Version updated on 14 May 2020
In accordance with the authorisation given by French Parliament, Ordinance No. 2020-319 of 25 March 2020 (the "Public Contracts Ordinance") provides for various measures to relax the rules applicable to public contracts, the award or performance of which would be compromised by Covid-19. Ordinance No. 2020-460 of 22 April 2020 has clarified certain aspects, and Ordinance No. 2020-560 of 13 May 2020 adjusts its application time-limits.
SCOPE OF APPLICATION
The Public Contracts Ordinance applies to contracts subject to the French public procurement code (public procurements and concessions), ongoing or entered into during the period between 12 March 2020 and 23 July 2020 inclusive.
In its initial version, the Public Contracts Ordinance was applicable until the end of the state of public health emergency extended by two months, i.e. until 23 July inclusive. The Ordinance of 13 May 2020 thus allowed the initially stipulated temporal scope of application to be maintained, despite the extension of the state of public health emergency until 10 July 2020 by Law No. 2020-546 of 11 May2020. In light of the expected economic recovery, the application of the Public Contracts Ordinance's measures beyond this date no longer seemed justified.
Its original version stated that it also applied to contractual provisions relating to the payment, performance and termination of other public contracts. A careful reader could understand that the authors of the text were mainly targeting, by this formulation, those contracts permitting the occupation of the public domain. This is one of the points confirmed by the Ordinance of 22 April 2020.
The Ordinance on Public Contracts contains provisions relating to tendering processes. A public authority will be able to extend the deadlines for the receipt of applications and bids and adjust the competitive tendering processes.
CONTINUITY OF SUPPLY
Other measures aim to guarantee the continuous supply of government bodies. In particular, contracts coming to an end during the public health emergency period may be extended until the end of this period, extended by the period of time needed to restart the tendering process and to enable suppliers to submit competing bids. Similarly, contracting authorities may enter into substitute contracts should a contractor no longer be able to perform its obligations.
PROTECTION OF ECONOMIC ACTORS
Lastly, several measures have been taken to avoid adverse effects on economic actors unable to perform their obligations as a result of the epidemic:
- the removal of the limit on the amount of advance payments;
- the extension of deadlines;
- the release of liability and the obligation to remedy the breach in case of an impossibility to execute the contract;
- the compensation for expenses incurred by the contractor in the event of termination of a contract as a result of measures taken in the context of the state of public health emergency;
- the immediate payment under the procurement contract in the event of suspension of a lump-sum procurement contract;
- the interruption of the concession fee's payment by the contractor to the contracting authority, and the possibility of receiving an advance payment on sums due from the contracting authority;
- the compensation of the contractor in the event of a significant change in the performance of its obligation by the grantor.
On this point, the Ordinance of 22 April 2020 provides an important clarification: it confirms that it is possible for a concessionaire to suspend any payment to the grantor when the performance of the concession has been interrupted, not only by decision of the grantor, but also by virtue of an administrative police measure, which may for example be applicable to establishments receiving the public such as concert halls, stadiums or congress centres, whose existence is seriously affected by the health crisis.
In addition, the Ordinance of 13 May 2020 provides for the ability to remove the threshold on the amount of advances for ongoing contracts or contracts concluded during the period from 12 March 2020 until the end of the state of public health emergency proclaimed by Article 4 of the Law of 23 March 2020, extended by two months. The application of this measure is thus not limited to 23 July 2020 inclusive.
SCOPE OF THE PUBLIC CONTRACTS ORDINANCE
As stated in the introductory report to the Public Contracts Ordinance, the application of these provisions requires a case-by-case analysis and the contracting parties must justify the need to resort to them.
In addition, together with the Public Contracts Ordinance, the French Ministry for the Economy and Finance also announced that the epidemic would be interpreted as a force majeure event for the purpose of enforcing the State's public procurement contracts and encouraged local authorities to show flexibility in their own contracts (to read the relevant document, please click here).
♦ ♦ ♦
Gide's Public Law & Environment practice group is available to answer any questions you may have in this respect. You may also get in touch with your usual contact at the firm.
This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee.
>> Click here to read the legal updates of Gide's multidisciplinary taskforce set up to answer all your legal issues relating to Covid-19.