1.1 What is the aim of this procurement advice note (PAN)?
During the COVID-19 pandemic, this PAN reminds contracting authorities in Wales of the range of procurement procedures available to them and describes some practical steps that can be taken to optimise resources in these exceptional circumstances.
This PAN should be read together with the 2 procurement policy notes (PPNs) and associated frequently asked questions (FAQs) and construction contracts guidance published by the UK government during March/April 2020, which describe some other specific flexibilities of the procurement rules at this time and outline relief that can be provided to suppliers - PPN 01/20 ‘Responding to COVID-19’, 02/20 ‘Supplier Relief due to COVID-19’ (including FAQs PPN 02/20 and Guidance Notes for Construction Contracts PPN 02/20).
The Welsh Government implemented PPN 02/20 with immediate effect and encouraged other contracting authorities in Wales to do likewise. It should be noted the FAQs initially wrongly stated that PPN 02/20 did not apply to contracting authorities in Wales and that the Welsh Government would be producing their own advice but that has now been corrected. Adoption across Wales will be a matter for the accounting officers in each authority.
A third PPN 03/20 ‘Use of procurement cards – COVID-19’ has also been published by the UK government to support cash flow for suppliers.
During the COVID-19 pandemic minimising pressures on supply chains is paramount to ensure that suppliers at risk are better able to cope with the current crisis and ensure service continuity and delivery during and after the outbreak.
Authorities should take particular care over the coming months to keep their existing and forthcoming contracts under review to ensure that these remain practical.
PPN 01/20 and 02/20 consider options to procure goods with extreme urgency and options for supplier relief. This note suggests practical examples of how activity might be prioritised including taking account of factors like current and evolving supplier capacity and capability as we move from our response to the pandemic and into recovery.
The European Commission has also issued guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis (2020/C 108 I/01). This guidance places an emphasis on use of accelerated procedures at the moment and the opportunity to take an innovative approach to supply solutions. It also suggests some considerations which procurement staff may wish to reflect on as, and when, travel and access restrictions are lifted.
Authorities need to ensure that their staff and suppliers are using their resources as efficiently as possible and making best use possible of the procurement procedures available. For example, they could use appropriate public procurement framework agreements that are already available to optimise resources.
The COVID-19 pandemic is having a significant impact on businesses of all sizes and their supply chains internationally. Many suppliers will struggle to meet their contractual obligations and this will put their financial viability, ability to retain staff and their supply chains at risk. This note describes some practical steps for existing contracts and forthcoming contracts that authorities might want to consider in discussion with their customers and suppliers to reduce pressures on them at this time.
2. Existing contracts
For contracts that are already in place, authorities will want to consider the most appropriate response to ensure continuity of service. Authorities should:
- Work with suppliers to understand the specific pressures they face and identify potential solutions on a case-by-case basis.
- Consider with individual suppliers whether it might be sensible in some cases to revise delivery dates and other elements of the contract. For example:
- Where contracts include inspections and key performance indicators (KPIs) you could consider temporarily varying these to take account of the implications of COVID-19, and
- In some contracts where delivery is particularly critical, you can ensure increased contact with suppliers to ensure issues and concerns are captured and addressed quickly.
2.1 Contract variations and extensions
If you feel you need to vary or extend your contract as a result of COVID-19 please ensure you speak with your Head of Procurement/Finance Department and follow any standing orders/internal financial regulations/departures delegations process. It is important you keep a log providing a rationale of any decisions made during this time and keep it with the contract documentation. It is also important that you check any decisions you are planning with the Welsh European Funding office (WEFO) if you receive any funding from them. There is provision with the Public Contract Regulations 2015 (PCR 2015), supported by the UK government’s PPN 01/20, to extend or vary contracts impacted by Covid-19. For example:
- Where contract outputs/deadlines are unlikely to be met by the supplier, procurement staff may wish to consider any requests for flexibility. For example, it may be possible for the supplier to deliver the services/goods but not to the original timescales.
- If a supplier has requested an extension, as it is unlikely to deliver by the agreed dates without an extension to the contract period and there are no further budget implications (including an increase in the overall cost), this can be considered using whatever departures process exists within your authority.
- If a supplier has requested a variation/extension which results in an increase in costs or if the costs will now fall into a subsequent financial year, procurement staff should discuss with the Head of Procurement/budget holder/Finance before seeking departure approval.
- If there are likely to be budgetary issues by varying/extending the contract, procurement staff will need to liaise with their Head of Procurement/budget holders/Finance before any commitment can be given to suppliers.
- There may be occasions where suppliers request that the contract ends earlier. Such requests can be given consideration if linked to COVID-19.
