Mr. TOMISLAV DONCHEV
DEPUTY MINISTER-PRESIDENT
ON EUROPEAN FUNDS AND THE ECONOMY
SUBJECT: Publications for public discussion Draft law on public procurement
DEAR MR DONCHEV,
In connection with the Public Procurement Bill published for public discussion, the Confederation of Employers and Industrialists in Bulgaria, after polling its members, expresses the following position:
Public procurement occupies a significant share in the structure of the Bulgarian economy. They are a key tool for the economic development of individual entrepreneurs in our country in the conditions of low local consumption and shrinking foreign markets. It is for this reason that it is essential to create a new, more precise legal framework that will, on the one hand, implement the new requirements regarding public procurement established by the new Directives, but will also liberalize the sector by creating opportunities to encourage small and medium-sized enterprises, which has been declared as a main goal in a number of strategic documents at the national and European level.
In connection with the above, on 09.04.2015, the Ministry of Economy published for public discussion a draft of a new Law on Public Procurement, and it should be noted that it gave too short a deadline for expressing opinions on such a key normative act. Our analysis of the provisions and new rules set out in the draft has put some issues on the agenda that we believe should be clarified before the procedure for adopting the law begins.
The most general review of the provisions showed that a significant part of the texts needed further refinement, in order to overcome linguistic, stylistic or admitted logical inconsistencies. There are too abstractly formulated texts, references to by-laws, which is a path in the direction of changing rules and requirements on the fly, which creates some legal uncertainty. In addition, the project introduces new terms that need additional language editing; the same applies to the definition of part of the procedures. In this regard, "collecting bids with advertisement" is not defined as a type of procedure. We believe that the nature of this proceeding should be clarified.
With regard to the collection of bids with an announcement in the draft PPA, it is provided that this bid collection announcement will be published only in the "Buyer Profile" of the contracting authority, and there will be no information about the announcements in the Public Procurement Register. The absence of a public register from which applicants and participants can be informed about the upcoming orders of the contracting authorities would significantly complicate and limit the possibility of participation of the interested persons at the national level.
In order to comply with the principle of publicity of public procurement, we consider it necessary to preserve the current order, in which the announcement for the collection of offers is also sent and published in the Register of Public Procurement. It should be taken into account that this is an active, apart from normative, technical and organizational procedure. In view of this, by keeping it, no unjustified technical or financial difficulties will be imputed to the contracting authorities. In this situation, the restriction of the principle of publicity in the conduct of this type of procedure appears unjustified and contrary to the main goals of the law.
The removal of the requirement, and therefore the possibility, to publish tender notices in a centralized public register will also lead to a clear negative result for the interests of many contracting authorities, who will not be able to count on their notice reaching all potential contractors and accordingly receive competitive, market offers.
An essential feature, which as a trend is also declared in the new Directive, is the promotion of the division of public procurement into separate items and an explicit motivation why the Contracting Authority has decided not to award the contract by dividing it. On the other hand, however, the drafter of the law did not provide for the possibility of combining certain separate positions and assigning them to one contractor, with a view to better performance of the order. Even when announcing the order under the Directive, the Employer should determine which specific items can be combined. We believe that this is a positive approach that should be encouraged and will overcome hypotheses where a better economic and efficient result of the public procurement can be achieved. At the same time, we consider it unfounded in certain areas that the Court of Justice explicitly obliges the contracting authorities to issue public procurements, dividing them into separate positions. This is a highly binding condition, which contradicts the principle that the Contracting Authority alone assesses whether the division of the subject into separate items is expedient or not.
