After the announced reform of the public procurement procedures in 2017, at the beginning of this year the National Parliament adopted the new Public Procurement Law (“Law”). This new piece of legislation embodies the current EU public procurement rules and sets the legal landscape which is expected to result with transparent and efficient spending of public funds. The Law entered into force on 1 April 2019, but its applicability will be de facto prolonged in practice due to the start of the presidential elections.
Change of the contract award criteria
One of the key novelties is the introduction of the ‘most economically advantageous tender’ as main contract award criteria, instead of the current ‘lowest price’ criteria. In addition to harmonisation with EU legislation on this matter, this change is somewhat expected, since the previous practice showed that low prices do not always mean low costs at the end for the contracting authorities. At first glance, the biggest challenge this approach faces appears to be the implementation, since it will require significant knowledge of the respective goods and services in order to identify the best solution for the contracting authority. This will put into test the capacity and competences of the public administration to properly prepare tender documentation and evaluate the received bids.
This replacement of the selection criteria is naturally followed with abandoning the mandatory use of electronic auctions. Instead, contracting authorities are no longer obliged to use an electronic auction in every public procurement.
New types of procedures
The new awarding procedures can be roughly classified into two separate groups, as simplified procedures (procurements of small value and a simplified open procedure) and complex procedures (competitive procedures with negotiation and innovation partnership). On one hand, the procedure for procurements of small value will be used for procuring goods and services with an estimated value of up to EUR 10,000 – i.e. for works up to EUR 20,000, while the simplified open procedure for goods and services up to EUR 70,000 – i.e. for works up to EUR 500,000. On the other hand, the other two procedures should serve for the more demanding and specific objects of public procurements.
In addition to these four procedures, the contracting authorities can use: an open procedure; a restricted procedure; competitive dialogue; and a negotiated procedure with and without prior publication.
First of all, the contracting authorities are obliged to publish each January on the Electronic System for Public Procurements an annual plan for public procurements. This will enable the potential bidders to monitor the market timely and prepare themselves for upcoming tenders. In addition, they could contribute to the preparation of the tender documents by submitting comments during a technical dialogue. However, unlike the previous one, the new Public Procurement Law entitles only the contracting authorities to carry a technical dialogue on a voluntary basis, and does not contain a threshold or condition when this mechanism must be used in practice.
Further on, some of the changes are intended to facilitate the participation of small and medium-sized enterprises in public procurements. For example, bidders are not required to provide bank guarantees in procurements of small value and with simplified open procedures. Also, a significant change that could impact these kinds of companies is the possibility for subcontractors to request direct payment from the contracting authority. If there is no direct payment agreed, the contracting authority has to receive, via the main contractor, a written statement from the subcontractor that its receivable is settled within 60 days as of the day of the payment to the main contractor.
Starting from 1 January 2020, contracting authorities could use the so-called “reserved contracts”, which will be intended for entities whose main aim is the social and professional integration of disabled or disadvantaged persons, or for socially vulnerable groups and those who reinvest their earnings for this purpose.
Capacities for participation
The criteria for assessing the capacities of the bidders have been upgraded. As an example, until now only the bidders who were subject to a criminal court decision could not participate in a public procurement. The Law expands this ban also to the bidders whose members of management or supervisory bodies are subject to a final and valid court decision in the last five years for crimes such as: corruption, child labour, human trafficking, money laundering or terrorist financing, etc. Additional exclusion grounds are also added.
As was the case with the previous public procurement regime, under the new Law, bidders can also rely on the capacities of other entities regarding economic and financial standings or technical and professional ability, regardless of the legal nature of the links between these entities.
Protection in public procurements
The competent authority to review any breaches of the new Public Procurement Law continues to be the State Appeals Commission upon Public Procurement (“State Appeals Commission”), an independent state body appointed by the National Parliament. With respect to the procedures before this body, a significant change is the possibility to submitting complaints by electronic means, via the Electronic System for Public Procurements, as well as the possibility for issuing interim measures. The decisions of the State Appeals Commission are subject to judicial scrutiny before the Administrative Court. To accelerate the review process, the Administrative Court now has to decide upon the complaint if it has annulled the decision by the State Appeals Commission.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Ljupka Noveska Andonova, Senior Associate and Veton Qoku, Senior Associate Karanovic & Partners