Member Article

On March 25, 2020, the Supervising Agencyof the GovernmentProcurement - OSCE issued Communiqué No. 005-2020 acknowledging that the immobilization recently decreed by the Central Government to contain the spread of the coronavirus (COVID-19) is recognized as a force majeure event.

Based on the above, it identifies a number of assumptions related to the execution of public contracts, as follows:

(I) Provides that the declaration of a state of national emergency issued by Supreme Decree No. 044-2020-PCM, specified by Supreme Decree No. 046-2020-PCM, is a force majeure situation that may affect contractual ties concluded under the government procurement regulations.

(II) It indicates that, in cases where the order for social isolation or immobilization prevents the timely and/or full implementation of the provision of goods and services, it is the contractor's right to request the extension of the term of the contract, in accordance with the procedure laid down in the State Procurement Act and its Regulations, the request for expansion must be submitted within the terms established in the applicable legislation once the event giving rise to the delay has ended, even when the term of the contract has expired.

(III) As an alternative to the extension of the term, it recognizes the prerogative of the parties, even in contracts arising from proceedings called prior to December 14, 2019, to agree to the suspension of the period of the contract execution until the situation of force majeure or its effects ceases. Be advised that an extension of such suspension may also be agreed.

(IV) Provides that, where the performance of the contract may be continued, it is the Entities' responsibility to communicate to the contractor in ways that do not violate the mandate of social isolation or immobilization, an email address for the respective coordination and the delivery of benefits, as much as possible; otherwise, the contractor has the right to request the extension of the term.

(V) In the case of works contracts, it acknowledges that, in addition to the procedure for the extension of the term, the grounds for postponing the start of the execution period and for suspending the execution period of the contract are also laid down. It is for the parties to the contract to adopt the respective agreement in ways that do not violate the mandate of isolation or social immobilization.

(VI) Finally, the OSCE calls upon the Entities and contractors to observe the principle of equity, enshrined in section i) of article 2 of the State Procurement Act, according to which the benefits and rights of the parties must have a reasonable relationship of equivalence and proportionality.

In each specific case, the analysis must be carried out to determine the starting and ending date of the event giving rise to the delay, in order to submit the corresponding request for an extension of the term in accordance with the regulations applicable to State Procurement. For this purpose, we recommend contacting our specialists from the Administrative Office.

It is important to note that, in addition, OSCE published Communiqué No. 004-2020 dated March 25, 2020, referring to the adaptation of acts on the platform of the Electronic System of State Procurement - SEACE in the framework of the declaration of a national state of emergency, which provides as follows:

(I) That Entities must register with SEACE the postponement of the remaining stages of the selection procedures which were scheduled to take place until March 30;

(II) That, in the case of selection procedures whose stages had closed or concluded between March 16 and 25, inclusive, the OSCE shall provide technical support to exceptionally carry out the respective postponement or extension, so that prejudice the right of the participants or bidders; and,

(III) In the specific case of electronic reverse auctions in which sets were made during the aforementioned period, this stage may be considered valid as long as all the bidders who registered bids have launched; otherwise, the entity shall declare the selection procedure invalid.

Any query on the matter may be acquitted by the attorneys of our Administrative Office. Contact doctors Carlos Carpio ([email protected]); Hugo Silva ([email protected]); and/or, Augusto Effio ([email protected]).