PPN 01/21 – Procurement in an Emergency
On 4th February, the Cabinet Office published its first procurement policy note of 2021. PPN 01/21: Procurement in an Emergency reminds contracting authorities of the options available to them when undertaking procurements in an emergency.
Broadly speaking, PPN 01/21 doesn't produce anything too surprising, and is a reminder of the tools that are already at contracting authorities' disposal (and largely builds on what was set out at the beginning of last year in PPN 01/20 (Responding to Covid-19)). The PPN has immediate effect, and applies to all contracting authorities (including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector).
PPN 01/21 provides a useful recap of the various options to be considered when procuring in an emergency, including:
- awarding a call-off contract under an existing framework agreement or dynamic purchasing system;
- making use of the accelerated timescales for urgent procurements under the open and restricted procedure;
- modifying an existing public contract (including extending the duration of contracts); and
- direct awards following the negotiated procedure without prior publication (relying on one of the justifications set out in regulation 32 of the Public Contracts Regulations 2015 (the PCR)).
In all cases, contracting authorities should ensure that the approach taken is proportionate and, particularly for direct awards, limited to what is absolutely necessary for the immediate requirements.
Of note, paragraph 7 of PPN 01/21 provides that, where required, contracting authorities should publish a contract award notice on the Find a Tender service (FTS). For modifications to existing contracts, and call-offs from existing frameworks/DPS, clients should consider whether they are still required to publish to the Official Journal of the European Union before publishing in FTS.
Given the high profile challenges to the various direct awards in responding to the Covid-19 crisis, and the recent judgment in R (on the application of the Good Law Project and others) v Secretary of State for Health and Social Care  EWHC 346 (Admin), this is a timely reminder for all contracting authorities of their publication requirements under the PCR, even where a contract has been awarded without prior publication.
In addition to reminding contracting authorities of the routes to procuring in an emergency, PPN 01/21 sets out a few interesting points of note.
Firstly, PPN 01/21 specifically sets out that when a contracting authority makes use of the negotiated procedure without prior publication "even though not required by regulation 32(2)(c), contracting authorities should consider some form of advertisement, running an informal competition and/or undertaking due diligence on the supplier market before making a direct award".
The rationale behind this message is that this approach might secure better value for money, and would allow the contracting authority to hold discussions with more than one supplier. There is some tension here between the idea of running some form of competition and being able to deliver a contract quickly in an emergency, and contracting authorities will need to weigh up, on a case-by-case basis, whether such a competition undermines the justification for relying on the negotiated procedure without prior publication (for example, if such a competition is run, could the truncated timescales for the accelerated open/restricted procedure have been adopted instead?).
Secondly, PPN 01/21 recognises that, in an emergency, prices may be higher than would be expected in a regular market. With that in mind, PPN 01/21 highlights that abnormally high pricing should be approved by the appropriate commercial director before awarding a contract. Additionally, it is recommended that contracting authorities consider the inclusion of contractual mechanisms to ensure that they have the ability to secure reductions in price across the duration of the contract. Where it is not possible to secure such contractual mechanisms, the reasons for not including them in contracts (as well as the justification for awarding a contract with an abnormally high price) should be documented.
Finally, the Government has come under much criticism in recent months over the perceived "chumocracy" in the award of public contracts. Perhaps as a nod to addressing some of this commentary, PPN 01/21 sets out that contracting authorities should maintain documentation on how they have considered and managed potential conflicts of interest in the procurement process. Additionally, the PPN sets out that "particular attention should be taken to ensure award decisions are being made on the basis of relevant considerations and not personal recommendations".
Overall, the message is clear – even in cases of emergency and extreme urgency, contracting authorities should consider all procurement options and accelerated time-scales before making direct awards, and even then, proper record-keeping and ensuring value for money remain top procurement priorities.