Our firm has extensive experience both in advising foreign contractors wishing to submit bids in tenders and in advising the contracting authorities organizing tenders. With this experience in mind, we would like to draw the reader’s attention to the fact that the Czech law regulating public procurement procedure (i.e. primarily Act No. 137/2006 On Public Procurement, as amended – hereafter “PPA”) is one of the most strict and formalistic laws in the EU placing an exaggerated importance on meeting formal requirements, especially when foreign suppliers are involved. It is therefore no wonder that many foreign suppliers fail to submit a formally correct bid, which often results in their exclusion from further participation in the tender, without effective recourse, or in cancellation of the tender altogether. For this reason we would like to provide a simple overview of what foreign suppliers wishing to submit a bid in a tender must demonstrate to meet the basic qualification criteria in the full extent. This article does not deal with professional qualification criteria or technical qualification criteria.

Section 51 (7) PPA stipulates that foreign suppliers demonstrate their qualification:

  • In the manner prescribed by law valid in the country of their seat (registered headquarters), place of business or residence of the supplier;
  • In the extent required  by PPA and by the contracting authority (in the tender documentation);
  • In original language with official translation into Czech.

Official translation is not required when the tender documentation or applicable international treaty says otherwise. This does not apply to documents in Slovak.

In the event that a specific document required by the contracting authority is not issued under the law valid in the country of their seat (registered headquarters), place of business or residence of the supplier, or if the obligation, whose demonstration is in tender documentation defined, does not exist there, foreign suppliers may demonstrate compliance / qualification by an affidavit.

The basic qualification criteria are defined in Section 53 (1) PPA. Foreign suppliers need to demonstrate compliance with these criteria both for the Czech Republic and for the country of their origin (seat, residence); these basic criteria require that the foreign suppliers / bidders:

  1. have not been finally sentenced for criminal offences listed in Sec 53 (1)(a) – criminal offence committed on behalf of an organized crime group, a criminal offence involving participation in an organized crime group, money laundering, complicity, the acceptance of bribes, bribery, indirect bribery, fraud or loan fraud, including cases involving preparation or an attempt or participation in any such criminal offence or if a sentence for the perpetration of any such offence has been expunged – this must be demonstrated both for the supplier’s corporation and its statutory bodies (usually directors);
  2. has not been finally sentenced for a criminal offence associated with the subject of the supplier's business activities – again this must be demonstrated both for the supplier (corporation) and its statutory bodies (usually directors);
  3. does not owe tax;
  4. does not owe insurance, social security payments or contribution to state employment policy;

All these must be demonstrated both in relation to the Czech Republic and in the country of origin (where the corporation has a seat, or if the bidder is a natural person, residence).

To obtain these documents in the Czech republic, foreign suppliers / bidders should proceed as outlined below:

  1. With respect to good standing / non-existence of criminal record relating to requirements defined in Sec 53 (1) (a) and (b) PPA, bidders should apply for an Extract from Criminal Registry. These Extracts can be obtained at CzechPOINT (http://www.czechpoint.cz) or directly at Criminal Registry office located at Soudní 1, 140 66 Prague 4 (http://portal.justice.cz/Justice2/Soud/soud.aspx?o=203&j=213&k=2027&d=9354). This document may be obtained in person at both the CzechPOINT or Criminal Registry office or by post. The fee for one document is 100 CZK in the form of a duty stamp. Applications for EU citizens may take some time (depending on the response time in the applicant’s state authority in the home country) as the Czech Criminal Registry office request corresponding confirmation also from the country of origin (regardless of the fact that the bidder needs to submit the same document also from his home country) prior to issuing its own, for the Czech Republic. Applications can be also made at Czech embassies abroad. Please note that these criminal registry excerpts must be submitted both the corporation itself and its directors, for both countries (i.e. CR and the country where the corporation has the seat). It is therefore highly advisable to start the application process for these documents as soon as one decides to participate in the tender.
  2. Requirements defined in Sec 53 (1)(f) PPA – financial good standing – is demonstrated by confirmation issued by local tax authority and with respect to consumption tax by an affidavit. This confirmation is issued to foreign suppliers at Financial Authority for Prague 1 (which is local for all foreign subjects not having a corporation in CR), at Štěpánská 28, 112 33 Prague 1 (http://www.financnisprava.cz/cs/financni-sprava/organy-financni-spravy/financni-urady/app/urad-kontakt/2001) against an application in writing. The usual time for processing this confirmation is 30 days and the fee (in form of a duty stamp) is 100 CZK. In reality this confirmation is usually processed within week or ten days; however this should not be relied on 100 %.
  3. Requirements defined in Sec 53 (1)(h) PPA – no debt in social security area – is demonstrated by confirmation issued by local authority dealing with these issues, which is, for foreign suppliers not having a local corporation, the Prague Social Security Administration for Prague 1, Biskupská 1752/7 (http://www.cssz.cz/cz/kontakty/krajska-a-okresni-pracoviste/praha/uzemni-pracoviste-praha-1.htm); the fee and processing time is identical to the financial good standing.

If these documents (such as the Criminal Record extract) are not issued in the country where the bidder has the seat, bidders may replace it by an affidavit. The remaining basic qualification criteria as defined in Sec 53 (1) letters c) to e) (unfair trading, insolvency, liquidation) plus letters g) - insurance arrears or penalties for public health insurance, i) to k) PPI  (disciplinary measures, tender blacklist, illegal employment) may be demonstrated by affidavit (signed by statutory directors of the corporation).

With respect to all documents thus submitted please note than none should be older than 90 days as of the submission date (respectively, application to participate or preliminary bid submission, as applicable). All these documents may be obtained for foreign supplier by a proxy and in this connection you should be aware that the signatures on respective powers of attorney must be officially verified (notarized) and Apostilled, of required by applicable international treaties.

The main point of this exercise is that foreign suppliers / bidders submit these documents both for the Czech Republic and for their home country, and, depending on the document, both for the corporation (who is the actual bidder in most cases) and for its all statutory directors. This is obviously quite time-consuming and complicated, especially when a corporation has directors from different countries (and outside the EU) and if the state authorities in the country of origin are even more formally minded than state authorities in the Czech Republic. The crucial aspect is therefore time. All these processes must be started as soon as reasonably possible so that by the submission date all documents will have been duly issued, delivered and translated (where necessary) to be included with the bid / application to participate.