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Governance of procurement in the public sector is vital to the efficient service delivery of any government. It must be held to a higher standard of conduct because it accounts for a significant portion of taxpayer money.
Public procurement underpins the relationship between the private and public sectors and requires an acute appreciation and understanding of the broader legal and policy framework in public law, including public procurement, public finance management, constitutional law, administrative law, municipal law and regulatory law.
Our integrated approach
Our team is uniquely comprised of a combination of corporate lawyers, ex-regulators, qualified Company Secretaries and certified Commercial Forensic Practitioners and Fraud Examiners who have sat on the boards and been members of executive and audit committees of national and municipal entities.
We have the long-standing practical experience and technical knowledge to assist you in achieving a policy system that is fair, equitable, competitive, commercial and cost effective whilst upholding the constitutional principles of accountability and transparency.
Our services include:
accessing information from public bodies
advising on administrative legislation including the Municipal Systems Act, the Local Government Act, Municipal Finance Management Act, the Municipal Budget and Reporting Regulations, the Municipal Service Delivery and PPP Guidelines, Municipal Supply Chain Regulations, the Supply Chain Management Guide for Municipal Accounting Officers and municipal supply chain policies
advising and training on the Public Finance Management Act, regulations 16 and 16A of the Treasury Regulations, the PPP Manual issued by National Treasury, the Constitution and procurement legislation including the Preferential Procurement Policy Framework Act, the Public Service Act and the Promotion of Administrative Justice Act.
advising on tender procedures and the applicable legislative framework
advising on company acquisitions and sales
advising on property acquisition, development and management
challenging irrational and unlawful administrative action
drafting and negotiating outsourcing and performance management agreements'
drafting and reviewing risk management and procurement policies
drafting opinions on constitutional, administrative and local and municipal government issues
lobbying/submissions to Parliament and all levels of government regarding legislative changes
providing employment advice
representing clients in proceedings before quasi-judicial bodies and parliamentary sub-committees
Frankfurt, 7 October 2019. CMS announces that RM Partners and Daly & Inamdar Advocates, based in South Africa and Kenya respectively, have today joined the leading global law firm. Going forward, they will be known as CMS RM Partners and CMS Daly Inamdar Advocates.The addition of these firms considerably strengthens CMS’s presence in Africa, already encompassing Angola, Algeria and Morocco. For over 50 years, CMS has developed a track record of significant deals in Africa, showcasing its deep knowledge of the legal systems across the continent. CMS now has 75 offices in 43 countries and more than 4,800 lawyers worldwide.Duncan Weston, Executive Partner, CMS said, “Our clients see Africa as a major growth opportunity, and many are looking to expand into key markets on the continent. South Africa and Kenya are both sizable economies, but they’re also gateways into other sub-Saharan markets. RM Partners and Daly & Inamdar Advocates have outstanding reputations thanks to their local market knowledge and the overall quality of service they provide to clients.” With this expansion, CMS is unveiling a dedicated organisation that brings together our African firms and experts in a unique model and aligned practices to provide our clients with the best support in Africa. CMS Africa has a presence in the most dynamic regional hubs – Casablanca, Johannesburg and Nairobi – providing us with a strong footprint, sustained by offices in Algiers, Luanda and Mombasa. CMS Africa offers the ideal alternative for tax and legal services in Africa, a position that is being reinforced through the addition of the new firms.CMS RM PartnersCMS RM Partners specialises in providing practical and innovative legal, tax and transaction advisory services. It is committed to developing young African talent and is accredited as a Black Economic Empowerment (BEE) Level 1 law firm. Founded by senior lawyers with exceptional track records from top international and local firms, the firm is based in Johannesburg and comprises more than 20 lawyers. Its clients include local private and public institutions, listed companies and numerous global enterprises.Riza Moosa, Founder