Changes to the Public Procurement Law – Take Seven

Procurement Law – More Amendments to Remedies in 2024

JUDr. Ján Azud, Partner, RUŽIČKA AND PARTNERS

Since 2018, we have been publishing an annual update on amendments to the public procurement rules and system of remedies under the Slovak procurement law. The year 2023 was extraordinary, as no amendment to the public procurement law was passedfor the first time since the law was adopted in 2015. This was just an exception to the rule, however. After a year-long hiatus, the lawmakers decided to fiddle with the law again and adopted several amendments. As always, this was done under the motto of simplification. So, there is still something to write about and we are giving you our seventh take on the changes in public procurement.

Professionalisation of Public Procurement

The previous management of the Public Procurement Office was a huge fan of the professionalisation of public procurement and convinced the government and parliament of its necessity. A robust regulation was passed in 2022,effective 1 April 2024. Not surprisingly, a significant portion of experts opposed the regulation as too robust and bureaucratic. The Public Procurement Office tried two times to get rid of the regulation by means of an amendment to the law but failed to succeed on both occasions. The new government, however, decided to listen to experts and finally amended the law to make professionalisation voluntary or, in other words, completely obsolete. As the classic saying goes, the intention was probably good but it turned out as always.

No more requests for remedy

Since forever, the Slovak system of remedies has been constructed on two pillars. Bidders were expected to file aremedial request with a contracting authority if they felt unhappy with tender conditions. An unsuccessful remedy had to be followed by filing a challenge with the Public Procurement Office. This notoriously prolonged tenders. After decades of keeping this anomaly, the lawmakers decided to give change a try and removed the remedial request from the system. In our opinion, this change is one of the few that we have described in our previous six takes that is helpful. Bidders used to try and improve their commercial position in a tender by simply requesting a remedy, which cost them nothing. Unlike a remedial request, challenges are not free, and bidders will think twice before filing them. It remains to be seen how it all pans out, but we believe that this amendment will speed up tenders significantly.

Cut-off date for challenges

Before the amendments, the challenges against tender documents could be filed virtually on the last date of the bid submission deadline, or even later. This year's amendments to the Public Procurement Act finally introduced a cut-off date, set on the 10th day from the contract notice or provision of the relevant tender document. Combined with the removal of the remedial request, this measure is bound to shorten and smoothen tenders in a material way. Irrespective of the magnitude of a tender, bidders always started to investigate it in very late stages and only then found out that they were not happy with something. Last-minute challenges were therefore frequent. It goes without saying that this did not help the fluency of tenders. More credit to the lawmakers for this one.

Removal of ineffectiveness action and more lenient approach to penalties

Giving an unusual amount of credit to the Slovak Parliament, we must mention two more changes that we find very reasonable and helpful to the system. First, the lawmakers removed a mandatory action for ineffectiveness by the Public Procurement Office regarding an agreement that was entered into in breach of procurement rules. This remedy was unique within the EU system of remedies and often exposed critical agreements at risk of being set aside by court without a proper plan B. Aggrieved bidders will still be free to file for ineffectiveness, but the state decided not to purposefully undermine its own functioning by making state authorities fight each other in court. Another anomaly in the Slovak system was the presence of draconian sanctions for the breach of rules. Several breaches were automatically fined 5% of the contract value regardless of the severity of the violation. This was finally changed to give some discretion to the regulator, which can now impose a fine in the interval of 0,1% to 5% of the contract value. In our view, the mere presence of penalties is nonsense as the state punishes the state and transfers money from one pocket to another. Making the penalties generally dependent on severity of a breach makes this nonsense more palatable, at least.

Conclusion

Contrary to tradition, we think that the lawmakers deserve a lot of praise for some of the amendments adopted in 2024. Of course, there are others which are far from perfect, but we decided to be positive at least once in seven years. Experience proves that there will be a lot to complain about down the line.

RUŽIČKA AND PARTNERS s.r.o. (source: RUŽIČKA AND PARTNERS s.r.o.)

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