UPDATE 4 April 2020: The automatic suspension of deadlines for initiating a review procedure on local and federal level has been revoked for public procurement as of today. These are the main consequences for bidders and contracting authorities:
- The deadlines to initiate a review procedure depend on the date of the relevant decision of the contracting authority:
- If the decision has been issued before 22 March 2020, it has to be determined what time had been left for initiating a review procedure on that date. Starting with 5 April 2020 that time left is now the new deadline for a bidder.
- If the decision has been issued on or after 22 March 2020 but before 5 April 2020, the deadline filing a complaint had been automatically suspended completely. On 5 April 2020 the deadline set out in the law starts.
- If the decision has been issued on or will be issued after 5 April 2020 the deadlines set out in the law apply regularly.There is no automatic suspension!
- Due to the specifics of procurement procedures it was unclear, whether the previously issued automatic suspension also applied for review procedures against tender documents or after a contract has already been awarded. The explanatory notes to the new bill state, that this has been the case.
- If a review procedure has already been initiated, the deadlines determining the procedure or set within the procedure will start again on 7 April 2020 (this does not apply to procedures regarding an already awarded contract).
- The deadlines for an appeal to the (highest) Administrative Court as well as to the Constitutional Court shall still be automatically suspended until 1 May 2020. Since there is legal uncertainty regarding this suspension for appeals to the (highest) Administrative Court, we recommend to determine the deadline for such an appeal based on the abovementioned dates.
Additionally, a request for interim measures does not have a suspensive effect, if the procurement procedure in question is tightly related to measures fighting COVID-19.
Specific amendments to the legal provisions regarding public procurement law have not been issued yet.1 Nevertheless, the current situation affects public procurement. Ongoing public procurement procedures, future procedures as well as existing contracts are hit by the current developments. Here is some guidance through the main questions that arise:
1. Ongoing procurement procedures are not automatically suspended
The Austrian parliament has passed a bill that suspends public authority deadlines. However, public procurement procedure deadlines are not covered by this automatic suspension. Thus, for example, the deadline for submitting offers continues. However, from a practical point of view, most procuring authorities suspended the deadlines on their own initiative. If a contracting authority has not prolonged deadlines, bidders can request an extension. Bidders will probably have a good chance that their request will be granted, even if they are not able to collect all necessary documents due to external reasons or restrictions ordered by law.
If offers have already been submitted and the deadline for submitting an offer has expired, be aware that the period a bidder is bound to his offer is not automatically suspended.
2. No extended use of simplified procurement procedures (direct award or negotiated procedure without prior publication) is allowed
The Austrian Government has not extended the possibilities to directly award contracts, so that the general thresholds of EUR 100,000 apply.
Furthermore, the Austrian Public Procurement Act allows the negotiated procedure without prior publication to be used if it becomes strictly necessary due to extreme urgency brought about by events unforeseeable by the contracting authority (and not attributable to the contracting authority) and the time limits for the open or restricted procedures or a negotiated procedure cannot be complied with. In our view, these requirements are met for certain supplies and services due to the corona-pandemic (e.g. medical equipment or other supplies and services urgently required to secure the functioning of the health care system and public order). For such reasons of extreme urgency, contracting authorities are also not obliged to invite at least three eligible economic operators to participate.
3. Taking special measures and extending the use of electronic means during a procurement procedure
Apart from the rather restricted possibility of directly awarding a contract or choosing the negotiated procedure without prior publication, contracting authorities are entitled to shorten the minimum deadlines for submitting a request for participation or an offer in case of urgency. The minimum deadline for submitting an offer in an open procedure is 15 days; the minimum deadlines for a restricted procedure and negotiated procedure with prior publication are 15 days for submitting a request to participate and 10 days for submitting an offer. The contracting authority is required to document the reasons of urgency that prevented it from complying with the regular minimum deadlines.
If the value of the contract is below the EU-thresholds (mainly EUR 214,000 for supplies and services and EUR 5.35 m for constructions), the minimum deadlines set by the Public Procurement Act can be reduced in case of urgency without having any absolute minimum deadlines. In this case the reasons for taking this measure have to be documented too.
If during an ongoing procurement procedure, negotiation or presentation rounds were planned, the question arises of whether these face-to-face meetings can be replaced using electronic means (video conferences). We would consider this possible, provided that the principles of equal treatment, non-discrimination and transparency are obeyed. Thus, it is essential that the same conditions apply to all bidders.
4. Automatic suspension of certain deadlines for remedies
The aforementioned bill also impacts the deadlines for remedies in public procurement procedures. Based on this bill, the deadlines for filing a complaint are generally suspended until 1 May 2020 at the federal and regional level. However, since the bill does not specifically deal with public procurement procedures and their legal characteristics, the concrete implications are highly uncertain.
Thus, we recommend nevertheless filing a complaint against the tender documents and the award decisions within the deadlines set out by law in order interim measures to be granted. Additionally, complaints after a contract which has already been awarded must also still be filed within the deadlines set out in the Public Procurement Act.
5. What possibilities does a contracting authority have, if no offer has been submitted?
If no (suitable) tenders or no (suitable) requests for participation have been submitted in response to an open procedure or a restricted procedure, a contracting authority may choose the negotiated procedure without prior publication, provided that the initial conditions of the contract are not substantially altered. In our view, the latter condition specifically prohibits changes that might attract other bidders and thus might have an influence on the bidders’ interest regarding the contract. If this condition is met, contracting authorities may award the contract (after having revoked the initial procurement procedure) on the basis of a negotiated procedure without prior publication.
However, according to the general rule, a contracting authority has to invite at least 3 eligible economic contractors to participate in such a procedure.
6. Modifications of existing contracts in the context of COVID-19
The Austrian Public Procurement Act also limits the modifications that may be made to an existing contract after its award. However, modifications due to unforeseen circumstances and the replacement of a contractor are possible under certain conditions.
If the need for modification has arisen from circumstances that a diligent contracting authority could not have foreseen and (i) the modification does not alter the overall nature of the contract and (ii) any increase in price of each modification (provided that consecutive modifications are not aimed at circumventing the law) does not exceed 50% of the value of the original contract (this condition does not apply in the utility sector), a modification is lawful. Modifications that exceed the EU-thresholds nevertheless have to be published in TED after being made.
Changing the contractor is possible, but only in very limited cases. Such cases are either (i) an unequivocal review clause contained in the initial contract or (ii) universal or partial succession to the position of the initial contractor following corporate restructuring (including mergers, acquisitions and insolvency), provided that (a) this does not entail other substantial modifications to the contract, (b) this is not aimed at circumventing the law, and (c) the new contractor fulfils the criteria for qualitative selection initially set out by the contracting authority.
An official recommendation of the Ministry of Justice has been published on 30 March 2020. See more information here.