Thailand’s COVID-19 Relief Measures For Government Procurement Contracts – Government, Public Sector

With virtually all business operations in Thailand affected by
the fallout of the COVID-19 pandemic, the government has been keen
to provide relief measures to limit the economic damage. In
addition to implementing broad economic relief, this has also meant
changes to the government’s own internal operations, and in
recent months, the Public Procurement and Supplies Administration
Ruling Committee has issued two circular letters prescribing
guidelines on how government authorities should handle their
procurement operations during this period. The circulars, which
were issued under the Public Procurement and Supplies
Administration Act B.E. 2560 (2017), detail the relief measures for
government procurement contracts that cannot be fulfilled because
of the disruptive effects of the COVID-19 pandemic.

Most significantly, the circulars clarify that the impact of
COVID-19 should be deemed force majeure under government
procurement contracts and government procurement law, which affects
the penalties levied on contractors for late performance of
required duties under government procurement contracts. The Ruling
Committee specified the start of the force majeure period as March
26, 2020 (the date when the government first announced a nationwide
state of emergency). This official designation enables contractors
to cite disruption from COVID-19 when requesting additional time to
perform their duties under a contract, or exemption from or
reduction of penalties incurred due to the delay.

For contracts that have not yet reached their maturity date, the
Ruling Committee granted relief measures by directing the relevant
government authorities to count the number of days that COVID-19
has affected performance of the contract, and use this number as
the basis for determining an extension of the timeframe for
performing the contractual duties. For contracts that have already
reached their maturity date, the contractual party that failed to
perform according to the contract would normally be subject to an
assessed fine for their non-performance. In these cases, the
relevant authorities are to likewise count the days that
performance was affected by COVID-19, and exempt or reduce the fine
for the contractual party accordingly.

The days to be counted in the above scenarios are defined as
“the number of days of the actual occurrence”—that
is, the number of days for which COVID-19 and related measures
actually impacted performance. These will be considered by the
government authority based on the government’s various
pandemic-related regulations and restrictions, such as closure
orders, prohibitions on certain activities or movements, and other
relevant orders up until the date on which the business re-opened,
resumed business operations, or resumed normal operations
(whichever is most appropriate for performance of the obligation in
question).   

When a force majeure event obstructs contractual performance
under a standard procurement contract in Thailand, the private
party must notify the relevant government party of the delay,
within 15 days of the end of the force majeure situation, in order
to request an extension of the timeframe for contractual
performance, or a reduction or exemption of the fines incurred. In
the present situation, however, the force majeure event is still
taking place, and it is not yet known when the situation will end.
Therefore, the Ruling Committee has ruled that, instead of
following these requirements, the contracting party must notify the
government authority about COVID-19’s impact on the project,
regardless of whether or not that impact has ended, and provide
documentary evidence demonstrating that the contracting party was
affected by the COVID-19 pandemic. Examples of this documentation
could include the government’s announcement of the state of
emergency due to COVID-19, closures or other limitations issued by
the government agencies, or evidence showing that suppliers
cancelled their production runs.

In addition to the above relief measures, the Ruling Committee
has provided options for cases in which a procurement contract has
not been fully executed because of a problem in the delivery or
investigation of the relevant products or services. This could
occur, for instance, when a contracting private party may have
performed the actions required by the contract, but disruptions
from COVID-19 intervened before the contracting government agency
was able to investigate the products or services in order to ensure
that the work had been appropriately completed.

The various relief measures that have been issued by the Public
Procurement and Supplies Administration Ruling Committee in the
last six months provide a number of helpful options for businesses
whose involvement in government procurement has been negatively
affected by the COVID-19 pandemic. By taking advantage of the
alternatives outlined by the committee, and by working in concert
with the relevant government agencies, businesses can mitigate
their losses and delays due to the global disruption and chart a
course back to profitability.