It is noteworthy that the regime of "reserved orders" in this draft law is not fully understood, as essential moments of the awarding of such orders are not settled, but are referred to a future Rulebook. This creates legal uncertainty, and although the law is considered a "framework", key points should be regulated at the legal level, namely - the conditions for participation, the consideration of offers, the ranking and the conclusion of a contract. These are all circumstances concerning the decision to select an executor and would serve as arguments in a possible attack on such a decision. In addition, it is noticeable that the range of persons for whom orders can be reserved has been expanded, namely 30 percent of their list consists of people with disabilities or those in a disadvantaged position. It is not clear what the requirement for disability should be and whether it will be introduced at all, but the hypothesis of disadvantaged people raises legitimate concerns - how will it be defined, who will determine the degree of inequality, the type - social, health. Formulated in this way, the text creates even wider opportunities for developing a gray sector and circumventing the law. The positive aspect of the regulation is the adopted approach of annually updating the list of services and, to some extent, the possibility of other interested parties also participating, although the approach is the same as with the current regulation of Art. 16d of the ZOP. And in this project, the legislator has introduced an imperative rule regarding the Employers - "it is mandatory to state that the order is reserved", although the creation of a preferential regime contradicts basic principles of free market competition.
In view of the principles, certain questions also arose regarding the scheduled possibility for contracting authorities to conduct market consultations before announcing orders. In general, this is a positive tool that will promote communication between experts and contractors, with the aim of efficiency and effectiveness of procurement. In the text of Article 38, paragraph 5 of the project, the hypothesis of removal of a participant - consultant is described, as there is a fundamental contradiction and mixing of conditions. On the one hand, it is the obligation of the Contracting Authority to guarantee the principle of equality of participants in a future procedure. In essence, the principle is related to equal treatment of all participants, including the consultant participant. If the Contracting Authority cannot guarantee this principle, with the actions thus described in the law, the participant should remove himself, unless he proves that he does not violate the principle of fair competition. There is an overlapping of conditions and a mixing of principles, which in turn will compromise and reduce the use of this tool. A more precise and objective regulation should be considered, which is not directly tied to the hypothetical proof of principles, which will inevitably create conditions for abstract and subjective interpretation.
Next, positive and necessary, in view of the dynamics of the market conditions in this sector, are the measures to introduce fully e-access to documentation and complete e-communication, the introduction of a single form. There are concerns regarding the technical provision of these new rules, which are mandatory under the new Directive, because the conditions for publicity do not necessarily mean guaranteeing transparency, which in turn leads to the obligation of the Employers to secure resources for electronic communication, applying the highest and most secure standards , and this is also an additional administrative burden. It is noteworthy that the law imposes an obligation for "contractors to guarantee" the security and exchange of documentation, but nowhere is a sanction provided for, which makes it possible for manipulation. In addition, the law states that "The exchange of information in the awarding of public contracts shall be carried out using electronic means of communication..." - Art. 32, Paragraph 1. The scope of the exchange also includes "evaluation of offers". This also raises some concerns at this stage.
There are certain concerns regarding the formulated "grounds for mandatory and optional removal". Terminologically, the drafters followed the approach of the new Directive and introduced mandatory and optional grounds. Among the mandatory grounds, there are known concerns regarding the exception listed in Article 48, that if the unpaid tax obligations and social security contributions of a given participant do not exceed more than 2 percent of the estimated value of the order, then the latter should not be removed. Allowing such a deviation from a mandatory basis compromises a principled postulate and does not encourage receipts in the state treasury. We believe that participants with unpaid debts to the State should not be tolerated.
As for the non-mandatory grounds, they would essentially vitiate the public procurement process if they were not explicitly stated by the contracting authority, which on the one hand makes it pointless to define them as optional. There is a concern regarding the exception regarding hypothetical participants in bankruptcy proceedings who, if they prove that they can fulfill the order and the contracting authority has expressly foreseen this, may not be removed from participation. Such a hypothesis is admissible in the event of a recovery procedure within the framework of open bankruptcy proceedings, but in this sense there are some doubts as to how appropriate it is to use public procurement as a tool for the recovery of commercial companies. There is a similar doubt regarding the possibility listed in Article 113 of the project that the receivables due under public procurement contracts and subcontracts are transferable, can be staked and can be enforced. To what extent is it appropriate for receivables under contracts in the execution of public procurement to serve as collateral and in relation to them to carry out forced collection? This hypothesis should be reconsidered more precisely with a view to guaranteeing the security of the market and in particular in the public procurement sector.
In general, we believe that the selection criteria are not comprehensively formulated and should be reconsidered. We believe that the return to GFO as a measure of financial condition, for example, is not correct in our opinion.