and Director at CMS RM Partners, said, “We are on a journey to transform and modernise the South African legal market, but we also recognise the importance of an African and international footprint. Joining CMS is the right step for our firm because they recognise the importance of growing an African business from Africa, and have a clear, regionally-focused growth plan for Africa which aligns with our own strategies.”CMS Daly Inamdar AdvocatesCMS Daly Inamdar Advocates is one of the top-ranking law firms in Kenya. It was formed via the merger of two of Kenya’s oldest law firms and comprises more than 35 lawyers working out of offices in Nairobi and Mombasa. The firm’s partners have handled numerous ground-breaking commercial transactions and contentious civil disputes.Hamish Keith, Senior and Managing Partner at CMS Daly Inamdar Advocates, said, “Kenya is East and Central Africa’s epicentre of tech innovation and its economic expansion has been supported by a government that is committed to implementing business reforms. Our decision to join CMS follows a period of close collaboration on client work and a shared commitment to service. This will only deepen as Kenya becomes increasingly attractive as a destination for foreign investment.”Pierre-Sébastien Thill, Chairman, CMS, said, “This is an exciting time in the development of CMS. Our clients have a global mindset, and when they come to CMS, they need to know that they can access quality advice and service delivery in every major jurisdiction. One of our primary objectives for the next four years is to further grow our geographical reach. This is a significant expansion in our journey to becoming a genuinely global law firm.”
The COVID-19 crisis is having a serious impact on the economy and businesses. In these circumstances, public procurement can be of even greater importance than usual and various questions arise, such as:Are public procurement procedures automatically suspended due to the corona pandemic and, if not, are contracting authorities suspending procedures on their own initiative?Does the current situation allow extended use of special procedures or special measures during a procurement procedure (accelerated timeline, use of electronic means)?Are the deadlines for remedies automatically suspended?How can existing contracts be modified or extended in the context of the current situation?In many countries the legal situation is changing rapidly, and time is valuable. CMS Public Procurement team has prepared a brief but comprehensive overview of the main developments in 23 countries. The overview includes links to articles or official guidance for further information on each country.Overview: The impact of COVID-19 on public procurement
Summary of the key aspects
The European Commission has issued a guidance regarding choice of procedures and deadlines in public procurement under the EU public procurement law. The guidance is available here.
Bernt Elsner, Robert Keisler, Ruth Bittner
Several legal measures have been taken in the last few weeks. They included the suspension of deadlines for remedies; however, this suspension has been revoked in the last few days. Apart from that, there have been no changes in the legal situation until now. For further information on this and other questions, see Guidance for public procurement procedures in Austria during the COVID-19 crisis.
Bosnia and Herzegovina
The main question for Bosnia and Herzegovina is whether the extraordinary circumstance is considered a force majeure event. Currently, our answer is negative, but this may change.
The Bulgarian parliament adopted measures in the recent state-of-emergency law (Emergency Measures Act) to regulate major relationships during the current crisis, which for example stipulate that the Public Procurement Act will not be applied for certain medical devices. However, questions still remain. For more detail, see Bulgaria: Public procurements during the coronavirus crisis.
A notice was issued by the PRC Ministry of Finance (Cai Ban Ku  No. 29) on 6 February 2020 that covers various questions related to public procurement, such as for example the suspension of deadlines in procurement procedures. See here for further details.
María Lucia Amador, Daniel Rodríguez
With the appearance of COVID-19 in Colombia, the National Government has declared the country in State of Social, Economic and Ecological Emergency (the “State of Emergency”) by means of Decree 417 of 2020, enabling the President to issue Legislative Decrees designed to overcome the emergency. Based on this, a series of public procurement measures have been adopted which may be of interest to our clients. For further details see Public Procurement Emergency measures adopted by the Colombian National Government to address COVID-19.
