There has been some recent discussion in the British media and on certain blog sites regarding the impact of the Covid-19 pandemic on public contract activity, mostly focused on the use of “emergency” direct awards to procure goods and services in the health context, and whether contracts procured in this manner are giving value for money. No doubt that discussion will continue as bodies such as the National Audit Office in the UK (and presumably the C&AG and Public Accounts Committee in this country) will be subjecting this expenditure to close scrutiny over the coming months.
Impact on Tendering Activity
There has been little coverage of the fact that the public sector market across the EU continues to function, albeit at a somewhat reduced level. This activity accounts for 14% of EU GDP or a trading volume of €2,448 billion annually [1]across the EU and will hopefully be a powerful locomotive in hauling the EU out of the Covid economic slump.
The following table of figures obtained from the European Commission website “Tenders Electronic Daily” indicate that the period 1 March to 31 May has seen a falling off of the order of 14.5% in publication of contract notices on the TED website (as compared to the same period in 2019) which is considerable, but which will hopefully be caught up to some degree over the rest of 2020.
| Procedure | 2019 (1 March -31 May) | 2020 (1 March -31 May) | Difference | % Difference |
|---|---|---|---|---|
| Restricted | 1800 | 1425 | -375 | -20.83 |
| Open | 55183 | 47277 | -7906 | -14.33 |
| Competitive Procedure with Negotiation | 3558 | 2926 | -632 | -17.76 |
| Accelerated Restricted Procedure | 19 | 16 | -3 | -15.79 |
| Negotiated Procedure | 2533 | 2344 | -189 | -7.46 |
| Innovation Partnership | 30 | 11 | -19 | -63.33 |
| Accelerated Negotiated Procedure | 7 | 3 | -4 | -57.14 |
| Competitive Dialogue | 214 | 153 | -61 | -28.5 |
| Total Contract Notices: | 63344 | 54155 | -9189 | -14.51 |
The same comparison for the period 1 January to 31 May 2020 shows a less dramatic decline of 8.4% overall in publication of contract notices, as can be seen from the following table:
| Procedure | 2019 (1 Jan Ð 31 May) | 2020 (1 Jan-31 May) | Difference | % Difference |
|---|---|---|---|---|
| Restricted | 2892 | 2464 | -428 | -14.8 |
| Open | 84600 | 77622 | -6978 | -8.25 |
| Competitive Procedure with Negotiation | 5314 | 4856 | -458 | -8.62 |
| Accelerated Restricted Procedure | 39 | 24 | -15 | -38.46 |
| Negotiated Procedure | 3896 | 3709 | -187 | -4.8 |
| Innovation Partnership | 41 | 19 | -22 | -53.66 |
| Accelerated Negotiated Procedure | 9 | 4 | -5 | -55.56 |
| Competitive Dialogue | 355 | 288 | -67 | -18.87 |
| Total Contract Notices: | 97146 | 88986 | -8160 | -8.4 |
The fact that public bodies across the EU are continuing to publish tenders during the crisis is undoubtedly a lifeline for many businesses and is only possible because public tendering is nowadays almost exclusively an on-line electronic process which is amenable to working from home by purchaser and supplier staff alike during the lockdown period. Nevertheless, much credit is due to all concerned who have been working hard behind the scenes to keep business flowing.
In the case of Ireland, while there has been a decline of 5.89% in the number of notices published on the national etenders portal during the period 1 March to 31 May, the position for the period 1 January to 31 May actually shows an increase of 5.3% in the number of notices published.
| etenders notices | 2019: 1 Jan - 31 May | 2020: 1 Jan-31 May | Difference | % Difference |
|---|---|---|---|---|
| 2664 | 2805 | 141 | 5.29 | |
| 2019: 1 March - 31 May | 2020: 1 March -31 May | |||
| 1766 | 1662 | -104 | -5.89 |
The figures for the number of Irish contract notices at EU level (i.e. posted on the TED website) during the period 1 January to 31 May 2020 actually show an increase of 24% over the same period in 2019, and also for the period 1 March to 31 May where there was an increase of 19% in contract notice activity.
| Ireland TED Notices | ||||
|---|---|---|---|---|
| Procedure | 1 Jan - 31 May 2019 | 1 Jan -31 May 2020 | Difference | % Difference |
| Restricted | 83 | 79 | -4 | -4.82 |
| Open | 448 | 599 | 151 | 33.71 |
| Competitive Procedure with Negotiation | 13 | 16 | 3 | 23.08 |
| Accelerated Restricted Procedure | 0 | |||
| Negotiated Procedure | 94 | 97 | 3 | 3.19 |
| Innovation Partnership | 0 | |||
| Accelerated Negotiated Procedure | 0 | |||
| Competitive Dialogue | 6 | 11 | 5 | 83.33 |
| Total | 644 | 802 | 158 | 24.53 |
| Procedure | 1 March -31 May 19 | 1 March-31 May 20 | Difference | % Difference |
|---|---|---|---|---|
| Restricted | 44 | 49 | 5 | 11.36 |
| Open | 300 | 360 | 60 | 20 |
| Competitive Procedure with Negotiation | 7 | 11 | 4 | 57.14 |
| Accelerated Restricted Procedure | 0 | |||
| Negotiated Procedure | 58 | 66 | 8 | 13.79 |
| Innovation Partnership | 0 | |||
| Accelerated Negotiated Procedure | 0 | |||
| Competitive Dialogue | 1 | 3 | 2 | 200 |
| Total | 410 | 489 | 79 | 19.27 |
Some commentators have noted a marked increase in contracts awarded without advertised competition during the crisis and the figures as published on the TED website for “contract awards without prior publication” would tend to bear this out with 2470 such awards in the period 1 January to 31 May 2020 compared with 2182 for the same period in 2019, an increase of some 13%.
Impact on Current Contracts
There is no data on the impact of the pandemic on current contract activity but undoubtedly there has been huge disruption to contract performance everywhere with consequences that have yet to play out. Most Irish contracting authorities make use of standardised contracts for goods, services and works which include “Force Majeure” clauses whereby the purchaser “shall be relieved from any obligation to make payments under this Agreement save to the extent that payments are properly due and payable for obligations actually fulfilled by the Contractor”. This clause would seem to provide a basis for Irish public bodies to discontinue making payments under contracts in cases where services are not being performed due to the crisis. However, concerns have been expressed as to the possibility that some contractors may continue to be paid by the State even though they are not performing any services and their staff are furloughed (and also receiving payments from the State).
No doubt this area will come in for the close attention of auditors over the coming months.
© James Farrell, 10 June 2020.
[1] European Parliament Fact Sheet on Public Procurement https://www.europarl.europa.eu/factsheets/en/sheet/34/public-procurement-contracts
