Possibilities for accelerated procurement in times of the "corona crisis"
"Hesse announces instantaneous procurement for protective suits" - this was one of the many headlines that could be read in the last few days in the course of the spread of the SARS-CoV-2 pathogen in Germany. Especially in times of crisis, public procurement law is seen as a potential impediment to rapid procurement. It is thus all the more important that public contracting authorities are aware of the possibilities available under public procurement law for the implementation of accelerated award procedures and make consistent use of them:
1. Shortening of standard time periods
In the pan-European award of contracts for supplies and services, it is possible to shorten the standard time limits provided for the respective type of procedure in cases of "duly substantiated urgency" (e.g. section 15 (3) German Ordinance on the Award of Public Contracts (VgV), section 16(3), (7) VgV). When applying the fastest method of awarding contracts, the so-called open procedure, a reduction to 15 days from the date of dispatch of the contract notice is permitted. A shortening of the regular minimum time period requires objective reasons which, while not completely excluding the award procedure, make it impossible for the contracting authority to comply with the standard time period of 30 days in open procedures when submitting tenders by electronic means. In the event of an acute procurement bottleneck situation which would endanger the supply of medical facilities with necessary equipment, these conditions are met.
It is controversial Whether the shortening of the standard time period may not be attributed to failures on the part of the contracting authority which is the legal concept of section 14 (4)no. 3 VgV. The question can, however, remain open if the urgent need is in any case based on the unexpected increase in demand for protective equipment and not on fundamental structural shortcomings of the contracting authority.
2. Implementation of a negotiated procedure without prequalification
The process is even faster if the contracting authority can negotiate directly with suppliers capable of delivering. The means of choice in the area above the EU thresholds is the negotiated procedure without a call for competition ("Verhandlungsverfahren ohne Teilnahmewettbewerb"), i.e. a type of procedure which does not provide for prior pan-European publication of the procurement intention, and in the sub-threshold area the negotiated process without a call for competition ("Verhandlungsvergabe ohne Teilnahmewettbewerb"). As competition is substantially restricted in this procedure, the negotiated procedure without prequalification pursuant to section 14 (4) VgV or the negotiated contract award without prequalification pursuant to section 12 German Rules of Procedure for the Awarding of Below-Threshold Contracts (UVgO) is only permissible if the prerequisites for narrowly interpreted exceptions are met.
For the procurement of protective clothing, section 14 (4) no. 3 VgV (or section 8 (4) no. 9 UVgO) is particularly relevant. According to this provision, there must be a case of extreme urgency brought about by events unforeseeable by the contracting authority which make it impossible to comply with the minimum time limits for the conduct of an award procedure. Compared to the deviation from the standard time limits (no. 1.), the requirements are even more stringent and are interpreted very restrictively by the courts. The public contracting authority must weigh up the threatened legal interests on the one hand and the obligation under public procurement law to carry out a competitive and transparent award procedure (section 97 (1) and (2) German Antitrust Act GWB)) against each other and document this weighing up process. This "pendulum" swings in favour of the threatened legal interests in particular if specifically high-ranking legal interests (life, physical integrity, etc.) are affected and their impairment is imminent or has already occurred. In the supply of protective equipment, particularly high-ranking legal interests are concerned which are also directly impacted. In particular, the supply of protective equipment not only serves to protect oneself but also to inhibit the uncontrolled spread of SARS-CoV-2.
Furthermore, the emergency must have been unforeseeable. Unforeseeable events are those which are outside the normal economic and social life. Although there have been pandemics in the past, it cannot be assumed that a real outbreak is common or predictable.
And finally, the bottleneck situation must not be the result of negligence on the part of the public contracting authority. If there are doubts here whether the bottleneck situation is not (also) due to structural shortcomings on the part of the contracting authority, at least an interim award (see no. 3. below) could be considered as an alternative.
3. Interim awards as a means of temporarily covering a procurement need
Interim contracts are contracts which are awarded directly and are limited in time until the earliest possible conclusion of the pan-European award procedure required by public procurement law. They thus serve to bridge a bottleneck situation for a limited period of time while at the same time a regular award procedure is carried out. The interim award is therefore not an instrument for fulfilling demand on a permanent basis.
Interim awards are not explicitly regulated in public procurement law but are recognised by case law for certain emergency situations (e.g. High Court of Berlin [Kammergericht Berlin], decision of 29 February 2012 - Verg 8/11). In the case of procurements of services of general interest, case law allows interim contracts even if the shortage is due to the fault of the contracting authority. In terms of time, the interim contract must be limited to the time necessary to carry out a regular procurement procedure.
4. Exploiting and exceeding framework agreements
If the public contracting authority has an existing framework agreement with a service provider for protective clothing or other essential items, this is the fastest and most flexible instrument for corresponding individual contracts. In case of framework agreements, the procurement volume does not have to be conclusively determined in advance. More recent case law of the European Court of Justice (ECJ), however, assumes an obligation to define at least an upper limit on quantity (judgement of 19 December 2018 - C-216/17 - though on the old procurement directives).
However, even if the ceiling laid down in the framework agreement is exceeded, this does not necessarily lead to a new award procedure. This is because the provision of section 132 GWB on subsequent changes to contracts is also applicable to framework agreements. If the value of the subsequent assignment does not exceed the threshold value of EUR 214,000 for service contracts and at the same time a volume of 10 percent of the originally assigned value is not exceeded, the additional assignment is already permissible on the basis of section 132 (3) sentence 1 GWB.
In turn, higher follow-up orders in terms of value should also be covered by section 132 (2) no. 3 of the GWB in times of crisis. Accordingly, the public contracting authority may make changes which it could not foresee within the scope of its duty of care. This may well be the case with the "corona crisis". If the overall character of the contract does not change as a result and the follow-up order does not exceed 50 percent of the original order (section 132 (2) sentence 2 GWB), this order change is permissible without a new award procedure. Pursuant to section 132 (5) GWB, such a change of order must be published in the Official Journal of the European Union for transparency reasons.
+++ Update on 23 March 2020 +++
On 19 March 2020, the Federal Ministry of Economics and Energy (BMWi) issued the "Circular on the application of public procurement law in connection with the procurement of services for the containment of the spread of the new coronavirus SARS-CoV-2" to the federal government, the federal states and municipal umbrella associations. The circular states that the requirements for a negotiated procedure without competitive tendering are met if this serves to contain and deal with the corona epidemic in the short term and/or to maintain the operational service of the public administration. The circular is available at Link.
Our expert will be pleased to answer your questions on this topic can be contacted under Sascha Opheys.