Marija Mušec, Mia Kanceljak
Croatian Government adopted a Decision to limit use of the state budget in 2020, which prescribes that as of 4 April 2020 budgetary and extra-budgetary entities in Croatia must suspend all public tenders and are not allowed to initiate new tenders, unless doing so is necessary to carry out their essential functions and work.The Ministry of Economy, Entrepreneurship and Crafts issued a Recommendation to contracting authorities on the requirements and delivery of the bid guarantee. The recommendation concerns the fact that the original copy of the bid guarantee must be delivered and timely delivery of the bid guarantees is difficult due to the restrictions on movement within Croatia (prohibition to leave residence) and restrictions on international travel. Also, the Ministry issued a Recommendation to contracting authorities on the public opening of bids, in the light of a previous Civil Protection Directorate decision on limiting social gatherings and the obligation of employers to cancel meetings and organize teleconferences for future meetings, which is also reflected in public procurement procedures.Moreover, the State Commission for Supervision of Public Procurement Procedures (DKOM) adopted a decision on communication with clients during the crisis.For more information, please see the Guidelines for Public Procurement in Croatia during the Covid-19 Crisis.
Even though specific COVID-19 related public procurement law or rules have not been issued yet, in light of the state of emergency in the Czech Republic declared on 12 March 2020, the Office for the Protection of Competition of the Czech Republic published a statement regarding public procurement. For further for details on that statement and other aspects, see article Czech procurement rules waived for COVID-19 emergency medical supplies.
François Tenailleau, Kawthar Ben Khelil
In the field of public procurement, positions were quickly stated by the French public authorities in response to the health crisis related to the Covid-19 epidemic. However, there was no specific legal framework for this period of crisis. This is now the case with the Ordinance of 25 March 2020 on public procurement in the emergency situation related to the COVID-19 crisis. For more information, see article Public procurement contracts in the context of the Covid-19 crisis in France.
Tobias Sdunzig, Jakob Steiff
In the course of the current COVID19 pandemic, various measures have been adopted in Germany (both at a federal and state level) to enable public purchasers to procure services which will help to contain the pandemic and maintain the public administration's ability to act more easily and quickly. For more details, see a guidance for public procurement procedures in Germany in times of COVID-19.
There have been legal amendments, such as the Government Decree No. 48/2020, effective since March 20, that introduced an exception for direct purchases from Hungarian sources (not including those from EU sources) for certain goods mentioned in the Public Procurement Act. For more detail, see article Hungary relaxes certain public-procurement rules during COVID-19 crisis.
Pietro Cavasola, Marco Iannacci, Tiziana Masone
Among the government measures adopted for the current health emergency, none expressly refer to the course of tender procedures that have already been launched or the execution of ongoing public contracts. However, the Minister of Transport and Infrastructure has issued a notice regarding the suspension of deadlines. For further details on this matter see here.
Petra Heemskerk, Olav de Wit
The Dutch government has left it up to contracting authorities to decide on how to continue with procurement procedures and has not yet taken any specific legal measures in this regard. However, several of the provisions for exceptional cases in the relevant law are already fulfilled in the current situation. For further details, see: Netherlands: guidance for Dutch public procurement procedures in response to COVID-19.
Malgorzata Urbańska, Magdalena Wyszynska
The legal measures taken in an act on specific solutions related to preventing, counteracting and combating COVID-19, include provisions that revokes the Public Procurement Law for certain goods. For more on this question and other specific aspects, see Public Procurement Market in Poland adapts to the pandemic reality.
In Peru, the Government has issued a series of measures to tackle coronavirus. The most important is the declaration of the “state of emergency”, which restricts several citizens’ rights. Following this special situation, the Government has issued specific measures regarding public procurement during the state of emergency:Suspension of every public procurement procedure (tenders).Suspension of the deadline for signing the contracts already awarded.Suspension of the sanctioning procedures before the Public Procurement AuthorityHowever, the Government has allowed the procedures and contracts necessary to fight the coronavirus; therefore, the different Government bodies (Health Department, public hospitals, etc.) are still contracting those goods (medicines, protection equipment, etc.) and services (transport of food and medicines, health services, etc.) that are necessary.For the performance of contracts, our current Public Procurement Act provides two solutions: (i) the state of emergency is considered a force majeure event and, as a consequence, allows the parties to ask for more time to execute their obligations; and, (ii) the parties are allowed to agree to suspend the contract, during the state of emergency.Several regulations have so far been enacted to tackle this state of emergency.
