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13.07.2020 | KPMG Law Insights

Courage for flexible procurement

Courage for flexible procurement

This article was co-authored with Marlene Lindemann, Attorney at Law in the Public Sector.

Contractors are also currently facing special challenges due to the Covid 19 pandemic. They are expected to procure urgently needed – possibly increasingly scarce – goods and services at short notice, for example protective equipment, hygiene articles or technical equipment to maintain the functioning of the administration, while at the same time acting economically and in compliance with procurement law. In this dichotomy of interests, clients often perceive public procurement law as a rigid set of rules that leaves no room for innovative, flexible and strategic solutions in procurement.

The EU Commission (“Commission”) concedes with this “misconception” in its current communication dated
April 1, 2020 (again) explicitly on(available here).

Like a large number of current circulars at federal and state level, the Commission also initially refers to the “classic” mechanisms which the current public procurement law provides for contracting authorities to accelerate award procedures in the case of procurement requirements arising at short notice (for example, use of possibilities for shortening deadlines, admissibility of the choice of award procedure without a competitive bidding process, direct award).

However, the Commission goes much further in its communication: It actively calls on contracting authorities to interact and cooperate with market participants in order to use the potential and know-how of the market sensibly for the benefit of accelerated, flexible procurement, especially in times of crisis. From the Commission’s perspective, opportunities and possibilities forcontracting authorities arising from such interaction include the following:

  • Developing additional sources of supply:
    Interaction with the market potentially provides clients with a broad base of supply sources through which needs can be met in the event of an extraordinary increase in demand and supply chain disruptions.
    In the Commission’s view, contracting authorities should pay more attention to alternative, innovative solutions or suppliers in order to be able to react in the event of increased demand for similar products.
  • Increase bidder participation in future award processes: Reaching out to previously unknown or new bidders in the market potentially increases the chance of higher participation in future procurement processes and offers companies with new, innovative solutions in particular the opportunity to enter new markets.
  • Strategic procurement: The cooperation
    with the market offers contracting authorities an incentive to take aspects such as environmental protection, sustainability or innovation promotion into account in their award procedures in the future.

The Commission also gives some – not conclusive – indications as to the form in which, in its view, interaction with the market can in principle take place.

These include contacting contractors or suppliers directly by phone, email, or in person, using digital tools and formats (such as hackathons), and collaborating with existing entrepreneurial networks.

With its current communication, the Commission consistently confirms the objective it has pursued to date,
align public procurement not with a “purely administrative” approach, but with a collaborative approach “based on strategic objectives and needs” (Commission Communication of October 3, 2017, available here).

In the course of the modernization of public procurement law in 2016, the legislator has already introduced the negotiated procedure (Section 17 VgV, Section 15 SektVO, Section 3 b EU Para. 3 VOB/A), the competitive dialogue (Section 18 VgV, Section 17 SektVO, Section 3b EU Para. 4 VOB/A), the innovation partnership (Section 19 VgV, Section 18 SektVO, Section 3b EU Para. 5 VOB/A) and the market investigation (Section 28 VgV, Section 26 SektVO). procedure-specific mechanisms are anchored and detailed, with a high degree of cooperation, dialog and flexibility inherent in them. The importance of flexible action in technical aspect highlights in its recent recommendation of April 8, 2020, for a common set of tools for the use of technology and data in the current pandemic situation, in particular with regard to mobile apps (available here; see also KPMG, Public Sector Insights, Issue 4/2020, Covid-19-Special).

Contracting authorities are well advised to use this door opener of the Commission to mechanisms and possibilities of cooperation with the market and to flexible action as well as the resulting opportunities for themselves and their procurement projects in a sensible project-specific way. It goes without saying that this must be done in compliance with all rules and principles of public procurement law, in particular transparency and equal treatment.

 

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