The Public Contract Regulations of 2015 were put in place to regulate the way that public money was spent. Aligned with EU regulations, the Public Contract Regulations, or PCR, set out the processes and requirements for public sector tenders to ensure there was fairness and transparency throughout the process.
But the PCR always included a provision to allow organisations to skip the competitive tendering process under certain circumstances and make a Direct Award. This would be allowed where there was only one possible supplier, or in the event of ‘extreme urgency’ due to unforeseeable events, for example where there is a risk to life.
Responding to COVID-19
In March 2020, the Government published PPN 01/20 Responding to COVID-19. Procurement Policy Notes (PPNs) are published to provide guidance on best practice for applying the Public Contract Regulations. PPN 01/20 was written with the purpose of setting out information and associated guidance on the public procurement regulations and responding to the coronavirus outbreak.
The PPN offered procuring organisations the following options for meeting urgent requirements for goods or services during COVID:
- direct award due to extreme urgency;
- direct award due to absence of competition or protection of exclusive rights;
- call off from an existing framework agreement or dynamic purchasing system;
- call for competition using a standard procedure with accelerated timescales;
- extending or modifying a contract during its term.
Where a direct award was made, all the following tests had to be met:
- There are genuine reasons for extreme urgency
- The events that led to the extreme urgency were unforeseeable
- It is impossible to comply within the usual timescales of the PCRs
- The situation is not attributable to the contracting authority
Authorities were required to keep a written record of how these tests were met, and the following guidance was given:
It is important that contracting authorities continue to achieve value for money and use good commercial judgment during any direct award. Whilst prices may be higher than would be expected in a regular market, any abnormally high pricing should be approved by the appropriate commercial director. Additionally, contracting authorities are encouraged to consider contractual mechanisms to ensure that they have the ability to secure pricing reductions through the life of the contract. Where this is not possible, it is recommended a log should be kept and reasoning provided for future auditing.
Why the Concern?
Transparency International is the world’s leading non-governmental anti-corruption organisation. In April of this year they published, Track and Trace – Identifying Corruption Risks in UK Public Procurement for the COVID-19 pandemic. They reported that at least 73 contracts totaling £3.7 billion relating to the COVID-19 response between February and November 2020 merited further investigation.
Of those contracts, 65 were for the provision of PPE with 24 of them given to companies who had a known connection with the Conservative Party. It wasn’t just PPE, however, with contracts worth over £536 million being given for resting related services to politically connected companies. 72% of all identifiable COVID contract awards were reported after the 30-day legal deadline, rising to 93% for contracts awarded to politically connected companies with journalists being quick to pick up on the implication of impropriety.
These concerns were echoed by the National Audit Office in their Investigation into government procurement during the COVID-19 pandemic and its separate report into the supply of PPE, both of which identified areas of concern.
In addition to this, there were problems with the quality of some of the items being purchased from new suppliers, which lead to tens of millions of face masks and gowns purchased being unsuitable for use.
What’s Happening Now?
The Good Law Project is an organisation that uses the law to protect the public interest. They challenged the Government in court with regard to the procurement of PPE with their argument being made to the High Court in May 2021. To further raise concerns amongst the public, Prime Minister Boris Johnson has been trying to change Parliamentary rules following an investigation into the conduct of former Minister, Owen Paterson, who had been found guilty of advocacy on behalf of two companies. He was able to pressure his own party into backing his change, however, the public outcry led to Paterson’s resignation and a U-turn on the plans.
In terms of the Public Contract Regulations, life has returned to normal and standard procurement practices are back in place. Lessons must be learned from what went wrong during emergency purchasing for COVID, and we may see more amendments or PPNs to clarify or define best practice in the future.
Confused by the Public Contract Regulations
We know, from talking to SME business owners around the country, that understanding the Public Contract Regulations and ensuring that your tender is compliant can be a major concern. That’s why we’re happy to partner with your business in any way that suits you, whether it’s just a compliance check or you need our support end-to-end from identifying opportunities to submission – and that includes challenging tender results where there may be an error. If you need some support, please get in touch today.