- If it is not possible to agree to a supplier’s request for flexibility, leading to a decision to terminate the contract, advice should be sought from your Head of Procurement/budget holder. They may need to liaise with senior managers; this would be especially important if the supplier is likely to face further financial difficulties as a result of the authority terminating the contract.
2.2 Prompt payment and paying in advance
PPN 02/20 provides extensive advice in relation to supplier relief and you are encouraged to follow it. You should discuss with your Head of Procurement/budget holder/Finance and ensure you follow your internal departures process to seek approval to pay in advance.
2.3 Where a decision may impact the viability of a supplier
PPN 02/20 provides extensive advice in relation to this and should be followed. In the coming weeks procurement staff should carefully consider any decision that could impact the financial viability of suppliers, e.g. award of contracts, not awarding or terminating and the likely impact of this decision, particularly if this will place the recipient in financial difficulty. Before any final decision is taken please speak with your Head of Procurement/Finance department for advice.
3. New procurements
For any procurement procedures due to start soon, you should consider how appropriate it is to proceed with your purchase/contract in light of the pandemic. It is recommended you speak with your customers/Head of Procurement to ensure that it is necessary to commence the procurement at the time, that the requirement still exists and that it is still practical to deliver.
The following should be considered to ensure that procurement procedures are not commenced which are not practical to deliver and to ensure the best use of resources at this time:
- Will you have the resource to proceed and manage the procurement? Think about all the steps/timescale in the process necessary to see the procurement through from start to end. May the work of key staff be re-prioritised to deal with urgent Covid-19 response issues leaving you with nobody to manage the procurement?
- Could there be reputational damage to your authority in proceeding? Consider how running the procurement could be perceived by others externally.
- Are there health & safety implications of not proceeding?
- Is the market able to submit bids at this time? Again, a supplier’s approach to furlough2 may impact on its ability to bid. For example, if the majority of staff in an organisation, including those involved in submitting tenders are on furlough, which is distinct from working from home, this could affect the ability of individual businesses to submit a tender at this time
- Sourcing strategies and specifications should be reviewed to check that these are still achievable or if any changes are needed; and
- Consider whether it may be necessary to re-write parts of the specification and other documentation such as evaluation criteria. For example, for a service contract that would traditionally involve face-to-face interaction, consideration might need to be given to using innovative technology to reduce or replace that requirement. This may have the additional benefit of positive environmental benefits.
For procurements that need to proceed, procurement staff should consider making the greatest use of technology in the market engagement process. For example, some organisations will have facilities to provide for video-conferencing/information sessions. It will also help suppliers to manage uncertainty if changes to procurement plans and timescales are clearly communicated through Forward Plans and other media. This will provide assurance to suppliers as circumstances change and opportunities arise.
More generally, procurement staff should continue to use existing flexibilities in the public procurement rules to minimise timescales and/or administrative resource. These flexibilities include:
- Use of the most appropriate procurement procedure to reduce the burden on both buyers and suppliers – in particular the restricted procedure should be used for procurement exercises where market analysis has shown many bidders could meet your needs and bid
- Appropriate national and sectoral framework agreements and dynamic purchasing systems
- The ‘Quick Quote’ facility on Sell2Wales for lower value procurements
- Use of the negotiated procedure without prior publication – i.e. direct award, that is available in some cases for reasons of extreme urgency brought about by unforeseeable events. Information about using direct award and other flexibilities, including steps that can be taken to modify and extend contracts and also to reduce cash flow concerns, are described in PPN 01/20 and 02/20.
3.1 Looking ahead
As procurement staff turn their attention to their forward plans and restrictions lifting, including releasing any tenders temporarily put on hold during the crisis, they should consider how they might plan and co-ordinate the release of these tenders to avoid flooding the market. Many businesses may still be in recovery mode and perhaps less able to bid. Where possible, authorities are urged to consider:
- Using the Sustainable Procurement Assessment (SRA) to assist early stage strategic planning and to help embed relevant and proportionate social value requirements and key policies in the development of frameworks and contracts
- Exploring if there are any national or sectoral framework agreements you can take advantage of, and
- Working with economic development colleagues and other collaborative stakeholders (including through city or region deal networks) to support emerging priority areas of spend. This might include focused approaches and/or interventions with markets likely to receive simultaneous tender opportunities from multiple public bodies.
Please bring this PAN to the attention of all relevant staff, including those in agencies, non-departmental public bodies and other sponsored public bodies within your area of responsibility.
Welsh Government acknowledges that it has utilised the following publications in the production of this procurement advice note and would like to credit the Scottish Government in particular:
- Scottish Procurement Policy Note SPPN 6/2020, 9 April 2020
- UK Government’s PPN 01/20 and PPN 02/20
- Wales Procurement Policy Statement, Welsh Government, 2015