Public procurement is set to become fairer and more transparent under changes proposed by a group of MPs and approved by Slovak Parliament. The amendment was passed into law on 11 February 2011 and became effective on 1 April 2011.
The changes were designed to boost competition and should lead to more efficient use of public funds. Whilst the amendment aims at reducing the scope for the process to be manipulated, its drafting which is far from perfect is likely to make the life of public authorities and economic operators even harder at times. Nevertheless, it is hoped that more businesses will be encouraged to participate, which will in turn increase competition and deliver better value for money to the public sector.
First and foremost, the amendment changed the thresholds for public supplies falling under different categories of contract awards. The idea is to make more contracts subject to a more transparent regime of procurement. For example, the threshold for contracts at or above which contracting authorities should follow procurement rules changed to €20,000 for construction works and €10,000 for other goods and services compared to €120,000 and €30,000, respectively.
Before the amendment came into effect, public procurement procedures (with special thresholds) applied also to contracts more than 50% funded by contracting authorities even if procured by entities which regularly do not fall under the public procurement regulation. The special thresholds and 50% rule was removed by the amendment. This change impacts heavily on foreign investors who benefit from investment incentives and receive cash funds to procure equipment, works or services. Since the effectiveness of the amendment, they will be mandated to procure them through the public procurement process.
Additional rules were approved for notifying the Public Procurement Office (“PPO”) after contracts are concluded or the procurement is cancelled. This includes submitting minutes of an assessment of whether conditions for participation (qualification criteria) have been met, the bids themselves and further detailed reports and minutes on various procedural steps. This would create an immense amount of work for the PPO given the volume of procurement procedures and make it likely that contracting authorities and contracting entities will increasingly require tenders to be submitted also electronically.
Contracting authorities and contracting entities would also be required to send the PPO a copy of the executed contract, concession contract, framework contract and any contract amendments unless they have already been disclosed under freedom of information laws (in which case they must notify the PPO of that disclosure). This is closely related to the obligation of the PPO to file a complaint with court for the annulment of a contract, concession contract, framework contract or contract amendment when it has been entered into unlawfully by the relevant contracting authority or entity or other person. The statute of limitations is one year after execution of the respective contract and the obligation extends also to any public prosecutor.
Changes were approved to reduce the number of candidates failing because they do not meet the qualification criteria. This involves requiring contracting authorities and entities, when publishing a procurement notice, to justify the appropriateness of each criterion relating to the bidder’s financial and economic standing and its technical or professional qualification. Contracting authorities and entities will also now be obliged (instead of merely having the option) to ask for explanation or supplementing of submitted documents needed to verify suitability of candidates.
Contrary to expectations, the amendment did not restrict the ability to exclude candidates who submit tenders with an abnormally low price nor do they define what would amount to it. Instead, the term was replaced by ‘abnormally low tender’, to consider all aspects of tenders, not only price and to align the law with the terminology used by the respective EU directive.
Candidates could be required to attend a personal consultation to explain their abnormally low tender, which could in theory allow unlawful contact with candidates. This seems to represent a departure from the principles of equal treatment and transparency.
The introduction of mandatory electronic auctions (eAuctions) for public supply contracts is one way in which it is hoped to improve transparency, efficiency and economy in the procurement process. EAuctions should be compulsory also for public service contracts and public works contracts where it is possible to specify technical requirements, as well as for contracts using the dynamic purchasing system and for recommencing among parties to a framework contract, but the drafting of the respective provision makes it quite difficult to decipher what the actual obligations are.
Contracts excluded from the eAuction procedure are those awarded using the competitive dialogue procedure, the negotiated procedure without publication, contracts below the limit (but only until 31 December 2012) and contracts involving small amounts.
In addition, the so-called non-priority services, such as legal services, would no longer be subject to exceptions or special rules. Although Member states are permitted by EU law to set their own rules for non-priority services as there is little likelihood that participants from other member states would be involved, Slovakia decided to unify the rules which means that there would be no distinction between priority and non-priority services in practice.
The procedures for contracts below the threshold also changed: tenders have to be drafted and submitted within 20 days; and they would also have to be publicised in EU and PPO bulletins.
Currently, Ministry of Justice supervises the drafting of a comprehensive Public Procurement Act amendment, and it is likely that a wholly new act will be passed into law early next year, replacing the existing Public Procurement Act, which has seen far too many unsystematic amendments.
Law: amendment to Act 25/2006 Coll. on public procurement; Act 211/2000 Coll. on free access to information, as amended