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The Public Procurement Framework in Romania During the COVID-19 Crisis

The Public Procurement Framework in Romania During the COVID-19 Crisis

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The COVID-19 pandemic constitutes an unprecedented challenge that continued to escalate worldwide, including in Romania. Among the severe consequences affecting people’s health, the pandemic had a negative impact on the businesses across all sectors as well.

From the suspension of courts activity to employment issues, real estate industry clobbered or M&A transactions cancelled or postponed, Romania was subject of a severe hit both on the individual businesses and the overall economy, not to mention the measures taken as far as individuals are concerned such as the suspension of the employment contracts.

Nonetheless, COVID-19 is considered a health crisis that requires swift and smart solutions and agility in dealing with an immense increase of demand for medical equipment or similar goods and services while certain supply chains are disrupted. It is well-known that hospitals from all over the world met difficulties in the procurement of the medical equipment in order to ensure the necessary stocks, and Romania was no exemption. The rapid spread of the virus in our country generated the urgent need for materials, medicines and equipment necessary to combat the epidemic.

Although the legislative framework on public procurement has undergone relatively recent changes when the Government Emergency Ordinance no. 23/2020 on amending and supplementing some normative acts with an impact on the public procurement system was adopted, the current context has led to the shaping of non-unitary or at least unclear practices regarding procurement medicines and equipment needed to control the epidemic caused by COVID-19.

Therefore, the Romanian legislator has adopted lately a set of normative acts aimed to flow the purchase of the materials mentioned supra, some of them raising interpretations as presented in the following rows.

To begin with, given the fact that the decentralized and non-unitary procurement of specialized equipment would lead to very long periods of time, leading to delays in the endowment of the beneficiary units, with a possible risk to public health, during February 2020 the Government Emergency Ordinance no. 11/2020 on  emergency medical stocks, as well as some measures related to the establishment of quarantine was adopted. Its provisions state that the National Office for Centralized Procurement has competence in awarding in cases of emergency, in a negotiated procedure without publication, so as to cover the necessity of urgent medical stocks such as thermal scanners, isolation chambers, islets, medical fans, medical monitors, injectors, coveralls, protective visors, gloves, protective masks, disinfectants etc., subject to prior compliance with the public procurement applicable legal provisions, namely Law no. 98/2016 on public procurement.

Subsequently, among the measures established by the Decree of the President of Romania no. 195/2020 on the establishment of the state of emergency on the territory of Romania and by Decree no. 240/2020 on the extension of the state of emergency we highlight the possibility of the authorities such as hospitals, ministries, public health directorates to purchase, this time, directly, regardless of the estimated value of the purchase, materials and equipment necessary to combat the epidemic caused of COVID-19.

Specifically, this Decree stipulates that both the central public authorities and legal entities in which the state is the majority shareholder, as well as the public health directorates and health units, respectively the ministries with their own health system, can directly purchase materials and equipment necessary to combat this epidemic.

As the 30 days period established for the state of emergency to last were close to expire, the President enacted Decree no. 240/2020 for the extension of the state of emergency. By its provisions, the sphere of the authorities entitled to make the award has been expanded also to other authorities that can be considered contracting according to the law. As the latter are concerned, the possibility for them to purchase products or services that exceed the value of  RON 135,060, respectively the purchase of works whose value exceeds the amount of RON 450,200, without establishing, however, a maximum value threshold has been expressly specified.

Therefore, if the direct procurement procedure is used in the situations expressly provided for by the two Decrees, for the remaining procurements generated by the pandemic with COVID-19 the direct negotiation procedure will be used without prior publication of a notice, this being in accordance with the provisions of the Guidance from the European Commission on using the public procurement framework in the emergency situation related to the COVID-19 crisis of 1st April 2020, published in the Official Journal of the European Union no. 2020/C 108 I/01.( “The Guidelines”)

This Guidance has been elaborated in order to fully empower the public buyers under the EU framework to engage with the market and in matchmaking activities in order to procure medical supplies in the fight against COVID-19 and explains which options and flexibilities are available under the EU public procurement framework for the purchase of the supplies, services, and works needed to address the crisis.

The Guidelines take into account the  procurement in cases of urgency and extreme urgency, in the first case giving the possibility to use short deadlines such as submission of tenders, submission of requests to participate, receipt of tenders etc. so that open or restricted “accelerated" procedures respect the principles of equality. treatment and transparency and ensure competition even in emergencies. In emergency situations which make it impossible to comply with the time limits applicable under normal conditions, contracting authorities have the possibility to shorten them.

In line with the above, according to art. 32 para. 2 c) of Directive no.  2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement, Member States may provide that contracting authorities may award public contracts by a negotiated procedure without prior publication in so far as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with. The circumstances invoked to justify extreme urgency shall not in any event be attributable to the contracting authority.

The Commission thus confirms that the pandemic is subject to the notion of extreme urgency, and that the specific needs of hospitals and other health institutions to provide treatment, personal protective equipment, ventilators, extra beds and hospital and intensive care infrastructure, including all technical equipment cannot be foreseen and planned in advance, thus constituting an unforeseen event for the contracting authorities.

