Could the COVID-19 be grounds for streamlining acquisition procedures?

COVID-19-related events could justify adopting direct award procedures for reasons of "extreme urgency”. The following amendments introduced by Decree-Law 10-A/2020 must be highlighted:

  • Possibility of direct award on the grounds of "extreme urgency" by the State, the Autonomous Regions of Azores and Madeira, municipalities, independent agencies, public institutes, public foundations, public associations and “public law bodies”, for the execution of public works, lease or purchase of goods and services procurement contracts, provided that they are related to Covid-19 (Articles 1.3 and 2.1, as amended by Decree-Law no. 10-E/2020, of 24 March)
  • Possibility of simplified direct award where the contractual price of public works, goods or services procurement contract do not exceed EUR 20,000 (Article 2.2)
  • Possibility of simplified direct award, to the necessary extent and for duly justified reasons of extreme urgency (which cannot be attributed to the contracting authority), regardless of the price and up to budgetary ceiling, for the execution of contracts for the acquisition of the necessary equipment, goods and services for the prevention, containment, mitigation and treatment of COVID-19, or related purposes, notably personal protective equipment, goods required for testing COVID-19, equipment and materials for intensive care units, medicines (including medical gases), and other medical devices and logistics and transport services (including air transportation), related thereto, or with the respective distribution to entities supervised by the member of the Government responsible for the health sector or to other public entities or entities of public interest for which they are intended (article 2-A/1 and 3, as amended by Decree-Law no. 18/2000, of 23 April); also applicable to the Autonomous Regions of Madeira, mutatis mutandis, through article 4.2 of Regional Decree no. 9/2020/M);
  • Exceptionally, to the extent strictly necessary and on duly grounded reasons of extreme urgency, a group of contracting entities (being its representative appointed by the Council of Ministers, which also establishes the powers of each of the members) may be assembled for the execution by direct award of the contracts for the acquisition of space for institutional advertising related or associated to COVID-19, before national, regional and local media, through television, radio, printed and/or digital means, up to an overall amount of 15,000,000.00 Euros, including VAT (article 2-B of Decree-Law no. 10-A/2020, added by Decree-Law no. 20-A/2020, of 6 May). The entities benefiting from these aids, were designated through Resolution of the Council of Ministers no. 38-B/2020, of 15 May, as amended by Declaration of Rectification no. 22/2020, of 27 may.
    On duly grounded reasons of extreme urgency, and for an 18-months period, the acquired space shall be the strictly        necessary for instructional advertising on:

a) The public health pandemic situation and, among others, advertising on preventive and containment measures for the transmission of the virus, good social ad hygiene practices, periodic reports and information on the public services in question;
b) Legislative measures adopted to contain the pandemic, as well as the public or social means available to rescue, monitor, inform or oversee;
c) Legislative measures adopted to balance the economy on a cross-sectoral or sectoral basis, as well as the public or social means available to rescue, monitor, inform or oversee;
d) Legislative measures adopted for the progressive recovery of life and economy in a pandemic and post-pandemic context, as well as the public or social means available to rescue, monitor, inform or oversee;
e) Ancillary measures in the health area, such as the call for vaccination and the use of primary and emergency health services;
f) Measures in the area of education to inform the educational community of their rights and duties, deadlines, timetables, teaching and auxiliary resources as well as the means available to implement them;
g) Raising awareness on the prevention of forest fires in a pandemic year;
h) Social and humanitarian causes, such as domestic violence, violence against the elderly or minors, sharing of domestic and parental responsibilities, fighting discrimination, raising awareness to mental illness, and helplines and services in times of pandemic;
i) The promotion of media literacy and dissemination of cultural activities during and in the aftermath of the pandemic;
j) Other areas and matters serving similar purposes.

  • Removal of the limits to repeated procurement set out in Article 113.2 and 113.5 of the Public Contracts Code ("CCP"), where economic operators who have already concluded high-value contracts by direct award in the previous two years, as well as those who, during this period, have executed works, supplied goods or services, free of charge, to the contracting authority, may be invited to submit a bid in these direct award procedures (Article 2.3)
  • Removal of the obligation to invite more than one entity, even where possible, due to the urgency of the procurement, as set forth in Article 27-A of the CCP (Article 2.3)
  • Contracts concluded as a result of direct award procedures are not subject to the prior clearance of the Court of Auditors (Article 6.1)
  • Possibility to exempt the awarding bidder from the submission of its qualification documents and of a performance bond prior to the contract’s execution (article 2.º/9 e 10, added by Law no. 4-A/2020, of 6 April)

 

Can an entity bound by the National Public Procurement System procure, in this context, goods and services outside the centralized framework agreements without the need for a prior authorization?

Yes. The legislator waived the prior authorization requirement for the procurement of goods or services in connection with Covid-19 and that are subject to a framework agreement executed by a purchase center binding on the buyer (Article 2.7 of Decree-Law 10-A/2020). The derogation from the subjection to the framework agreement is therefore fulfilled ope legis.

 

Could COVID-19-related events be grounds for administrative streamlining and cutting red tape?

Yes. Decree 10-A/2020 introduced many simplifications:

  • Tacit expenditure authorization

Requests for authorization by the financial and sectoral authorities, where required by law, are considered tacitly granted, in the absence of a decision by those entities within 24 hours after referral to the authority empowered to authorize them [Article 3(a)].

