Mr. TOMISLAV DONCHEV
DEPUTY MINISTER PRESIDENT
ON THE EUROPEAN FUNDS AND
ECONOMIC POLICY
MR IVAILLO CALFIN
DEPUTY MINISTER PRESIDENT
ON DEMOGRAPHIC AND SOCIAL POLICY
AND MINISTER OF LABOR AND SOCIAL POLICY
REGARDING: Decision No. 551 of 25.07.2014 of the Council of Ministers for approval
A list of manufactured and delivered goods, executed construction and provided services, which are awarded to specialized enterprises or cooperatives of people with disabilities in accordance with the Law on Public Procurement
We would like to hereby bring to your attention the position of the Confederation of Employers and Industrialists in Bulgaria /KRIB/ regarding Decision No. 551/25.07.2014, by which, on the basis of Art. 30 of the Act on the Integration of People with Disabilities in connection with § 113, par. 1 of the Transitional and Final Provisions of the Law on Amendments and Supplements to the Law on Public Procurement (SG, No. 40/2014) The Council of Ministers approves a List of the manufactured and delivered goods, the completed construction and the provided services, which are awarded to the specialized enterprises or cooperatives of people with disabilities in accordance with the Law on Public Procurement.
The Confederation of Employers and Industrialists in Bulgaria /KRIB/ believes that the amendments made to the regulations regulating the participation of specialized enterprises and people with disabilities in public procurement procedures pose serious challenges to small and medium-sized businesses in Bulgaria during the new Program Period 2014-2020 consisting of the following:
The amendment of the regulation on the participation of specialized enterprises and cooperatives of disabled people in public procurement procedures leads to an unjustified restriction of free competition and unequal treatment of applicants, and in certain sectors completely excludes the possibility of competitive participation of economic operators in public procurement – tour operators, accounting firms, suppliers of computer equipment, accounting firms, advertising and printing agencies, etc.
As a final effect of the legislative changes, a decrease in revenues in the Republican budget is expected, since the specialized enterprises and cooperatives of disabled people, in the sense of art. 40, para. 4 of the Civil Code, in force from 01.01.2014, are used with tax preferences regulated in the Law on Corporate Income Taxation - Article 178 of the Civil Code regulates the procedure for ceding the corporate tax to these legal entities. In addition, all their realized incomes are exempt from profit tax.
The new regime creates conditions for the generation of a new "grey sector" in the country's economy and the registration of "hollow" specialized enterprises and cooperatives of people with disabilities, for which there is no comprehensive and sufficient information in the Register of the Agency of People with Disabilities, and in fact the only and a sufficient condition for using the preference is precisely the entry in this Register. To date, it does not contain all information and publicity that would identify legal entities. On the other hand, it is striking that only for a period of 3 months - from 14.11.2014 (shortly after the entry into force of the new regime) to 20.02.2015, 20 new enterprises were entered in the Register, which in number equals the total registered ones for the period 01.01.2012 - 24.11.2014. Most of the enterprises are sole proprietorships with limited liability, which casts doubt on the objectives of these enterprises, because as already mentioned above, according to Art. 20 of the 2014 Directive /24/EU member states may retain the right to participate in public procurement procedures for protected enterprises or economic operators, but only those whose main purpose is the social and professional integration of disabled or disadvantaged people. At present, it is not regulated how the main purpose of the newly created and existing special entities will be established.
The regime in the Law on Public Procurement is also not precisely regulated, as all the specifics of conducting award procedures are not taken into account. For example - it is not clear how to proceed if a person enjoying a preference ultimately refuses to conclude a contract with the Contracting Authority and whether the relevant procedure should fail just because there is no suitable contractor, even though there were other offers , which were not considered under the law. Another purely practical problem arises from the point of view of more complex public procurements, which at this stage should be artificially divided into separate positions, which creates conditions for circumventing the law and contradicts basic principles in awarding public procurements. Directive 2014/24/EU explicitly mentions that in the case of mixed procurement, the applicable rules should be determined depending on the main subject of the procurement, when the various parts that make it up are objectively indivisible. The opinion of the European Parliament and the Council is categorically expressed that in order to establish whether the different parts of the contract are divisible, the case law of the Court of the EU in this area should be applied. The national legislator limits the right and the obligation of judgment of the Contracting Authority through an imperative text, the implementation of which will create difficulties in the overall process of awarding public contracts, will give the opportunity to contest the decisions of commissions, legal disputes, delay the implementation of projects of the contracting authorities, as well and other negatives of a similar nature.
