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The amendment to the Public Procurement Act which enters into force on April 1, 2011

On February 11, 2011 the parliament adopted an important amendment to the Slovak Public Procurement Act (the Act) which entered into force on April 1, 2011. The amendment, according to the general part of the explanatory statement, aims to have a positive impact on competition and the business environment in Slovakia. It should also improve both the costs of public procurement and spending in the management of public resources, by implementing several new measures. The following article provides a basic overview of these new measures and institutes and some other important changes to the Act.

(Source: PETERKA & PARTNERS Law Offices)

On February 11, 2011 the parliament adopted an important amendment to the Slovak Public Procurement Act (the Act) which entered into force on April 1, 2011.
The amendment, according to the general part of the explanatory statement, aims to have a positive impact on competition and the business environment in Slovakia. It should also improve both the costs of public procurement and spending in the management of public resources, by implementing several new measures. The following article provides a basic overview of these new measures and institutes and some other important changes to the Act.


Financial limits

One of the most important and positive changes provided by the amendment is the implementation of new financial limits by contracts. This was brought about partly by Commission Regulation No 1177/2009 on new limits concerning above-limit contracts. Together with the Regulation’s limits, the amendment significantly lowers the national limits for under-limit contracts, under-threshold contracts and contracts of small value. This particular change brings greater control of public resources and spending by authorities by imposing an obligation to use more formal public procurement procedures even for smaller values of orders.

Under the new provisions, generally an above-limit contract under the Act is one whose value is estimated to be equal to or greater than €125,000 (previously €133,000). For building works contracts the value must be equal to or greater than €4,845,000 (previously €5,150,000). Consequently, a contract is considered under-limit when its estimated value is lower than €125,000 and equal to or higher than €40,000 (previously €60,000). A contract worth less than €40,000 is called an under-threshold contract. The lower limit for under-threshold contracts was also changed to €10,000 (previously €30,000). Contracts of small value are now contracts whose value is estimated to be less than €10,000.


New definitions of some subjects under the Act

The amendment has also altered the definition of public procurer, introduced an important change to the provisions on persons participating in co-financing (Article 7), and made a minor change to the legal definition of procurer.

The new definition of public procurer has extended the range of subjects that it applies to. At present, a public procurer includes, among other, all legal entities financed either completely or in the main by another public procurer, or those in which another public procurer holds direct or indirect exclusive control, or those in which another public procurer appoints or votes for more than half of the members of the governing body. Formerly, these legal entities were considered public procurers only if they were founded or established for the special purpose of meeting public interest needs not of an industrial or a commercial nature. Such entities are still considered public procurers, however, if another public procurer appoints or votes for more than half of the members of their controlling body.

Misuse of the institute of co-financing to avoid the obligation to comply with the Act by providing financial means to a person who is not a public procurer or a procurer will be limited under new regulations (see Article 7). The previous wording of Article 7 enabled these entities to use less strict financial limits and public procurement procedures than would be required if they were a public procurer or a procurer. Under the amendment any person using these means must fulfil the obligations required of a procurer. If the person provided with such means is also a public procurer or a procurer, they must fulfil the obligations imposed on a public procurer by using the financial means. The value of a contract in this case is determined by the amount of financial means provided.


Extension of a public procurer’s and a procurer’s obligations

The provisions on the basic obligations of a public procurer and a procurer have been extended by two new sections. These new sections speak of the obligation to send, immediately after concluding a contract or after ending certain other procurement procedures, relevant documents (as hardcopies or by electronic means) such as minutes on evaluating compliance with participation conditions, minutes on evaluating tenders, or copies of all tenders, to the Office for Public Procurement (the Office). Regarding sending the tenders the amendment points out the obligation to keep some of the information stated in the tenders as confidential.

The amendment also introduces new provisions regarding a public procurer’s and a procurer’s obligations to the Office. Under these provisions a public procurer and a procurer are obliged to send the Office a notice of concluding a contract, a concession contract, a framework contract or amendments to any of them, within seven days of publication. If publication is not mandatory hardcopies must be sent within seven days of conclusion. The aim of the amendment is to ensure that a higher level of information is provided to the public by publishing the whole contracts with the successful tenderers. This obligation was not previously expressly imposed by the Act. The Office only had the right to ask further questions. Confidentiality was often used as a reason for not publishing a contract, including, in many cases, contracts of major importance.

The confidentiality provision has now been amended. The provision defining what can be considered confidential information has been repealed. Confidentiality now covers trade secrets and information indicated as confidential. More important than the change in the definition of confidential information, however, is the amendment of matters which the confidentiality obligation should not affect, such as the obligation to send notices of concluding contracts, or the complete wording of them, to the Office for registration and publication.

