Slide background
Slide background

Government issues policy note on procurements in an emergency, warns on commercial risks of direct awards without competition

The Cabinet Office has issued a procurement policy note (PPN) reminding contracting authorities of the options available to them when undertaking procurements in an emergency.

It said: “This includes extremely urgent procurements required by the ongoing response to the COVID-19 pandemic and this PPN builds on the guidance in “PPN 01/20 - Responding to COVID-19”.

The latest PPN, PPN 01/21 - Procurement in an Emergency, applies with immediate effect to all contracting authorities, including central government departments, executive agencies, non-departmental public bodies, local authorities, NHS bodies and the wider public sector.

It says: “There will be a range of commercial actions that must be considered by contracting authorities in responding to an emergency. In exceptional circumstances, authorities may need to procure goods, services and works with extreme urgency and without competition.

Article continues below...

“This is permissible under current public procurement regulations using regulation 32(2)(c) of the Public Contracts Regulations 2015 (PCRs) but there are inherent commercial risks which authorities should take into account.”

The PPN and accompanying guidance covers options that may be considered in relation to procurements under the PCRs including:

  • 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;
  • direct award due to absence of competition or protection of exclusive rights;
  • direct award due to extreme urgency under regulation 32(2)(c).

The PPN says that where required contracting authorities should publish a contract award notice on the Find a Tender service (FTS) as set out in PPN 08/20. This includes emergency procurements under regulation 32(2)(c).

The Cabinet Office warns that it is “important that contracting authorities continue to achieve value for money and use good commercial judgement and sound decision-making in an emergency, including when making direct awards. Authorities need to manage these in the context of the broader risk of not being able to secure the required goods or services in a timely manner.”

Potential risks identified include:

  • poor value for money such as abnormally high pricing;
  • unequal treatment of suppliers in the procurement process;
  • poor practice due to procuring at speed, such as retrospective contract awards or retrospective due diligence checks;
  • lack of documentation around key procurement decisions including how conflicts of interest are identified and managed.

The PPN says contracting authorities must ensure they keep proper records of decisions. "Regulation 84 of the PCRs states that authorities should document the progress of all procurement procedures, ensuring that they keep sufficient documentation to justify decisions taken in all stages of the procurement procedure. This includes procurements under regulation 32(2)(c)."

The Cabinet Office also says that 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.

“This approach can have the benefit of allowing the authority to hold discussions with more than one supplier and potentially secure better value for money.”

Sponsored Editorial

Slide background