Gonçalo Guerra Tavares
In Portugal, the President has declared a State of Emergency, but the Government has not yet adopted any specific measures related to ongoing procurement procedures. For more details see here.
Gabriel Sidere, Cristina Popescu, Laura Capata
The legal measures taken did not include any amendments to the public procurement legal framework in Romania. However, the current developments have a significant impact on public procurement procedures, and particular questions arise. For more on this question and others, see: COVID-19 State of Emergency in Romania and Impact on Public Procurement.
Russia has passed new laws on tightened liability, insolvency, rents, public procurement and medicines.On 1 April 2020, a number of amendments to Russian laws came into force in connection with the spread of COVID-19. Among others, the Russian Public Procurement Law has been amended. More specifically, in accordance with the amendments, goods, works and services (“goods”) may be purchased without observing the established competitive procedures if the following conditions are met:such goods are needed for urgent provision of medical aid, subject to the followingthe medical aid is required due to an accident, a force majeure event or with a view to prevent or eliminate the consequences of an emergency, or in a few other cases; andcomplying with time-consuming competitive procedures is unjustified under the given circumstances requiring urgent measures; orthe goods are listed by the competent authorities and are purchased by state bodies and state-owned companies responsible for national defence and security, including the fight against terrorism.Another important change makes it possible for parties to an existing public procurement agreement to amend the timing of the performance and the price of the agreement if it is no longer possible to perform the agreement due to COVID-19 or other force majeure reasons. This exceptional regulation is subject to several conditions and will remain in force until the end of 2020.
Petra Corba Stark, Martin Balaz, Vladimira Rostarova
The Slovak National Council passed Act No. 62/2020 Coll. on certain extraordinary measures in connection with the spread of COVID-19, which, amongst other things, amends Act No. 343/2015 Coll. on Public Procurement. For more on this question and others, see: Guidance on public procurement procedures in Slovakia during the COVID-19 crisis.
Dunja Jandl, Tamara Žajdela
Slovenia is adopting the “Anti-Corona Package 1” Act, which introduces measures to mitigate the effects of the corona epidemic. Regarding public procurement, a measure to increase the thresholds for the application of the Public Procurement Act (ZJN-3) is envisaged, namely from EUR 20,000 to EUR 40,000 for supply and services, and from EUR 40,000 to EUR 80,000 for works. The act will come into force around 27 March 2020.
Save for the above-mentioned, the ZJN-3 is fully applicable even during the coronavirus (COVID-19) epidemic. Only an individual contracting authority can decide on a specific public procurement procedure; however, the ministry advises them as follows:in case of a public procurement procedure, which has already been published but its award is not urgent now, to extend the deadline for submission and/or opening, including the deadline for submitting the potential tenderers’ questions. The deadline may be extended for at least three weeks and re-extended, if necessary,in case of a public procurement procedure, which has already been published but its award is not necessary now, to suspend the procedure in accordance with Article 90 of ZJN-3,in case of a public procurement procedure, in which the deadline for submission of tenders has already expired and the contracting authority is currently examining and evaluating the tenders, to extend the deadline for a potential supplementation or clarification of tenders,to require such a tender guarantee that can be submitted electronically (i.e. not a bill of exchange),to enable such a way of proving the tender documentation that enables online or email verification without obtaining physically signed documents, or to wait with the examination and evaluation of tenders until normal business activities are established,to conduct a proper market consultation and identify risks that might arise during the public procurement procedure (e.g. is the procedure necessary in the current situation, …),pressure to change agreed prices for any protective equipment or an inability to supply the procured goods will be considered as changed circumstances in accordance with Article 112 of OZ, as well as the provision on changing the contract in accordance with Article 95 of ZJN-3.The ministry has also explicitly clarified that provisions of the adopted Act on Temporary Measures Relating to Judicial, Administrative and Other Public Law Matters to Control the Spread of the Infectious Disease SARS-CoV-2 (COVID-19) do not apply to public procurement procedures.