Multiannual expenditure resulting from the execution of the contracts at stake is tacitly granted if the request for authorization by means of an ordinance extending the charges to the member of the Government in charge of finance is not rejected within three days [Article 3(c)]

Budgetary changes involving reinforcement, in return for other actual expenditure items, are authorized by the member of the Government in charge of the relevant sector [Article 3(d)]

If required, the release of funds to meet the objectives set out in Decree-Law 10-A/2020 shall be considered tacitly granted three days after the submission of the application [Article 3(e)]

  • Release from administrative authorizations

The decision to procure services whose purpose is to carry out studies, opinions, projects and consulting services, as well as any specialized work, does not require the administrative authorizations provided for by law, and is entrusted to the member of the Government in charge of the relevant sector (Article 4)

  • Derogation for Ministry of Health services

The decision to procure services by bodies, agencies, services and other entities, including the corporate public sector, the Ministry of Health, the Directorate General for Rehabilitation and Prison Services, IP, of the National Institute of Forensic Medicine and Sciences, IP, the Hospital of the Armed Forces, the Military Laboratory of Chemical and Pharmaceutical Products and the Institute of Social Action of the Armed Forces, IP, is authorized by the highest officer or highest management body, and is subsequently communicated to the members of the Government in charge of health ,justice and national defense, respectively (Article 7, as amended by Decree-Law no. 12-A/2020, of 6 April). Such contracts are also not subject to the prior clearance of the Court of Auditors (Article 6.1 of Law 1-A/2020).

The General Health Direction and the Central Administration of the Health System can authorize (regardless of the contract’s value) the expense related to the supply of equipment, goods and services necessary to prevent or combat the disease, up to their budget’s limit, or the additional funds provided by the members of the Government responsible by the finance and health sectors (article 2 of the Decree-Law no. 10-E/2020, of 24 March).

 

Could the COVID-19 be grounds for streamlining acquisition procedures? Can I withdraw a bid already submitted in a public procurement procedure claiming that as a consequence of COVID-19 I can no longer meet the requirements to which I am bound?

Specifically as regards public procurement, the COVID-19 may have a particular impact on the following aspects of the framework, depending on the specific case:

  • As potential ground for adopting a direct award procedure for reasons of “pressing urgency” of urgent goods in connection with the disease
  • As grounds to set a deadline longer than the standard deadline to submit offers or bids or to extend any deadlines already running
  • As possible ground to release the bidder from the obligation to maintain the bid submitted provided that duly justification is provided (the disruption caused by COVID-19 must be an event which the bidder was not required to be aware of at the time of preparation of the bid and that demonstrably renders performance impossible or excessively burdensome)

 

Can I withdraw a bid already submitted in a public procurement procedure claiming that because of COVID-19 I can no longer meet the requirements to which I am bound?

The disruption caused by COVID-19 could be grounds to release the bidder from the bid submitted provided that it is duly justified (such disruption must be an event which the bidder was not required to be aware of at the time of preparation of the bid and that demonstrably renders performance impossible or excessively burdensome).

 

Does this context entitle interested parties to participate in public tenders and to enjoy a longer deadline to submit bids and offers?

The law does not expressly impose this – and, in fact, article 7.º-A/3 of Law no. 1-A/2020, added by Law no. 4-A/2020, emphasized that public procurement procedures deadlines were not suspended. Notwithstanding, considering the provisions in Article 63. 2 of the CCP in combination with the provisions in Law 10-2020 on the suspension of deadlines and justifiable reasons, it is advisable that awarding entities grant a period longer than the standard period to submit bids or proposals – except in the event of manifest and pressing urgency.

The disruption caused by the Covid-19 could further warrant extending deadlines already running.

 

What consequences could the pandemic have on the performance of my contracts with the Administration?

  • Qualification as a "force majeure" event, as grounds for not complying, in whole or in part, with obligations provided for in an administrative contract, in particular with regard to deadlines (depending on what the contract specifically provides for and provided that a causal link between the illness and the impossibility of meeting deadlines is evidenced, as well as the impossibility or unenforceability of taking alternative measures, or their insufficiency, and always without prejudice to the counterparty's duty to inform) – as already acknowledged by the Government concerning the insufficient implementation or achievement of actions or goals of the PT2020 (paragraph 4 of Council of Ministers Resolution no. 10-A/2020, of 13 March)
  • Claiming the occurrence of an abnormal and unforeseeable change in circumstances as grounds for amending the contract and/or restoring the financial balance – without prejudice to the restriction / suspension of such right on long-term contracts, pursuant to the provisions of Decree-Law no. 19-A/2020, of 30 April.
  • Increased duty of cooperation by the public contractor, in particular with regard to the immediate payment of contractual debts (paragraph 15 of Council of Ministers Resolution no. 10-A/2020) and the possibility to advance payments of the price (Article 2.6 of Decree-Law 10-A/2020, ratified by Law 1-A/2020, and article 2-A/4 of Decree-Law 10-A/2020, as amended by Decree-Law no. 18/2020).
  • Postponement of the deadline for the mandatory use of electronic invoicing in public contracts (as per Decree-Law no. 14-A/2020, of 7 April).

 

 

__________________________

This information is being updated on a regular basis.

All information contained herein and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.