Regarding the evaluation criteria, the main points are described in detail in the project, with again the leading requirement being the introduction of objective criteria for the evaluation of quality indicators. This is a significant problem even to this day, which gives serious scope for independent and subjective interpretation, in the exercise of control. In principle, objectivity in competitive procedures is postulated at the European level, and regulating public procurement there is no way to deviate from this requirement, but a more flexible approach should be adopted, which seeks quality based on expert assessment - this is precisely the tool for overcoming subjectivity and achieving quality rather than defining a "criterion" that would have no way of achieving the desired effect but would lead to the imposition of sanctions. Perhaps it should also be considered in this direction when writing down the rules regarding technical specifications and/or evaluation criteria, in particular the third type – quality/price ratio.
There are certain concerns and the detailed regulation of voidable contracts - a special civil law regime is being introduced - however, the hypotheses described in Art. 115 of the project to a very large extent vitiate the procedures and raises some hesitation as to how appropriate it is to allow a decision to award an order, for example, without an award procedure having been carried out, in the presence of a basis, such as the first hypothesis. Failure to attack such a procedure calls into question the entire regime, which should guarantee transparency and, above all, legality. There is also a separate issue with the too short deadlines for attacking voidable contracts and framework agreements, compared to the general 3-year preclusion period. At the same time, referral of unresolved issues is made to the Civil Code. Thirdly, part of the hypotheses concern the decisions of the contracting authority, which, according to the draft law, are INDIVIDUAL ADMINISTRATIVE ACTS and are subject to control and cancellation under the order of the Public Procurement Act, subsidiarily under the order of the APC. The latter should also be specified as regulation and hypotheses of attacking the acts. There is a mixing of civil law, administrative law principles and references to different procedural laws, which will create uncertainty.
On the other hand, increased sanctions are foreseen in case of non-observance of a specific procedure. For example, the sanction for concluding a contract without a procedure under the Civil Code has been increased 5 times - art. 249, para. 2 - which is illogical in view of what was stated in the previous paragraph. We believe that the sanction should be reduced and the issue of sanctions and the consequences of violating the law should be conceptually resolved - how will the civil and administrative-remedial consequences be combined.
With regard to the amendments in connection with the appeal under Art. 195, the term for an opinion on a submitted appeal against a decision, action or inaction of the Contracting Authority is significantly limited. The 3 days provided for are extremely insufficient and in the case of procedures with a more specific or complex subject, it may lead to an objective impossibility of motivation. It is proper to extend the deadline or, if it is kept, to change it to business days, not calendar days.
The draft PPA creates too many powers for contracting authorities and creates conditions for subjectivity, and hence for abuses.
The new ZOP provides for the creation of Official Lists of approved business entities and certification of bodies. In this regard, Article 62 - it is not clear which lists are in question, and Article 63 introduces a frankly restrictive regime limiting the freedom of movement of goods and services. With regard to Art. 64, the draft of the ZOP lacks regulation of the cases of offering prices that are subject to regulation. The current version of the Public Procurement Act takes into account the fact that offers in public procurement procedures are prepared under parameters strictly defined by the contracting authorities. In this situation, in certain cases it would be objectively impossible to reconcile the regulatory principles for pricing with the requirements defined by a specific contracting authority, which would deprive some potential contractors of the order from participating. This could lead to significant damage to the economic interests of individual traders, in a volume exceeding the purpose of the regulatory intervention and equivalent to a partial ban on carrying out economic activity, at the same time to the detriment of the financial interests of public procurement contractors and, accordingly, the budget. Given the above, we consider it necessary to include in the bill a provision analogous to the current norm of Art. 55, para. 3 of the ZOP. In this regard, we propose in Art. 64 of the draft law to add a new paragraph 12, with the following text: "(12) When the prices of the goods or services subject to public procurement are subject to regulation, applicants or participants may offer offers with prices that are lower of the regulated."
The presentation made is only a primary and general analysis of the draft of a new Law on Public Procurement, with which we only aim to outline some of the main questions that raise doubts, without going into unnecessary specifics, but rather by asking principled issues that follow to be decided at the project stage.
With respect,
Eugene Ivanov
Ex. director
http://www.turbulence.tech