South Africa declared the COVID-19 outbreak a national state of disaster on 15 March in accordance with the Disaster Management Act.
On 18 March regulations were gazetted pursuant to the declaration and prescribe the steps necessary to prevent an escalation of the disaster or to alleviate, contain and minimise the effects of the disaster. These regulations require compliance with the emergency provisions of the Public Finance Management Act and the Municipal Finance Management Act.
As required by regulation 9 of the COVID-19 disaster regulations regarding emergency procurement for institutions, on 19 March National Treasury issued emergency procurement instructions in a National Treasury instruction to all organs of state and public entities. The instruction facilitates emergency procurement to deal with the COVID-19 pandemic and aims to avoid abuse of the supply chain management system to deal with the disaster.
The National Treasury has negotiated and agreed prices with suppliers of preventative goods and taken measures to ensure continuity of supplies and to keep prices in check. Items, suppliers and prices are listed in long lists in annexures to the instruction (which will be updated from time to time). Accounting officers and accounting authorities are directed to procure the listed goods from the suppliers and at the prices listed. If none of the suppliers can supply them, the listed goods may be procured from other suppliers at prices not exceeding the prices listed in the instruction but in accordance with the emergency directive issued in 2016 and without the need for approval from the National Treasury. The National Treasury has taken similar steps with suppliers under transversal contracts. Reporting obligations are aimed at keeping a check on such procurement.
The disaster regulations and emergency directive from National Treasury are limited to combatting COVID-19. All other sate procurement may continue and must follow normal procurement laws and procedures.
Ignacio Grangel, Javier Torre de Silva
In Spain, several legal measures have been taken related to public procurement that include the suspension of certain contracts to be performed on a regular basis with which it is impossible to comply because of COVID-19, and the Administration will indemnify the damages caused. See our publications Royal Decree-Law 11/2020 of 1 April on urgent and supplementary social and economic measures in the fight against the virus and Guide analysing Royal Decree-Law 8/2020 on urgent and extraordinary measures to address the economic and social impact of COVID-19 for further information.
Marquard Christen, Fabian Martens
To date, no COVID-19-related legal changes or recommendations specifically about public procurement law have been put in place. The federal government extended the general standstill for deadlines during the Easter holidays due to the COVID-19 pandemic, which does affect some public procurement law procedure deadlines. Urgent procurement of emergency goods (e.g. face masks, hand sanitisers, etc.) may already be subject to exceptions from public procurement under the current law.
Döne Yalçın, Levent Bilgi
On 2 April 2020, Circular no. 2020/5 on the effect of the coronavirus (COVID-19) outbreak on Turkish public procurement contracts (the “Circular”) was passed with presidential decree and published in Official Gazette no. 31087.According to the Circular, contractors, which won tenders have the right to claim impossibility of performance due to the coronavirus pandemic. In response to such claim, the relevant public body may provide the contractor with a time extension or contract termination. To ensure service continuity during and after the pandemic, relevant public bodies will evaluate each claim on a case by case basis and the relevant public bodies will provide further guidance.Based on our experience this legal development will be crucial for contractors that recently won government tenders that may now have to reconsider their budgets. For more information, see article COVID-19 – Force majeure in public procurement contracts?
Caroline Hobson, Graeme Young, Shona Murphy
Useful clarification on the application of the procurement rules to the current COVID-19 crisis has been published by the UK and Scottish governments that addresses, for example, the direct award of contracts or modifications of existing contracts. For more on these and other questions, see: Buying in a crisis – UK and Scottish Governments clarify how the public sector procurement rules can be applied during the COVID-19 crisis.
