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Impact of COVID-19 on Public Procurement

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

Jurisdiction

Author

Summary of the key aspects

European Union

 

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.

Austria

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 They included the suspension of deadlines for remedies; however, this suspension has been revoked in the last few days.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

Nedzida Salihović-Whalen

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.

Bulgaria

Kostadin Sirleshtov, Zornitsa Stoykova, Antonia Kehayova

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.

China

Ulrike Glück

A notice was issued by the PRC Ministry of Finance (Cai Ban Ku [2020] 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.

Colombia

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.

Croatia

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.

Czech Republic

Lenka Krutakova

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.

France

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.

Germany

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.

Hungary

Veronika Kovacs

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.

Italy

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.

The Netherlands

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.

Poland

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.

Peru

Ramon Huapaya

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 Authority
  • However, 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.

Portugal

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.

Romania

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

Maxim Boulba

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 following
    • the 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; and
    • complying with time-consuming competitive procedures is unjustified under the given circumstances requiring urgent measures; or
  • the 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.

Slovakia

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.

Slovenia

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

Gavin Noeth

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.

Spain

    


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.

Switzerland

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.

Turkey

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?

United Kingdom

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.

Ukraine

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.

Authors

Picture of Bernt Elsner
Bernt Elsner
Partner
Vienna
Picture of Robert Keisler
Robert Keisler
Partner
Vienna
Picture of Ruth Bittner
Ruth Bittner
Associate
Vienna
Picture of Nedzida Salihovic-Whalen
Nedžida Salihović-Whalen
Partner
Sarajevo
Picture of Kostadin Sirleshtov
Kostadin Sirleshtov
Managing Partner
Sofia
Zornitsa Stoykova
Picture of Antonia Kehayova
Antonia Kehayova
Senior Associate
Sofia
Ulrike Glück
Dr. Ulrike Glück
Shanghai
María Lucía Amador
María Lucía Amador, LL.M.
Senior Associate
Bogotá
Daniel Rodríguez
Daniel Rodríguez, LL.M.
Partner
Bogotá
Lenka Krutakova
Lenka Krutáková
Senior Associate
Prague
Picture of Francois Tenailleau
François Tenailleau
Partner
Paris
Picture of Kawthar Ben Khelil
Kawthar Ben Khelil
Counsel
Paris
Tobias Sdunzig
Dr. Tobias Sdunzig
Associate
Frankfurt
Jakob Steiff
Dr. Jakob Steiff, LL.M. (Edinburgh)
Partner
Frankfurt
Veronika Kovács
Senior Associate
Budapest
Picture of Pietro Cavasola
Pietro Cavasola
Managing Partner
Rome
Tiziana Masone
Associate
Rome
Picture of Petra Heemskerk
Petra Heemskerk
Partner
Amsterdam
Olav-de-Wit-CMS-NL
Olav de Wit
Advocaat
Amsterdam
Picture of Malgorzata Urbanska
Małgorzata Urbańska
Partner
Warsaw
Image of Magdalena Wyszynska
Magdalena Wyszyńska
Associate
Poznan
Picture of Ramon Huapaya
Ramon Huapaya
Partner
Lima
Gonçalo Guerra Tavares
Gonçalo Guerra Tavares
Partner
Lisbon
Picture of Gabriel Sidere
Gabriel Sidere
Managing Partner
Bucharest
Cristina Popescu
Cristina Popescu
Senior Counsel and Head of CEE Insurance Practice Group
Bucharest
Image of Ioana Laura Capata
Laura Capata
Associate
Bucharest
Maxim-Boulba
Maxim Boulba
Partner
Moscow
Petra Corba Stark
Petra Čorba Stark
Partner
Bratislava
Martin Balaz
Martin Baláž
Associate
Bratislava
Vladimira Rostarova
Picture of Dunja Jandl
Dunja Jandl
Partner
Ljubljana
Tamara-Zajdela-CMS-SVN
Tamara Žajdela
Associate
Ljubljana
Gavin Noeth | Senior Consultant | Projects & Infrastructure
Gavin Noeth
Senior Consultant
Johannesburg
Ignacio Grangel
Ignacio Grangel
Partner
Madrid
Picture of Javier Torre
Javier Torre de Silva
Partner
Madrid
Picture of Marq Christen
Marquard Christen, LL.M., MAS
Partner
Zurich
Fabian Martens
Fabian Martens, LL.M., LL.M., MA
Counsel
Zurich
Picture of Caroline Hobson
Caroline Hobson
Partner
London
Picture of Graeme Young
Graeme Young
Partner
Edinburgh
Shona Murphy
Maria-Orlyk-CMS-UA
Maria Orlyk
Partner
Kyiv (CMS RRH)
Picture of Anna Pogrebna
Anna Pogrebna
Partner
Kyiv (CMS RRH)
Picture of Döne Yalçın
Döne Yalçın
Managing Partner Turkey
Istanbul
Levent Bilgi
Levent Bilgi
Counsel
Istanbul
Picture of Mia Kanceljak
Mia Kanceljak
Associate
Zagreb
Picture of Marija Musec
Marija Mušec
Partner
Zagreb
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