The latest measures taken in connection with COVID-19 involve a number of considerations in relation to procurement law for many undertakings and contracting authorities. This may be the case in relation to ongoing tender procedures and existing contractual relationships, but also in relation to the need for emergency purchases.
Under procurement law, all public contracts with a value exceeding the threshold values must initially be put out to tender. This may involve a number of challenges for contracting authorities, when the need for emergency purchases arises due to the measures taken in connection with COVID-19.
However, in special circumstances, the contracting authorities have the opportunity of making purchases without a prior tender, if for instance the conditions under section 80(5) of the Danish Public Procurement Act are fulfilled. These conditions are fulfilled when:
The exemption under section 80(5) of the Danish Public Procurement Act must be construed restrictively and has only been used a few times. An example is the refuge crisis in 2015, where the European Commission found that an emergency need to purchase, among other things, tents and food existed. In 2013, the Complaints Board for Public Procurement held that The North Denmark Region was entitled to enter into a contract for the delivery of a medical management system without a prior tender procedure due to a supplier’s bankruptcy and considering the impact on patient safety.
According to the Danish Competition and Consumer Authority, the outbreak of COVID-19 per se constitutes an unforeseeable event, but emergency needs due to the development in the preparedness or other effects may imply a possibility of purchasing goods, services and/or building projects without a prior tender.
The possibility of using the exemption under section 80(5) of the Danish Public Procurement Act must be assessed for each individual purchase and cannot be invoked in the award of contracts, which e.g. may be conducted by using fast-track procedures, where the time limits are shorter than in the usual tender procedures.
Undertakings and public authorities may as a result of internal and external measures taken in connection with COVID-19 experience difficulties in relation to meeting the original time limits set out in the tender. Particularly undertakings may in connection with a reduction of the staff experience challenges in respect of preparing applications and bids within the time limits. This may imply fewer applications and bids and thus reduced competition.
Under the Danish Public Procurement Act, the contracting authority has, however, the possibility of extending the time limits for submitting applications and bids, when this is due to objective considerations, including the principles of proportionality and equal treatment.
According to the Danish Competition and Consumer Authority, measures, including the shortage of staff due to COVID-19, may constitute an objective basis for extending the time limits for submitting applications and bids in ongoing tender procedures.
The same will apply in respect of circumstances on the part of the contracting authority, such as quarantine or sending home employees, which imply that the tender procedure cannot follow the original time schedule.
However, the contracting authority cannot extend the time limit for submitting applications and bids, if they have already expired, since such an extension of the time limit would initially be contrary to the principle of equal treatment.
The effects of COVID-19 may imply that the contracting authorities need to make supplementary purchases under an existing contract or to extend the contract until an ongoing tender is completed.
This may be the case if the time limit for submitting bids in an ongoing tender is extended, so that an existing contract expires before the new contract can be entered into.
According to the Danish Competition and Consumer Authority, COVID-19 and the measures taken in this respect form the basis for extending existing contracts under section 183 of the Danish Public Procurement Act until a new contract can be entered into. In this respect, it is a condition that:
In addition, a contract extension must observe the principles of equal treatment, transparency and proportionality. This means, inter alia, that a contract extension cannot last longer than necessary and can only concern the parts that are necessary in relation to COVID-19.
It may also be possible to make supplementary purchases under the above-stated conditions set out in section 183 of the Public Procurement Act and under the De minimis rule in section 181 of the Public Procurement Act, when the total value of such purchases are lower than the threshold values and lower than 10% of the original goods/services contract or 15% of the original works contract.
The Danish Competition and Consumer Authority’s assessment of the framework for procurement law in respect of COVID-19 is available here.