COVID-19 State of Emergency in Romania and Impact on Public Procurement

In Romania, on 16 March 2020, the President declared a state of emergency for the next 30 days to limit the spread of COVID-19 and manage its effects (the “State Emergency Decree”). Although the Presidential Decree does not qualify the current situation as force majeure, it does set out certain emergency measures that have become immediately applicable, as well as certain gradual/progressive measures, which may be taken in the future, depending on the developments. These measures affect also public procurement procedures and performance of contracts. Such measures include:

• procurement of materials and equipment necessary in the fight against COVID-19 may be done through direct procurement (without a tender) by the following contracting authorities:
  • central public authorities, as well as legal entities where the state is the majority shareholder;
  • the local public healthcare authorities and sanitary units (i.e. hospitals, clinics);
  • ministries with a separate healthcare system (such as the ministry of defence and military healthcare units/hospitals);
• measures will be taken to ensure continuity of supply for extraction, production, processing, transport, distribution, supply, maintenance and repairs, resources and raw materials as well as semi-processed materials required for the appropriate functioning of the national energy system, as well as for ensuring its continuity along with other public utility services.
• beneficiaries of EU funds affected by the emergency measures may decide – jointly with the management authorities – to suspend the relevant financing agreements;
• the Ministry of Economy, Energy and Business Environment shall issue “emergency certificates” to operators whose activity has been affected by COVID-19;
• authorisations/licenses/other documents issued by public authorities which expire during the state of emergency shall continue to be valid for such period;
• prices for drugs and medical equipment, basic foods and utilities may be capped at the average price calculated over the preceding 3 months;
• statutes of limitations and peremptive terms shall not start to run (and if they have started to run, shall be suspended) for the entire duration of the state of emergency;

Pursuant to the current laws effective in Romania, neither the state of emergency declared by the President, nor the COVID-19 pandemic automatically qualify as force majeure. If they have been qualified as such by way of a contract, then the affected party can rely on the COVID-19 pandemic to excuse itself from performance, provided that all the conditions of force majeure are met. These are that the event be external, unforeseeable, absolutely invincible/unsurmountable and unavoidable. If the parties to a public procurement contract cannot escape liability for non-performance on grounds of force majeure, there may be other legal remedies that can be invoked to limit its liability and exposure under a contract given present unforeseeable circumstances affecting the contract (e.g. the doctrine of hardship or frustration), subject to certain conditions being met.

The national regulatory authority on public procurement in Romania (the National Agency for Public Procurement (“ANAP”)) issued limited guidance following the State Emergency Decree, clarifying that contracting authorities have the responsibility of verifying whether the conditions in the Decree are met to enable them to directly procure the relevant products/services and the extent to which these contribute to the fight against COVID-19. Contracting authorities must submit relevant information in this respect to ANAP within a period of 30 working days as of the end of the state emergency status. ANAP, however, warned that it will continue using its monitoring powers to prevent contracting authorities from abusing these legal provisions when conducting award procedures during the state emergency period.

For more information please contact Gabriel Sidere, Cristina Popescu or Laura Capata.