The Danish Complaints Board for Public Procurement approves the Central Denmark Region's procurement of Covid tests by use of the negotiated procedure without prior publication

During the Covid-19 pandemic, the Central Denmark Region (the Region) assumed a special role as a central purchasing body for the Danish regions, municipalities, and all state institutions. Through direct award of contracts under Article 32(2)(c) of Directive 2014/24/EU on public procurement, the Region procured over 84 million tests for sectors like education, elderly care, and hospitals, with a value of around EUR 268 million.

On July 4, 2022, the Danish trade association DiaLab, which represents companies involved in the sale and/or production of laboratory products, filed a complaint with the Danish Complaints Board for Public Procurement. DiaLab, a part of the Confederation of Danish Industry, alleged that the Region's procurement of tests violated Article 26, acc. Article 32(2)(c) of Directive 2014/24/EU on public procurement. DiaLab argued that it would have been possible to adhere to the normal procurement procedures and still meet the required deadlines.

According to Article 32(2)(c) of Directive 2014/24/EU on public procurement, a contracting entity can choose to use a negotiated procedure without prior publication if it is strictly necessary. This might be the case if unforeseeable events make it impossible to meet the deadlines for open, restricted, or negotiated procedures.

In addition, according to the case law of the Court of Justice of the European union, Article 32(2)(c) of Directive 2014/24/EU on public procurement is a narrow exception and three cumulative conditions must be met before the provision can be applied; unforeseeable event, urgent need and causal link between the unforeseeable event and the resulting imperative urgency. The circumstances invoked to justify extreme urgency shall not in any event be attributable to the contracting authority.

The Danish Complaints Board conducted a review of the criteria in relation to the case and approved the Region's procurement under the provision, and the complaint was not upheld.
The Danish Complaints Board initially referred to the European Commission's guidance on public procurement in connection with Covid-19. This states that Covid-19 constitutes or may constitute an unforeseeable event and that crisis situations, such as the pandemic, may make it physically or technically impossible to carry out procurement procedures - even if using the fastest available procedures. The Danish Complaints Board then stated that the need for and scope of the tests was unforeseeable due to the variable development of the infection as well as the new variants and mutations that continuously emerged. The Danish Complaints Board recognised that, due to the development of the pandemic and changes in the government's testing strategy, the Region had to meet the need for tests either immediately or within a very short timeframe. I was found that it was not possible for the Region to make sufficient purchases of tests through the ordinary procurement procedures, and that there were consequently extraordinary events that resulted in an urgent need for tests. It was agreed that the causal link between the pandemic and the urgent need for tests could not reasonably be doubted and that the purchases had only been made until it was possible to meet the need for tests through the ordinary procurement procedures.

Reference is made to Bird & Bird's general article on Impacts of COVID-19 on public procurement in the EU, written by Riikka Aarikka and Katia Duncker.

While the ruling concludes that Article 32(2)(c) is legally applicable, it does not provide for an extension of the right to use the provision.

It may thus seem a little strange that at the end of 2021, COVID and its mutations were still considered such an unpredictable event that a fast-track tender could not have been carried out as a minimum.

In this case, however, the process was complicated by the fact that the procurement of tests and self-tests depended on the announcements from the authorities, and that the decision on a new strategy was made at very short notice, with the expectation that the necessary materials were procured and available.

In fact, there was a dynamic purchasing system in place, in accordance with Article 34, but purchases were canceled several times – one of the times, according to the Region, because there were inadequacies in the tender material with a requirement that no one could meet.

It could perhaps be argued with some justification that there was a degree of culpability in this cancellation, which meant that, according to the Region, the purchase could only be made without a tender and outside the system.

From a practitioner’s perspective, this ruling gives the impression that the result is based on sympathy for how difficult this market was to navigate for purchasers, and that the Complaints Board is therefore not quite as harsh in its assessment of the other conditions, including whether parts of the procurement could have been carried out as an urgent tender. 

At the same time, it cannot be denied that the fact that the Region acted as an extension of the authorities and procured on everyone's behalf was also significant. If the decision would have been in the complainant's favor, it could have had a very significant consequence, as an illegal direct award in Denmark is generally punishable by a fine of 5% of the contract value - in this case corresponding to approximately EUR 13,4 million.