To limit the possibility of a public procurer or a procurer to set the requirements and conditions in a procedure so that they favour a specific tenderer, a public procurer and a procurer are obliged under the new regulation to explain the necessity of every required condition of participation regarding the object of the contract.

Under the new provisions a public procurer is obliged every quarter to publish on its website or in the press a summary of contracts of small value with a value over €1,000.


Electronic auctions

The amendment has taken another step in implementing the use of electronic auctions in public procurement. Formerly, electronic auctions were optional. Now, the use of electronic auctions in certain public procurement procedures is obligatory. A public procurer and a procurer are currently obliged to use electronic auctions in above-limit contracts and under-limit contracts, but the introduction of the obligation to use electronic auctions by under-limit contracts has been postponed to January 1, 2012. Electronic auctions must be used in all contracts on goods and in contracts on services or building works, if the technical requirements regarding the object of the contract on services or building works can be determined exactly, or if these contracts are awarded by a dynamic purchasing system, or when the contest is repeatedly opened between all parties to a framework contract.


The abnormally low tenders

The mistake by the institute of abnormally low tenders, which was misinterpreted and transposed to the Act as abnormally low price (“neobvýkle nízka cena”) has been rectified and now correctly refers to abnormally low tender. In accordance with that a tender should not be considered as abnormally low only in the aspect of the price.

Moreover, new measures for limiting, at least in part, the possibility to arbitrarily exclude the tenderer because of an abnormally low tender, have been introduced. The deadline for submitting an explanation of an abnormally low tender has been extended to five working days after delivery of the commission’s request. After receiving a written explanation the commission can invite the bidder to a personal consultation on the tender, which cannot take place earlier than five working days after delivering the invitation.


Exclusion from the procedure because of formal mistakes

For higher protection of candidates and tenderers the amendment provides several other changes. Regarding formal mistakes in tender or submitted documents the draft amendment proposed to eliminate the possibility of excluding the tenderer because of formal mistakes in the tender.

In order to prevent its immediate exclusion from the procedure the new provisions introduce a minimum time limit6 which should be available to the candidate or tenderer to prepare an explanation or complete the documents. If the tenderer or candidate does not meet the deadline, the public procurer or the procurer is still authorised to exclude them from the procedure.


Some other changes

The amendment has introduced many other important changes to public procurement procedures, institutes and obligations. One is the removal of separate rules in awarding non-priority contracts (such as those for legal services, education and professional education). Formerly, non-priority contracts had less strict rules applied to them. Now, basically the estimated value of the contract is decisive.

Under the previous regulation under-threshold contracts were very often hard to get information on, as a public procurer was obliged to publish invitations to submit tender only on its website. The amendment has introduced significant changes in the procedure of awarding under-threshold contracts, mainly by imposing an obligation to publish an invitation to submit tender in the Office Journal. Detailed content on the invitation is also required by the amendment. Under the new provisions a public procurer is obliged to set a time limit for submitting tenders which cannot be shorter than 20 days after sending the invitation to the Office.

Another, often misused institute, the restricted procedure, by which usually only a limited number of candidates are invited by the public procurer to submit tenders, has been amended with the aim of removing the limitations and avoiding their misuse. But only the lower limit of a candidates’ number is raised from five to ten. The upper limit is still 20 candidates which can be invited to submit tenders.

Finally, the possibility to file a motion to have a contract concluded contrary to the Act nullified by the court within one year of its conclusion has been repeatedly introduced. The right to file such a motion is granted to the Office and prosecutors.


Conclusion
According to the explanatory statement the amendment’s aim is to significantly improve transparency and competition in public procurement procedures. However, only a partial improvement has been achieved mainly thanks to the implementation of the new financial limits and the removal of different rules for non-priority services.


Source: PETERKA & PARTNERS Law Offices

This article is of an informative nature only and under no account can it be considered to be a legal opinion.
Should you need any further information on the issues addressed in this article, please contact our Law Office:
PETERKA & PARTNERS
Tel. +421 2 544 18 700
E-mail: office@peterkapartners.sk
www.peterkapartners.com

* * *

Founded in 2000, PETERKA & PARTNERS has grown into a full-service firm with 75 lawyers and seven offices in Prague, Bratislava, Kyiv, Sofia, Moscow, Katowice and Bucharest and has built up a highly regarded practice within the CEE region.
PETERKA & PARTNERS has been consistently ranked among the best practices in the leading publications on the legal services market, such as Chambers, Legal500 and IFLR1000.


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