It goes without saying that the COVID-19 (coronavirus) outbreak and the measures being taken to contain it are having an impact on public procurement. This blog post deals with the procurement law questions raised most frequently during the present crisis, from the perspective of both tenderers and contracting authorities.
Have all procurement procedures been put on hold?
No. For the time being, procurement procedures are still ongoing. This has been confirmed by public authorities such as the Department of Public Works and Water Management (Rijkswaterstaat) and the Central Government Real Estate Agency (Rijksvastgoedbedrijf). In this context, the national government and the construction and engineering sectors have also agreed, for example, that they will continue to make investments to meet future construction and sustainability challenges. They have also made arrangements to prevent the construction industry from coming to a standstill.
Can deadlines be extended?
Yes. The Public Procurement Act 2012 (Aanbestedingswet 2012) (“Aw”) provides for the possibility to extend deadlines, including the so-called “Alcatel period” (i.e. the standstill period after announcement of an award decision), as is made clear in Section 2.127 Aw:
“A contracting authority shall observe a standstill period before concluding the contract envisaged in the award decision. […]
3. The standstill period within the meaning of the first subsection shall be at least 20 calendar days.”
The extension of minimum statutory deadlines also follows from Section 1.10 Aw and Rule 3.6 of the Proportionality Guide (Proportionaliteitsgids). The deadlines in procurement procedures must, after all, be proportionate.
PIANOo, the Dutch Public Procurement Expertise Centre, has called on contracting authorities to extend existing deadlines. Many public authorities have already complied with this request, as a recent PIANOo news bulletin makes clear.
It is important to note, however, that the terms will not automatically be extended and therefore requires action on the part of the contracting authority. An amendment is in any case required if the procedure is already under way. This can be done via TenderNed (see Section 5.1.3 of the TenderNed Manual for contracting authorities) or another procurement system. Contracting authorities are required, after all, to provide all interested parties or tenderers with the same information at the same time.
Can deadlines also be brought forward?
Yes. If a contracting authority now urgently needs certain supplies for a reason not attributable to it (such as the coronavirus crisis) and it is not possible to adhere to the normal deadlines under procurement law, an accelerated procedure (pursuant to Section 2.74 Aw) can be applied. In highly exceptional cases, it is even possible to refrain from putting the contract out to tender (see below). The contracting authority must properly substantiate the urgent need for use of the accelerated procedure. The accelerated procedure means that deadlines for the submission of tenders and requests to participate can be brought forward, resulting in a reduction in the overall time needed to complete the procurement process.
Does the coronavirus crisis mean that contracting authorities do not have to put contracts out to tender?
In the short term, the accelerated procurement procedure will not always offer a solution, especially when there is an imperative and urgent need for supplies, services or works, such as protective equipment, ventilators or laboratory supplies (including test kits). In such cases, even the accelerated procedure will simply take too long. In that case, the contracting authority may apply the negotiated procedure without prior publication of a notice (i.e. it can refrain from putting the contract out to tender). The Public Procurement Act (Section 2.32(1)(c) Aw) only permits the application of this procedure in cases of extreme urgency, for events which could not have been foreseen by the contracting authority, and not attributable to it and if the accelerated procedure does not offer a solution either. The Court of Justice of the European Union interprets this exception to tendering narrowly. For example, the Italian authorities were not allowed to purchase helicopters to fight forest fires in Italy without a call for tenders. The reasoning was that forest fires are a frequent occurrence in southern Europe in the summer months and that the government should therefore have foreseen the need for fire-fighting equipment. However, it will be more difficult to argue that the Dutch government could have foreseen the present pandemic. In our opinion, public authorities will be able to procure goods and services without a call for tenders if there is an urgent need arising from the present crisis and which is not due to the government itself, for example the need for testing equipment.
Can court hearings still take place?
New cases can be brought before the courts and registered as usual. Since Tuesday, 17 March 2020, however, the (district and appellate) courts and special tribunals have been closed due to the coronavirus outbreak. This basically means that oral arguments and docket hearings (rolzittingen) can no longer take place. Urgent cases can continue, but without physical hearings. The judicial system's website (De Rechtspraak) indicates that “urgent cases” are those in which a judicial decision cannot be dispensed with as the case, for example, affects the rights of the accused or persons seeking justice. Documents can still be submitted to the courts, meaning that proceedings will continue as long as there is no need for oral arguments.
In the case of temporary injunction/preliminary relief proceedings, the judge will decide whether a hearing should take place (according to De Rechtspraak “only in the event of extreme urgency”) or whether it should be postponed until further notice. If legal proceedings are imminent or foreseeable in connection with a procurement procedure, it is therefore uncertain when or how a hearing will take place. De Rechtspraak reports that if a hearing does take place, it should preferably be held by electronic means, for example video conferencing. The court will therefore decide whether an oral hearing is absolutely necessary and, if so, whether it can be held electronically.
The same broadly holds true for appellate proceedings, for which (physical) hearings have also been suspended, with the exception of urgent cases in which a ruling is required quickly, for example urgent preliminary relief proceedings. “Temporary Derogation Rules for Civil Cases before the Courts of Appeal due to the Special Circumstances Caused by the Coronavirus Crisis” (Tijdelijk afwijkende regeling voor civiele dagvaardingszaken bij de hoven vanwege de bijzondere omstandigheden door de Corona-crisis) were recently published. In brief, the rules provide for derogations to facilitate a more flexible approach to requests for postponement, the submission of documents, and the extension of certain deadlines for procedural actions.
On 25 March 2020, De Rechtspraak announced that the current measures will be extended after 6 April 2020 but that the categories of cases that can be dealt with substantively will be broadened. In this regard, De Rechtspraak has published an additional list of cases which should be given priority in the second stage, in addition to urgent ones. These are cases for which, in the court's opinion, a hearing cannot be postponed until after 28 April 2020 and an agreement on completing the case in writing cannot be reached. Depending on the available capacity, De Rechtspraak mentions temporary injunction/preliminary relief proceedings as an example of this type of case. Depending on capacity, it may even be possible for regular cases to be dealt with by the courts.
What are the risks of not complying with the contract and what can contracting authorities do?
Full compliance with a contract that was put out to tender out may be jeopardised by the coronavirus crisis. Nevertheless, the normal rules and risks regarding such contracts remain applicable. In our opinion, contracting authorities will in any case need to assess each contract in order to determine whether the crisis:
- (adversely) affects performance of the contract, for example as performance requires close physical contact between employees;
- leads to a situation of force majeure within the meaning of Section 6:75 of the Dutch Civil Code;
- should lead to leniency by the contracting authority.
The Rijkswaterstaat website states that, in any case, in the event of construction delays due to the coronavirus outbreak, contracting authorities will take a lenient approach to penalty clauses.
What practical advice do you have for tenderers and contracting authorities?
The coronavirus pandemic was not foreseeable, and it is unclear how it will develop. Our practical advice to tenderers and contracting authorities is therefore to think about how to deal with this situation in the context of ongoing or imminent procurement procedures. Specifically, for example, we mean that consideration should be given to whether and how the contract can take into account circumstances arising from the crisis which could constitute an event of force majeure, justifying a delay. We urge contracting authorities to make clear how they intend to deal with these issues when putting contracts out to tender and advise tenderers to ask questions if things are not (sufficiently) clear.
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