Public procurement during and after the quarantine

The COVID-19 pandemic has significantly affected the public procurement sector which consistently constitutes from 13% to 20% of Ukraine's GDP. There was a fragmentary adaptation of the public procurement procedure in response to the COVID-19 pandemic. The Law № 530-IX which came into force on 17 March 2020 simplified the procurement of goods, works and services which help to fight COVID-19. During 3 months they will not fall under the regulations in the Law "On Public Procurement".

Considering numerous amendments to the legislation due to the COVID-19 in almost all major areas, changes in the Law "On Public Procurement" were expected but haven't happened yet.

At the same time, there are general restrictive measures: railway, air and bus intercity, and interregional passenger traffic is prohibited; the activity of ASPCs is limited; remote work mode has been established, etc.

All the above can affect procurement procedures and suppliers. The suppliers, in particular, might face complications or find it impossible:

to get relevant certificates, bank guarantees and other documents necessary according to the tender documents;

to prepare a tender offer on time;

to sign a tender offer, complaint, contract or other documents on time;

to fulfill the contract concluded based on the results of procurement.

The legislative regulation of special mechanisms that could eliminate negative impact on competition could have been a lifesaver in such circumstances.

Nevertheless, the legislator did not provide any additional rules, benefits or restrictions for the procurement of goods, works, and services which are not related to COVID-19. These procedures must be held in the general order.
HOW SHOULD SUPPLIERS ACT?

Suppliers can still successfully participate in tenders even in the disadvantaged legal conditions. However, businesses should be prepared to compensate for the lack of specially created quarantine rules with their own proactivity while:

1. Preparing tender offers

2. Developing terms of the tender documentation and terms of the procurement

3. Developing terms of the contract based on the results of the procurement

What to do?
Optimize business processes and working conditions during the quarantine procurement procedure.
There are many resources with recommendations on how suppliers should act (for example, an article on INFOBOX PROZORRO).
Effectively and timely manage procurement deadlines that cannot be met during the quarantine.
First of all, it is the term for the submission of bids. There is no general mechanism which would be similar to the litigation procedure, for extending deadlines during the public procurement procedure. In most cases, the extension is possible only in particular cases (for example, in case of changing the tender documentation). At the same time, the legislator sets only the minimum deadlines for the submission of bids. In such circumstances, participants can manage the term by claiming the elimination of breaches. Special attention should be paid to the procedural peculiarities of these claims (limitation of the submission deadline, submission procedure), their validity (we recommend to emphasize the objectivity of the circumstances and the risk of violating one of the principles of procurement such as non-discrimination), as well as to relevance (the urgency of the procurement; whether the customer leaves open the possibility of extending the procedure).
Effectively and timely manage the conditions of the tender documents that are incompatible with the conditions of the quarantine.
Similarly to the above, you can use the claims of the participants to eliminate violations. The subject of the claims may be to eliminate or change the provisions of the tender documentation, the implementation of which is difficult or impossible in specific circumstances (for example, submission of hard copy certificates). Special attention should be paid to the future contract, in particular, the section regarding force majeure. It should relate to your ability to work under stronger of prolonged quarantine measures or adaptive quarantine.
Manage the category of force majeure during the execution of the contract concluded as a result of the procurement.
On one hand, force majeure can be used to release the supplier from the liability in case of breaching the contract. On the other hand, the same category can be used by the customer. In this case the supplier will be forced to respond to these changes. The latter is most likely during the crisis because of the budget deficits at various levels, as well as the constant adjustment of these budgets by the Government.
Take into account categories which are not manageable.
It goes about the circumstances which are bound with unequivocal legal consequences without any alternative. In particular, the omission of the extended term for the conclusion of the contract is the basis for rejection of the bid, while any alternative actions of the customer will be considered as a violation. As a result, this violation will be the basis for the further appeal of customer decisions and contracts.
The quarantine is currently effective until June 22, 2020. The quarantine-related regulation is not always timely. The epidemiological situation in Ukraine may undergo negative changes at any stage of the quarantine cancellation in Ukraine. Considering this, there is a high probability that the quarantine and all related measures will continue after June 22.

Those suppliers who are significantly involved in public procurement or who plan to do so in the future should develop the relevant protocols for preparation for tenders, participation in such tenders, as well as the implementation of contracts concluded as a result of the situation when the quarantine is actually extended indefinitely. Take into account the specifics of particular industries during the development of the above-mentioned protocols.

In addition, the adaptive quarantine may also change the activities of both regional (in the case of restrictions in the region) and interregional business (if the supply of the subject of procurement takes place in several regions).

Suppliers should bear in mind the regional peculiarities of COVID-19 dynamics, as well as the response of the local authorities to it (for example, the situation in Cherkasy and Henichesk will differ). It is important to remember that a significant easement or even the cancellation of the nationwide quarantine will not solve the procurement situation instantly.
Domestic Litigation team at INTEGRITES is ready to provide clients with full legal support on the newly introduced quarantine-related changes.
Contacts:
Oleksandr Onishchenko, Partner
+38 044 391 38 53, Oleksandr.Onishchenko@integrites.com
Got comments? Share your thoughts!
comments powered by HyperComments
Olena Perepelynska
Got questions?
Partner
Contact INTEGRITES Help Desk
Force majeure and contracts \ dispute resolution
Illya Tkachuk
Work conditions \ remote work \ immigration matters \ other employment law issues
Viktoriya Fomenko
Partner
Tax holidays and other quarantine-related novelties in tax law
Oleksandr Onishchenko
Litigation \ restrictions for economic activities during the quarantine \ domestic dispute resolution
Partner
Partner
Made on
Tilda