On the other hand, the multitude of separate positions in which each commodity and/or servant should be separated, in the sense of Art. 16d. will also create difficulties in the administration of a public procurement with a large number of goods or services falling on the list under Art. 30 ZIHU.
In connection with the above, WE MAKE THE FOLLOWING SUGGESTIONS:
It is necessary to rethink the adopted legislative approach, as one of the possibilities is to replace the imperative nature of the provision of Art. 16d, para. 1 of the Civil Code with the right of choice for each Contracting Authority to consider whether to single out a position and/or an order reserved entirely for enterprises or cooperatives of disabled people. This would correspond, as with Article 20 of Directive 2014/24/EU, where the requirement to retain orders is given only as an option for the member states, as well as correspond to the regulated requirement for expediency in the retention of such orders in order to create "normal conditions of competition"1.
Another approach would be to revise the current List, narrowing the scope of included activities, based on an analysis to assess which sectors have the highest percentage of employment of persons with permanent disabilities and which economic operators would ensure the actual promotion of employment and social integration of disabled people. In addition, we propose that part of the supplies and services subject to reserved public procurement be separated into categories and that these categories represent a separate item, and not, as is currently the case, for each good or service included in the list. This creates problems, both in the preparation of documentation and technical specifications, and in the administration and conduct of the procedures.
In order to guarantee the basic principles in the awarding of public contracts, and to enable the Contracting Authority to choose the best offer from the point of view of the quality-price ratio, it should be provided that selection criteria, including requirements from from the point of view of qualification, the volume of completed orders should apply to all subjects. With regard to cooperatives and enterprises, part of the preferences related to financial and economic requirements, with the exemption from payment of guarantees for participation and performance and others, may remain, but in view of the conditions of the economic environment in our country, it is much more expedient to made it possible for cooperatives and enterprises of disabled people to participate on an equal, competitive basis with other economic entities, providing for certain relaxed conditions, which, however, do not violate basic market and economic principles.
In order to achieve a greater market share in the field of public procurement for specialized enterprises and cooperatives of disabled people, measures should be taken in the direction of building capacity, skills, resources that will make them more competitive, thus the need to artificially create a preferential regime for them through legislation will disappear.
The legislator should also provide for greater publicity and precision in the declaration of the data concerning the specialized enterprises and cooperatives of people with disabilities, which will create greater security also on the part of the Contracting Authority when awarding public procurements and concluding performance contracts with them.
Motives:
The preferential regime introduced by Art. 16d of the ZOP
With the latest amendments to the Public Procurement Act (Government Gazette No. 40/2014), the Bulgarian legislator significantly changed the regulation for the participation of specialized enterprises and people with disabilities in public procurement procedures. Pursuant to Art. 16d of the Public Procurement Act, in force from 01.10.2014 - When the subject of the order is included in the list2 under Art. 30 of the Law on the Integration of Persons with Disabilities (PWD), contracting authorities are obliged to announce that the order is intended for implementation by specialized enterprises or cooperatives of persons with disabilities.
The contracting authority is obliged to separate in a separate item each good or service that is included in the list under Art. 30 of the ZIHU and is part of the subject of the public procurement, and to announce that this specific position is intended for implementation by specialized enterprises or cooperatives of people with disabilities.
