

The new Cabinet Office Policy Procurement Notices (PPN) offer guidance and advice to public bodies, but also companies, that are engaged in public procurement practices. These PPNs apply to all Contracting Authorities (CA). This is defined as being: all central government departments, executive agencies, non-departmental public bodies, Local Authorities, NHS bodies and the wider public sector. 

Both PPN draw heavily on the Public Contract Regulations 2015 (PCR). The PCRs include provisions which are designed to cover the implementation of emergency procurement measures.

Overview of ‘Supplier relief due to COVID-19’ (Action Note)

The Cabinet Office issued a COVID-19 related PPN on the 20th March. This PPN set out information as well as guidance for CAs on the payment of their suppliers. The guidance is intended to ensure service continuity during and after the outbreak. CAs have been advised to act now in order to ensure at-risk suppliers are in a position to resume typical service delivery once the outbreak is over.

The PNN became effective on the 20th March but is scheduled to apply until the 30th June 2020.

The PPN is guided by the understanding that the outbreak is unprecedented and will have a significant impact on businesses of all sizes. It recognises that many suppliers to public bodies may struggle to meet their contractual obligations and that this may put their financial viability, ability to retain staff and their supply chains at risk.  CAs are advised to take action to continue to pay suppliers. This will assist suppliers to cope with the current crises and to resume normal service delivery when the outbreak is over.

The PPN stresses, in particular, that CAs should pay all suppliers as quickly as possible to maintain cash flow and protect jobs. CAs should also take action to continue to pay suppliers at risk due to COVID-19 on a continuity and retention basis. Contracting authorities can consider making advance payments to suppliers if necessary. Typically, advanced payment would require treasury consent; however, due to the circumstances treasury consent is granted for payments in advance of need where the Accounting Officer is satisfied that a Value for Money case is made by virtue of securing continuity of supply of critical services in the medium and long term.

Moreover, CAs are advised that they should aim to work with suppliers and, if appropriate, provide relief against current contractual terms, e.g. relief on KPIs and service credits. This aims to maintain business and service continuity rather than accept claims for other forms of contractual relief e.g. force majeure.

Please note that the PPN contains a number of caveats and so, if the information above is of interest, the PPN should be read in full here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874178/PPN_02_20_Supplier_Relief_due_to_Covid19.pdf

Overview of ‘Responding to COVID-19’ (Information Note)

The Cabinet Office issued a broader PPN, in relation to COVID-19, on the 18th of March. It is intended to distribute information and associated guidance on the public procurement regulations as they relate to the current COVID-19 pandemic.

The PPN explains that there will be a range of commercial actions that must be considered by CAs in responding to the impact of COVID-19. It outlines how CAs may need to procure goods, services and work with extreme urgency; and that this is permissible under the Public Contracts Regulations (2015) using regulation 32(2)(c).

The PPN, and associated guidance i.e. regulations32(2)(c), relate to the following options which can be used to facilitate emergency public procurement:

  • Direct award due to extreme urgency (regulation 32(2)(c);
  • Call off from an existing framework agreement or dynamic purchasing system (DPS);
  • Direct award due to absence of competition or protection of exclusive rights;
  • Call for competition using a standard procedure with accelerated timescales;
  • Extending or modifying a contract during its term.

Additionally, depending on the nature of the CA’s requirement, there are further options available such as the additional delivery of supplies from an existing supplier (regulation 32(9)).

This PPN can be read in full here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/873521/PPN_01-20_-_Responding_to_COVID19.v5__1_.pdf

We would be happy to help you if you need additional resources. For example, emergency procurements can run on intense short timelines i.e. 14 days. If needed, our extensive professional capacity can be used to augment, strengthen and speed up your bid writing facilities.

Furthermore, we anticipate that procuring authorities will make more extensive use of DPS for procurements during this emergency. If you would like us to help you identify relevant DPS then please do let us know.

START DIRECT(ly)

A successful Bid Qualification service is fundamental to the submission of bids. Unfortunately, the S.C.O.T.S.M.A.N does not work well when qualifying public sector bids. In light of this, NewBusiness.Dev has developed their own methodology called START DIRECT(ly)™. You can find out more here.

EuropeAid and Brexit

Recently one of our customers contacted us regarding a contract notice published on the OJEU. The customer was interested in bidding for a contract funded by EuropeAid. A potential barrier to entry was noted at the end of the contract notice, with the following paragraph:

“Please be aware that after the United Kingdom’s withdrawal from the EU, the rules of access to EU procurement procedures of economic operators established in third countries will apply to candidates or tenderers from the United Kingdom depending on the outcome of negotiations. In case such access is not provided by legal provisions in force, candidates or tenderers from the United Kingdom could be rejected from the procurement procedure.”

Our client is not alone in being concerned, there are currently 345 tender notices on the OJEU dealing with a vast array of requirements, ranging from modernising schools with science laboratories in Northern Cyprus, developing a new payroll IT system for the Palestinian Authority, the purchase and commission of network infrastructure for the administrative court of Tunisia to reducing plastic waste in the Americas.

We researched into this and reassured our customer with the statement that Penny Mordaunt, Secretary of State for International Development (in office 2017-2019), told a House of Commons parliamentary hearing in July 2018. During this, she argued “UK-based organisations and individuals should be able to bid for funding, participate in and lead consortia, and otherwise implement as normal all EU development programmes that are approved before December 2020,” when UK MPs will try to negotiate a free-trade deal.

The Commission has been accused of over-reaching by Mordaunt and many others, as it is “not only applying these disclaimers to the funding we channel through the EU budget, over which we do not yet have discretion; it is also applying them to funding that we have chosen to channel through the EU as our preferred delivery partner.” She added, “we have raised these issues with the Commission multiple times and we are shocked and disappointed by their behaviour… I have been very clear that, if we are contributing to UK funds and EU projects, then UK organisations must have access.  We are now looking at how we can use the aid budget to protect UK organisations from this discriminatory practice.”

Claire Godfrey, Bond’s interim director of policy, advocacy and research, also commented separately on the matter: “we are very concerned that the European commission has misunderstood the eligibility criteria for UK NGOs to access funding from the EU in the event of a Brexit no-deal scenario… There is a real danger that UK NGOs will be both discouraged from applying and be discriminated against during the process, if the proper criteria are not used.” A UK government spokesman said: “We are clear that this disclaimer must be removed by the European commission.”

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