A party seeking to restrict another's commercial activities must consider whether such terms are normal in similar, factual and contractual circumstances.
During the Covid-19 pandemic, much of the focus has been on shoring up existing delivery and, where possible, extending arrangements if it is not possible to re-procure. Whilst a number of contracts adapted well to Covid-19, others did not. The contractual and operational basis of delivery did not fit the “new normal” and so changes had to be made, often on an emergency basis.
Over the course of the next year and beyond, contracting authorities across all sectors will be considering their plans for re-procurements. It is essential that contracting authorities establish the lessons learned from their own experience – across the entire organisation – and more widely from the experience of their sector in managing Covid-19.
This could include asking (and answering) the following questions:
- Was our contract operationally flexible enough to accommodate changes to delivery?
- If a formal change to delivery was needed, did the change mechanism to the contract actually work?
- How did our payment mechanisms cope with changes to delivery? Can we scope a new mechanism that sets out a plan for how something like a national lockdown will be dealt with, balancing both our responsibility for public funds but also supporting our suppliers?
- How did our own and our suppliers’ business continuity arrangements fare?
- Did we or the supplier seek to rely on the force majeure provisions?
- Does the change in how we work now demonstrate that our reliance on any particular service is going to be much greater so that a failure by the contractor would have a much worse impact on us than before?
- An obvious example is an increasing reliance on IT packages that enable staff to work from home.
- Contracting authorities may benefit from an internal review of its resources to manage such a contract as well as consideration of whether the contract is still fit for purpose by containing the right protections for the organisation adequate for the increased risk.
Covid-19 has not gone away and even if it does abate, it may be back. Or if not Covid-19, there could be another epidemic or pandemic during the life of the contract. Everybody hopes that is not the case, but it is prudent to plan now for new procurements. Consider:
- Market engagement with your potential bidders specifically on how a greater prevalence of epidemics/pandemics and lockdowns might be managed.
- Whether your quality evaluation should encompass how the supplier will deal with an epidemic/pandemic and measure the degree to which that will, from the supplier’s perspective, alter service delivery from the specification.
- Does the specification need to cover Covid-19 now – could the service be delivered in one way whilst Covid-19 is present but another way once/if it fully recedes? If yes, consider how to evaluate that.
- Can you build flexibility into your procurement documents and the contract, to ensure that you have a process and scope to change delivery in a controlled manner and, ideally, without potential public procurement or State aid (assuming both concepts endure) issues arising? This could include considering whether you should have a right to suspend delivery, wholly or partially, and what the financial implications of that would be.
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