We remind everyone that on 1 August amendments to the Public Procurement Law come into force. These mainly concern attempts to restrict tax-dodgers’ participation in public procurement.

First, the tenderer and applicant, along with their subcontractors, must not have tax debts when the procurement is initiated. The amendments make major changes to exclusion of tenderers from the procurement procedure due to tax debts. In particular, the tenderer or applicant will be excluded from the procurement procedure if the tenderer or its subcontractors have tax debts:

  • on the day when the contract announcement has been published in the home page of the Procurement Monitoring Bureau;
  • on the day when the procurement commission has decided to initiate the procurement, if the contract announcement is not published in relation to the procurement procedure;
  • on the day when the decision has been adopted about possible granting of rights to conclude the contract (and the tenderer is covered by this decision).

In addition, the amendments actually deny tenderers or applicants the option to pay their tax debts to avoid exclusion from the procurement procedure, as was practised previously.

In essence, the same exclusion regulation has also been newly introduced for so-called "small" procurements, namely, procurement of public supplies or services with an expected contract price of EUR 4,000 or more but less than EUR 42,000, and public procurement of construction works with an expected contract price of EUR 14,000 or more but less than EUR 170,000.

Second, the contracting authority must verify compliance of all tenderers and applicants (and their subcontractors) with the exclusion regulations, instead of only those tenderers and applicants who should be invited to submit offers or who should be granted the right to conclude a contract, as was practised previously.

Third, the contracting authority will have to assess whether the offer is not unreasonably cheap in all cases when the average hourly rate of the tenderer or the indicated subcontractors in any of the profession groups is:

  • less than 80% of the employees’ average hourly rate in the respective professional group according to the data collected by the State Revenue Service and published on the home page of the State Revenue Service; or
  • less than the minimum hourly rate set by the state.

Additionally under the amendments:

  • The contracting authority must require that together with the offer the tenderer submits printouts from the electronic declaration system of the State Revenue Service regarding the hourly rate indicated by the tenderer and its subcontractors for professional groups.
  • The tenderer will be entitled to explain the difference between the average hourly rates for employees of the tenderer and its subcontractors and the data collected by the State Revenue Service.
  • The contracting authority will have to request an opinion from the State Revenue Service regarding substantiation of the average hourly rate of the tenderer and its subcontractors.

These amendments affect several other issues as well. The full wording of the amendments to the Public Procurement Law was published in the official gazette Latvijas Vēstnesis, issue No 204 (5264) of 15 October 2014.