2. Specialized enterprises and cooperatives of people with disabilities, according to Article 28 of the Law on the Integration of People with Disabilities (PWD), are economic entities that meet the following conditions:
are registered under the Trade Act or the Cooperatives Act;
produce goods or perform services;
have a relative share of persons with permanent disabilities as follows:
a) for specialized enterprises and cooperatives for the blind and partially sighted
persons - not less than 20 percent of the listed number of personnel;
b) for specialized enterprises and cooperatives of persons with impaired hearing - no more
less than 30 percent of the rostered staff;
c) for specialized enterprises and cooperatives of persons with other disabilities -
not less than 30 percent of the rostered number of personnel;
are entered in the relevant register, which, according to the law, should contain sufficient information about the enterprise, the subject of activity, the relative share of persons with permanent disabilities employed, etc. information, expressly stated in Article 29b of the Law.
The Law does not require that persons with permanent disabilities be employed in the main activity of the enterprise, it is sufficient that they are on a basic employment contract. To date, however, there is no public information anywhere about the percentage of employed persons with permanent disabilities in specialized enterprises or cooperatives of people with disabilities, which casts doubt on how effective the social measure taken by the legislator will be.
3. In order to create "an economic mechanism that guarantees a level playing field for specialized enterprises and cooperatives and the disabled people working in them, so that they can compete effectively in the relevant markets, under the same conditions as other forms of enterprises."3 the Bulgarian legislator, with the Decision of the Council of Ministers No. 551 of 25.07.2014, updated the List4 of manufactured and delivered goods, of the completed construction and of the provided services, which are assigned to specialized enterprises or cooperatives of people with disabilities in accordance with the Law on Public orders. The list has been significantly expanded, including a number of new goods and services from the tourism, transport, IT-sectors, for example, which to date practically completely excludes the possibility of small and medium-sized enterprises developing activities in the above-mentioned sectors to participate and compete in public procurement procedures.
Pursuant to Art. 16 d, para. 5 of the PLO - the selection criteria determined by the contracting authorities should not be applied to candidates and participants who are specialized enterprises or cooperatives of people with disabilities, as well as to associations in which only such persons participate , and according to paragraph 6 of the same provision - when one or more specialized enterprises or cooperatives of disabled people, which are entered in the relevant register, and/or their associations participate in the procedure, and the offers of these persons meet the requirements of the contracting authority, the offers of other participants are not considered and evaluated.
The text of Art. 16d of the ZOP leads to the conclusion that all interested persons can participate in the "reserved" procedures on a general basis, but the participation of cooperatives and specialized enterprises of disabled people is accompanied by significant preferences. In practice, whatever selection criteria are specified and whatever requirements are set, if some of the privileged entities participate in the procedure, the entire competitive procedure becomes meaningless, regardless of the fact that the purpose of public procurement procedures is to give equal opportunity to all subjects to compete their bids and in the context of free market competition the Contracting Authority to choose the best ratio between the quality of the offered goods/service/construction and the corresponding lowest or most economically advantageous price.
4. This amendment to the Public Procurement Act, which creates a preferential regime for certain entities participating in the public procurement market, corresponds in a certain sense with the order specified in Article 20 of Directive 2014/24/EU, according to which "Member States may retain the right to participate in public procurement procedures for protected enterprises or economic operators, the main purpose of which is the social and professional integration of disabled or disadvantaged people, or to provide for such procurement to be carried out under programs to create protected jobs places, provided that at least 30% of the employees of these enterprises, economic operators or programs are disabled or disadvantaged workers."
This text foresees an opportunity (not an obligation) for the Member States, upon transposition of the Directive (for Bulgaria - until 18.04.2016), to create another additional mechanism for the integration of people with disabilities and to promote the competitiveness of their specialized legal entities by increasing their share of participation in the absorption of funds from the European Structural Funds. This in itself is a positive measure, as long as the extremely imperative and in some respects imprecise approach adopted by the legislator did not go against the principles of free market competition, the principles of equality and non-discrimination laid down at the basis of the procurement procedures of public procurement, as well as with the strategy to promote business in our country and in particular small and medium-sized enterprises, which is among the main priorities laid down in Directive 2014/24/EU5 and is among the specific recommendations6 of the Council of 08.07.2014. on the National Reform Program of Bulgaria for 2014
With respect,
Eugene Ivanov
http://www.turbulence.tech