Introduction
The recent storms Ciarán and Domingos caused significant disruption, raising questions about their potential impact on public procurement contracts. Although the precise effects of these weather events remain hard to assess at this stage, two major trends are already emerging.
1. Possible derogations from the French Public Procurement Code
Historically, exceptional circumstances have already led to temporary adjustments to the legal framework for public procurement. Last summer’s riots, for example, saw specific derogations introduced to speed up the reconstruction of damaged infrastructure (see our article on the subject).
In the context of Storm Ciarán, similar measures could well be adopted. Such derogations would allow a faster and more flexible response to the damage caused, in particular by simplifying award procedures for urgent reconstruction works.
Temporary increases in the award and/or publication thresholds can be expected. Private companies therefore have every interest in strengthening their pre-sales capabilities so as to anticipate the publication of such a decree.
2. Impact on specific markets
A. The insurance sector
Bruno Lemaire’s recent statement, citing costs of several hundred million euros for insurers following storms Ciarán and Domingos, highlights the potential challenges for the insurance market.
We can therefore legitimately expect uncertain and complex times for insurance contracts,
- Contract renegotiations: this situation could lead to tense renegotiations of insurance contracts, particularly those involving public bodies.
- Rising premiums: with claims on the rise, an increase in insurance premiums cannot be ruled out.
- Risk reassessment: public authorities may have to reassess their insurance needs, in particular by adjusting the cover and clauses of existing contracts.
B. The construction sector
The extensive damage observed, whether to road and telecommunications infrastructure or to buildings and other structures that must be rebuilt, repaired or reinforced, will inevitably have many consequences for public procurement in the construction sector. Here are a few of them:
- Urgency of the works: following the major damage caused by the storms, increased demand for construction and repair services is inevitable. This urgency could saturate the market, with construction firms called on beyond their usual capacity.
- Compressed timescales: reconstruction projects will require rapid execution to restore essential infrastructure. This will confront construction firms with significant logistical challenges, calling for efficient resource management and rigorous coordination to meet very tight deadlines.
- Application of force majeure clauses: existing contracts could be affected by the invocation of force majeure clauses, allowing the parties to suspend or amend their obligations because of unforeseen and irresistible circumstances.
- Claims based on unforeseeability: the French doctrine of imprévision (unforeseeability) could be invoked in public contracts, allowing terms to be renegotiated where circumstances change radically and affect the economic balance of the contract.
- More claims: with greater pressure on deadlines and costs, works contracts are likely to face a rise in claims. Managing those claims effectively, both legally and contractually, will be crucial to keeping projects viable.
Conclusion
Although the full extent of Storm Ciarán’s impact on public procurement remains uncertain, these two main trends give a preliminary view of the likely consequences. It is crucial for those involved in public procurement to prepare for these developments and to anticipate the adjustments needed to manage the repercussions of such natural events effectively.