The Cabinet Office has published its first Procurement Policy Note (PPN) of 2021 – PPN 01/21: Procurement in an Emergency. Fran Mussellwhite analyses what it says.
The PPN sets out guidance for contracting authorities on the options available to them to carry out emergency procurements. It is intended to build on the guidance in PPN 01/20 which was published at the outset of the COVID-19 pandemic to remind contracting authorities of the mechanisms under the Public Contracts Regulations 2015 (PCR) that enabled urgent procurement. We explained these mechanisms, and the effect of PPN 01/20 in our article last year.
By way of brief reminder, the main options are:
- To call off from an existing framework.
- To run a procurement under accelerated timescales.
- To extend or modify an existing contract (PCR 72(1)(c)).
- To award a contract directly in reliance on there being an absence of competition or in order to protect exclusive rights (PCR 32(2)(b)).
- To award a contract directly where extreme urgency renders a full procurement impossible (PCR 32(2)(c)).
This new PPN appears focussed on the direct award options under this list (options 3 to 5) and highlights to contracting authorities the inherent risks of making direct awards. It then sets out practical tips to minimise those risks. This guidance has no doubt been triggered at least in part by the number of challenges to direct awards that have been made subsequent to the issue of PPN 01/20 at the start of the pandemic. It is possible that some mistakenly considered that PPN 01/20 created a new type of exemption to avoid the need for an advertised procurement process; whereas in fact PPN 01/20 reminded contracting authorities of the different routes for urgent purchasing available under the PCR. Some of these ongoing challenges are very high profile judicial reviews brought by public interest groups against central government around the purchase of PPE from providers with no relevant experience and the entry into consulting contracts with companies linked to individuals within government. It is interesting guidance to see coming from central government where the outcomes of these judicial reviews are not yet known.
PPN 01/21 flags the potential for urgent direct awards to lead to poor value for money and weaknesses in documenting and ensuring due diligence in the process, which is something that a managed competitive process ought to iron out. The point is not made in the PPN, but direct awards of course also lead to the risk of procurement challenge. It therefore makes the following recommendations:
- Contracting authorities should seek to include mechanisms in the contract to enable price reductions once the market pricing surge brought on by the emergency has died down.
- The possibility of a form of advertisement or informal competition should be considered even where a Regulation 32 direct award is intended to be made. Bearing in mind that PCR 32 is about the ability to award a contract without advertisement, this is an interesting piece of guidance and something that was not mentioned in PPN 01/20. It may be linked to the fact that one of the grounds of challenge in the current PPE judicial review is that even where PCR 32 is justified, some form of competitive process should be followed if at all possible.
- Contracting authorities should keep full records of all decisions to make direct awards with reasons, as is required under PCR 84. From our experience, a good audit trail is often of huge importance in being able to successfully defend a procurement challenge.
- The use of processes or criteria to select suppliers for direct award should also be carefully documented and records kept. The criteria should be relevant, documented and applied consistently.
- The management of actual and potential conflicts of interest should also be carefully documented, noting the guidance set out in the Ministerial Code and Service Management Code and ensuring that decisions are taken based on relevant considerations and not personal recommendations.
The PPN then goes on to set out reminders of the requirements that must be met for a contracting authority to be able to use one of the options to award urgent contracts directly. None of this section of the note is new information – simply a reminder of what is already provided for in the PCR and associated case law.
The PPN does not cover possible risk mitigation measures open to a contracting authority where it has concerns about its ability to rely on one of these options. These may include the publication of notices on the Find a Tender Service website before or after contract signature, or the incorporation of contract terms to deal with what happens in the event of a challenge. Bevan Brittan’s contentious procurement team has significant experience of advising on these issues and would be happy to assist if your organisation is considering a direct award.