COVID-19 and defence procurement contracts in France

By Jean-Claude Vecchiatto, Jean-Michel Communier, Alia Jenayah

04-2020

The COVID-19 pandemic is causing huge global disruption on critical defence operations and programmes. In this respect, private actors operating in the defence sector are keen to anticipate the consequences of COVID-19 and understand their liabilities under their contracts during this period of health crisis.

In order to deal with the fast-spreading pandemic, public purchasers and in particular the DGA will be required to go through a massive contracting effort as the army will have to strengthen its capacity to supply the population and support the civilian authorities. This may require the urgent conclusion of public procurement contracts.

We provide you with practical answers to questions that are raised by defence actors which are currently participating or wish to participate in a French public tender procedure.

1. May a public purchaser award a defence contract without complying with the normal tender procedures?

Yes. defence and sensitive security equipment transactions are submitted to French public procurement contracts rules which are more specifically governed, since April 1, 2019, by articles L. 1113-1, L. 2300-1 to L. 2397-3 and R. 2300-1 to R. 2397-4 of the Public Procurement Code (PPC).

In the COVID-19 epidemic context, defence transactions shall be submitted to flexible rules. The DGA have several possibilities:

  • It may decide to sign a public procurement contract without launching any tender procedure (Article 2515-1 of the PPC).

  • It may also decide to apply the negotiated procedure without prior publication or competition (procédure négociée sans publicité ni mise en concurrence (Articles R. 2322-1 to R. 2322-14 of the PPC).

  • It may finally opt for an adapted procedure (procédure adaptée) which enables the DGA to award its contracts according to a transparent competitive tendering procedure freely determined according to the subject matter and special features of the contract.

More specifically, the DGA may order health care equipment or call on service providers because of "an imperative urgency resulting from external circumstances" which could not have been foreseen and prevent it to comply with the normal tender procedure timeframe (Article R. 2122-1 of the PPC).

The Ordinance n°2020-319 of 25 March 2020 (hereinafter the Ordinance) reinforces the use of these procedures to meet the needs of the contracting authorities while specifying that these orders shall be limited in time and amount strictly necessary to meet urgent needs, particularly health ones. Indeed, force majeure is not presumed by this new text and must therefore be assessed on a case-by-case basis by the contracting authorities in accordance with the principles set out in point 4 below.

2. How are defence and security procurements conducted in the COVID context?

The Military Health Service (SSA) is an agency within the ministry of Defense which plays a key role in the management of sanitary crises on the national territory.

In line with the announcements of the President of the Republic and the launch of a dedicated military operation: "Resilience Operation", the SSA has committed significant resources to support the Nation in the fight against COVID-19 (use of DGA’s stockpile of respirator masks, deployment of military field hospitals and expeditionary medical units in order to help relieve pressure on hospitals, emergency reconfiguration of the French Navy's amphibious helicopter carriers (PHAs).

As part of the government's plan to combat COVID-19, the use of calls for projects is being stepped up as this method allows for less restrictive competition in terms of criteria and deadlines.

In this context, a first call for projects "Innovative solutions to combat COVID-19", launched by the Defence Innovation Agency (AID), was published on 23 March this year. A budget of €10,000,000 including tax is earmarked to finance projects of interest.

Its objective is to enable the Ministry of the Armed Forces to have proposals to fight the COVID-19 pandemic. It focuses on the search for innovative solutions, whether technological, organisational, managerial or for the adaptation of industrial processes, which could be directly mobilised.
A committee will select the projects according to the following 3 criteria:

  • Impact: the anticipated benefits (for the population, decision cycles, health personnel...);

  • Credibility: any evidence, scientific or technical, to confirm the feasibility of the project;

  • Timeframe: time frame for implementation of the solution.

It is open until 12 April 2020.

3. Can a public purchaser use alternative procurements?

Yes. A defence actor participating in a public tender procedure may face various difficulties in the execution of contracts due to containment and the impossibility of carrying out certain activities deemed non-essential.

For many defence contracts, public purchasers may be faced with situations in which the co-contractor will be unable to perform all or part of the contract. In such cases, a modification of the initial contract without a new procurement procedure may be justified. The public purchaser may award a substitute contract for the performance of the services without waiting for the end of the health emergency and without its former co-contractor being able to incur liability (Art. 6 2° of the Ordinance).

In practice, the private operator must demonstrate that it was genuinely impossible for him to perform his contract (e.g. no teleworking possible). As for the public purchaser, he cannot take any sanctions against his co-contractor (no penalty, no performance at the expense and risk or claim for compensation under contractual liability).

4. Does the COVID-19 epidemic constitute a force majeure event and does it exonerate the defence actors from their contractual obligations?

In administrative matters, the force majeure has been recognised as an event outside the will of the parties, unpredictable at the time of the conclusion of the contract and irresistible in view of the means available to the debtor for the performance of his obligation. A case of force majeure is an exonerating cause of liability.

About epidemics, the study of judicial case law shows an almost regular rejection of the notion of force majeure to qualify these events. This is notably the case for:

  • the plague bacillus,

  • the dengue virus,

  • the H1N1 flu,

  • the Ebola virus,

  • the Chilungunya virus.

Very recently, the judicial judge has recognized the characterisation of force majeure for events arising from the COVID-19 virus in several decisions. In particular, the Colmar Court of Appeal considered that it should be noted that “in view of the pandemic, COVID-19 in progress and the containment measures taken by the public authority, characterised by a significant degree of contagion and sufficiently serious risks, the circumstances referred to above characterise a case of force majeure” (Colmar Court of Appeal, 23 March 2020, No. 20/01206).

However, the administrative judge has never yet had to rule on the application of force majeure in the event of an epidemic. He has only admitted the application of this theory in the event of natural events of exceptional gravity (bad weather, tidal wave) as well as in the event of a strike that the co-contractor could not prevent from occurring.

The classification of the COVID-19 pandemic as force majeure is not automatic and will be assessed by the judge according to the circumstances of the case. Nevertheless, the unprecedented scale of the COVID-19 virus, qualified as a pandemic by the OMS (Organisation Mondiale de la Santé), as well as the government restriction measures defined by the decree of 14th March 2020 (confinement of the population, bans on gatherings, travel bans issued by companies), could constitute arguments for maintaining that this pandemic constitutes an event of force majeure.

In any event, and in the case that this force majeure is recognised by the public purchaser, the latter may neither take sanctions for non-performance by the other party to the contract , nor apply penalties for delay.

Last reviewed: 02 April 2020