Anna Pogrebna, Maria Orlyk
Public procurement procedures in Ukraine have not been significantly affected by the measures aimed at the overcoming of the coronavirus (COVID-19) epidemic. Up to date, only an exemption from procurement procedures of for pharmaceuticals, medical products and medical equipment used for combatting the coronavirus has been introduced by the Law of Ukraine “On the Amendment of Certain Legislative Acts of Ukraine Aimed at the Prevention and Limiting Spread of the Coronavirus Disease (COVID-19)”, adopted by the Ukrainian parliament on 17 March 2020. Contracting authorities shall procure these goods under specific regulation of the Cabinet of Ministers of Ukraine (“CMU”) until 18 April 2020. For more information see here.
Delivery problems and the coronavirus: force majeure or not?
More and more companies are starting to face problems because of the COVID-19 virus, as the coronavirus is called officially. One of the consequences of the coronavirus is that the production and transport of goods from China are currently at a low level. It was recently announced that this has prompted Coolblue to increase the prices of products in its webshop, and that Blokker is not receiving all its products. Action and various supermarkets are facing similar problems. Now that the coronavirus has also been detected in the Netherlands, the consequences may become even more noticeable.Can companies such as the suppliers of Coolblue, Blokker and Action successfully invoke force majeure? Or will they be receiving claims for breach of contractual obligations?What is force majeure?According to the law, force majeure refers to an event that renders compliance with agreements impossible. Such an event must, moreover, be beyond the control of (in this instance) the supplier and not be for its account. An appeal to force majeure must always be assessed on the basis of the specific circumstances of the case. It is not unusual to include a definition of force majeure in agreements or general terms and conditions. This is permitted. This way, the term 'force majeure' can be narrowed or extended. It is possible that epidemics are designated as force majeure in an agreement. It is therefore important to always check the agreement. But even without specific arrangements on epidemics, there are various grounds for considering the coronavirus as a situation of force majeure: The China Council for the Promotion of International Trade has designated the coronavirus as force majeure for Chinese contract parties; There are rulings by Dutch courts about other epidemics, such as the bird flu, in which an appeal to force majeure was honoured; In general, an epidemic is beyond the control of the contract parties and is not foreseeable. Although this provides a strong basis, it is not possible to give an unequivocal answer to the question of whether the coronavirus constitutes force majeure.It is always important to check the cause of non-compliance with agreements. It is possible, for example, to make a distinction between a government measure related to the coronavirus ("ban on transport of specific goods by air") and factory stagnation due to illness of personnel. The question is whether the direct cause of non-compliance with agreements comes under the definition of force majeure.Also important is whether there are reasonable alternatives. If transport by air is not or no longer possible, this does not necessarily mean that transport cannot take place in another way. As a result of circumstances like these, it is possible that one case does involve force majeure while another does not. Consequences of force majeureThe result of a successful appeal to force majeure is that compliance cannot be required and that, in principle, no compensation is due. It is also possible that a party has the right to make partial deliveries and/or increase prices. This depends on the agreements in place.In general, this would entitle the other party to terminate the agreement. This depends on whether the shortcoming is serious enough to justify termination. It is also possible that the other party is authorised to order the products elsewhere. This, of course, also depends on what parties have set out about this in the agreement. ConclusionIn so far as can be ascertained, there is no court ruling yet on the question of whether the coronavirus can be considered force majeure. Should this come up in a particular case, the court will rule on it based on all specific circumstances of the case. This concerns both actual circumstances and legal agreements between the parties. In such a situation, it is therefore important to carefully review the contractual agreements and find out the exact cause of non-compliance with the agreements. For the future, it is important to include a clear definition of force majeure in agreements and/or general terms and conditions. It is also important to clearly formulate the consequences of force majeure to prevent discussion. This way, parties will know where they stand.
Our Corporate and Commercial team provided key takeaways for business operations during alert level 4 in South Africa. Now, in this second part to our handbook series: Covering COVID-19, we provide similar guidance in relation to the declaration of aler