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Covid-19: public procurement measures

What loosening of restrictions for public contracts and public service contracts?

30/03/2020

The public authorities have quickly announced positions on public procurement to respond to the covid-19 crisis. For all that, as in many other fields of law for which temporary provisions to confront the health crisis are going to be taken, they will certainly - and very quickly - be partly supplanted by the ordinance adapting the procedural and implementation regulations for public procurement contracts to come.

The possibilities of using force majeure for dealing with Covid-19 

The Minister for the Economy announced on his website the recognition of force majeure in public contracts for the State and local authorities. The Legal Affairs Directorate [Direction des affaires juridiques (DAJ)] of Bercy confirmed in its note on "the signing and implementation of public contracts in the health crisis situation" published on 18 March 2020: from the point where the situation resulting from the current health crisis, particularly the lockdown, no longer effectively allows companies to fulfil their contractual obligations, they should not for this reason have penalties applied to them, nor sanctions of any kind, when the contract says nothing about force majeure.

Safeguarding the holders of public contracts 

The Directorate of State Procurement [Direction des achats de l’Etat (DAE)] recommended that State purchasers and public entities "preserve" corporate suppliers, particularly by:

  • cancelling purchase orders the holders of which declare, in good faith, that they are unable to fulfil due to the current crisis;
  • extending implementation deadlines subject to the contract holder requesting this prior to expiration of the contractual implementation deadline;
  • waiving late penalties for any implementation difficulty of which they are notified that is associated with the epidemic;
  • doing everything possible to comply with invoice payment deadlines, while making broad use of options associated with advances and payments on account;
  • only cancelling contracts as a last resort even if circumstances would permit it.

In addition, the DAE invites companies that hold public contracts to put together substantive dossiers (work stoppages of their employees, supplier bankruptcy declarations, two-party reports, inventories, various attestations, etc.) to, if applicable, be compensated on the basis of force majeure and unforeseeable events.

Satisfying the urgent requirements of public entities 

Bercy DAJ also provides a reminder that when it is impossible for contract holders to perform the services to which they have committed, public entities may arrange for these services to be performed by other companies without this constituting a contractual failing.

To satisfy their urgent requirements, and only for this purpose, purchasers will be able to apply reduced disclosure deadlines, as allowed by section 3 of article R 2161-8 of the Code of Public Procurement, or implement the procedure without disclosure or prior competitive tendering as provided for in exigent circumstances by article R.2122-1 of the same code.

Adaptations to be made to the law on public procurement 

The emergency law to deal with the COVID-19 epidemic authorises the Government to take, by ordinance, any measure intended to "adapt signing regulations, payment, implementation and cancellation deadlines, particularly those related to contractual penalties, provided for by the Code of Public Procurement as well as the provisions of public contracts with the same purpose". This ordinance should be adopted very quickly.

One might expect that it could allow adjustments in the schedules and conditions for competitive procedures, if necessary, extending implementation deadlines for contracts that are underway and taking account of the difficulties being experienced by companies that hold public contracts and public service contracts: by eliminating penalties and other sanctions, increasing the possibilities for advance payments, preventing operators that cannot continue their business normally from having to pay contractually specified amounts to public entities (fees, etc.) and clarifying their possibilities for compensation.


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Authors

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François Tenailleau
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Paris