Returning to the Romanian legal background, our attention has been caught by the provisions of the Decree no. 240/2020 on the extension of the state of emergency, namely article 42 para. 5 stating the fact that during the state of emergency, in order to ensure the continuity of detainees' feeding and appropriate individual hygiene, the units subordinated to the National Administration of Penitentiaries may directly purchase food, cleaning and individual hygiene items for persons deprived of liberty, with the prior authorization of the General Director of the National Penitentiary Administration.

In this context, the situation is relatively unclear in comparison to the purchase of medical products, as the need for units subordinated to the National Penitentiary Administration cannot be considered a similar situation, given that food and hygiene items for persons deprived of their liberty are common purchases, regardless of the outbreak of a pandemic.

In addition, penitentiaries draw up annual public procurement programs, based on reports of need submitted by the units' departments, taking into account the objective needs of products, services or works. For example, the programs contain award procedures for the supply of pastries, personal hygiene products, maintenance services, etc.

Therefore, in accordance with the Guidelines, the procurement provided by the provisions of Decree no. 240/2020 cannot be seen to respect the idiomatic “spirit of the law”, namely Directive 2014/24 / EU on public procurement, so that the purchase of food, cleaning and personal hygiene products for persons deprived of their liberty is possible under the same conditions. The Commission does not regard hospitals and hospital institutions as the sole contracting authorities, but the purpose of using an exceptional procedure arises from these offered levers which reflect the Commission's interpretation of treaties, public procurement directives and the case law of the Court of Justice of the European Union.

As a first conclusion, the exceptional procurement procedures must be applied in the context in which they are necessary to prevent or eliminate the situation caused by the spread of SARS-CoV-19 virus in Romania, applying during the state of emergency.

As the Commission stated, the European Union directives are not characterized by procedural constraints to this end, this applicable framework in public procurement being characterized by all the flexibility needed to procure goods and services directly related to the COVID-19 crisis as quickly as possible.

Furthermore, in other countries of the EEA, public procurement legal framework resulted in changes related to the spread of the epidemic. For instance, in Italy, representing the epicenter of the epidemic in Europe, the urge for medical supplies was obvious, and the state of emergency had been declared since the end of January 2020. In accordance with the Italian Procurement Code, direct awards or tender procedures can be used without a previous public notice in relation to the acquisition of devices linked to the COVID-19 emergency. Same as Romania, Italy adopted measures to speed up tender procedures in certain sectors by increasing the possibilities for contracting authorities to use simplified procurement procedures, by enacting the Law Decree dated 17 March 2020, also known as “Cura Italia” Decree.

The Law Decree stated that the contracting authorities can use the negotiated procedure without prior call for tenders so that the contracts can be immediately concluded and, subsequently executed if it comes to purchasing IT products necessary to increase smart working for the administrative authorities and also for purchasing tools for the educational institutions for the remote teaching.

Therefore, we can observe that the legislation of the countries affected by the pandemic was significantly adjusted in order to help the economy and to fight by all means the spread of the virus. However, derogations from the public procurement rules must be used in accordance with the notion of extreme emergency, so as the contracting authorities derogate in this case from the basic principle of the Treaty of the European Union concerning transparency, the European Court of Justice requiring as well that the use of this procedure remains exceptional. Of course, as mentioned before, these procedures cannot be exclusively seen with the object of purchasing medical supplies, but also regarding other supplies necessary to prevent and stop the spread of the virus used accordingly.

The Romanian authorities have officially declared that the state of emergency will end on 15 May, this meaning that many of the derogatory adopted rules will not produce effects whatsoever, but it is not excluded that other sets of normative acts will be adopted in line with the need to restore the situation prior to COVID-19 crisis.

 By Dana Bivol, Partner and Dora Bidica, Attorney at Law, Popescu & Asociatii

Popescu & Asociatii at a Glance

Popescu & Asociatii is a top Romanian business law firm founded to provide premium integrated services to premium businesses, both in Romania and abroad, in all the relevant areas of practice, and especially in all industries of interest for active economic players.
Established as a full-service law firm, Popescu & Asociatii genuinely combines the expertise and exposure in the consultancy field with high level of strategic capabilities and experience in trials and court rooms, to provide state-of-art advice and representation both in local and cross border deals and files. The firm acts for corporation, local companies, banks and financial corporations, as well as for investment funds and entrepreneurs in all the areas of law: Banking and Finance, Capital Markets, Corporate and Commercial/Mergers and Acquisitions, Competition and Antitrust, Dispute Resolution, Employment, Compensations and Benefits, Energy and Natural Resources, Environment, Healthcare & Pharmaceuticals, Intellectual Property and GDPR, IT, Telecom & Media, Infrastructure, PPP and Public Procurement, Prevention, Compliance and White-Collar Crime, Real Estate and Construction, Restructuring and Insolvency, Transport Law.
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