Measures have been taken by the Belgian authorities to respond to the COVID-19 pandemic. These measures have serious repercussions on many companies that are used to doing business with authorities and public law entities. Companies may be unable to timely submit a tender in a public procurement procedure or they may no longer be able to perform their obligations under their public contracts. However, the public procurement rules may provide for some relief for those companies.
Can a candidate or tenderer invoke force majeure during the award procedure?
In view of the current Covid-19 crisis, tenderers may be unable to timely submit a request for participation or a tender in a public procurement procedure. For example, a candidate or tenderer may not be able to provide all the requested documents on time. The question is whether a candidate or tenderer can then invoke force majeure in order to safeguard its participation in the public procurement procedure.
Force majeure in the award phase by a candidate or tenderer has so far mainly been accepted by the Belgian State Council (the administrative supreme court) for last-minute issues with the electronic signature of tenders, issues with electronic tender platforms or issues with the continuity of postal services. Similarly, force majeure may be invoked in cases where certain documents from official instances requested in a timely manner were not delivered on time.
In order to prove force majeure, the candidate or tenderer will have to show that every effort has been made to avoid the force majeure. The burden of proving force majeure lies with the candidate or tenderer. The candidate or tenderer will have to prove the force majeure by means of documentary evidence. This evidence must demonstrate that the force majeure was unforeseeable and reasonably unavoidable.
If force majeure is accepted, the contracting authority must mitigate the consequences. Importantly, the contracting authority can only accept force majeure if there is no risk of manipulation of the content of those requests for participation or tenders.
In most cases, however, it will not be necessary to do so. For example, contracting authorities may, on their own initiative, choose to postpone the deadline for submission. When doing so, they must take into account the principles of equality and reasonableness. The public sector was quick to acknowledge the seriousness of the situation. For example, a circular from the Walloon Government dated 26 March 2020 (the Circular) provides guidance to the contracting authorities that fall under the Walloon Government. The Circular advises, amongst other things, for the deadline for on-going award procedures to be postponed until after 20 April 2020. The Walloon Government also asks that no new contracts be awarded before 20 April 2020.
Is a contractor under a public procurement contract entitled to extension of the time-limits?
Contractors performing public contracts for works, supplies or services may experience difficulties to perform their obligations as a result of the crisis. Some activities may no longer be possible due to social distancing rules, essential supplies from abroad may have become difficult or impossible and suppliers or subcontractors may be unavailable.
Under these circumstances, contractors may request an extension of the deadlines or a compensation of costs following from exceptional circumstances on the basis of the Royal Decree of 14 January 2013 establishing the general conditions for the performance of public procurement contracts (the GCP). The GCP apply to most public procurement contracts, unless specifically provided otherwise in the contractual documentation.
The GCP provide for a ‘hardship clause’, i.e. the right for the contractor to request a review of the contract, even if the contract does not provide for a specific arrangement. Such review may include the extension of the contractual deadlines or compensation of additional costs to the extent they exceed certain thresholds.
A tenderer that wishes to claim such extension or compensation must demonstrate that the amendment has become necessary as a result of circumstances that it could not reasonably foresee at the time of the submission of its tender, that it could not avoid and the consequences of which it could not provide for, although it has taken all the necessary measures.
Alternatively, the contractor may invoke a force majeure event, making the performance of its obligations impossible – therefore making the performance of the contract also impossible – due to an insurmountable event beyond its control, even though it had taken all the necessary measures. Depending on the circumstances, the government measures in relation to the lockdown and their consequences may characterize as force majeure.
It is important that contractors act timely in order to benefit from the above. The GCP require that the contractor must notify the contracting authority in writing and within 30 days of (i) the relevant facts and (ii) their impact on the progress and cost of the performance of the contract. A duly justified request in writing for relief must then follow.
The Walloon Government Circular referred to above refers to the possibility for the successful tenderer to request a review of the contract for unforeseeable circumstances. The Walloon Government asks the contracting authorities to treat any requests with common sense and in good faith. Although we are currently not aware of similar measures at other levels, we expect other contracting authorities to apply the same principles.