On the occasion of the project submitted to us to amend and supplement the Law on Public Procurement and its upcoming public discussion, the Confederation of Employers and Industrialists in Bulgaria expresses the following position:
1. Lack of motives. It is inadmissible and in violation of the provisions of Article 26, Paragraph 2 of the Law on Normative Acts (LA) to publish a bill for discussion without reasons for it. In the case when there are no reasons and it is not known whether the inspection under Art. 17, paragraph 1 of the ZNA on what are the results of the application of the current law, as well as what are the results of the inspection, if one was carried out, the discussion cannot be full and effective.
2. According to the so-called "in-house" orders. The draft law (§ 4) provides that the PPA shall not apply to contracts concluded by contractors under Art. 7, items 1, 3 and 4 with a company or state-owned enterprise for which the following conditions are simultaneously met:
a. its capital is entirely state and/or municipal property;
b. is subject to control similar to that exercised by the contracting authority over its own structural units;
c. its turnover is formed entirely by activities related to ensuring the performance of functions of the contracting authority assigned to it by a normative act."
It is also provided that when such a company or state enterprise - a contractor does not have a realized turnover due to the date of its creation or the starting moment of its activity, it is sufficient that at the time of its creation it is envisaged that its annual turnover will be realized from supplies, services or construction, which it provides to the contracting authority.
The position and practice of the European Court on the admissibility of the so-called "In house" orders, but such admissibility is available precisely as an exception ("In houseexception for public procurement"). In our opinion, what is envisaged by the draft zoning plan of ZOP exceeds the limits of the exception, opening wide the doors for distortions.
The envisaged possibility to form new companies that will enjoy the status of contractors of"In-house"procurements and for which the ZOP does not apply at all, means that a municipality will be able, for example, to register a municipal EOOD with 100% municipal capital. The municipality will appoint a manager for it and will make decisions under the competence of the company's General Assembly, providing with municipal ordinance that this company will work entirely and only for the municipality. The municipality will be able to negotiate directly with such a company"In-house" within the scope of its activity and without applying ZOP. And this company will be able, for example, to engage any and all subcontractors it wants, without needing to have material, organizational, personnel or other resources, except for municipal money to redistribute The danger of distortions and circumvention of the law is visible.
If the arrangement of "In-house" orders remain in the bill, it is imperative to provide that:
– performers of "In-house"orders can only be existing companies on the date of the amendment of the law;
– "In-house"contractors are not entitled to engage subcontractors or
- if it is decided that they have such a right, then the commitment should be made only according to the general rules of the Public Employment Service.
3. On the status of the executive director of the AOP and the vicious distinction of funds from European funds from those from the budget of the state and municipalities. The draft law prescribes the duty of the executive director of the AOP to carry out preliminary control over procedures for public procurement, fully or partially financed with funds from the European funds, of certain values, introduces a procedure for this and grants intensive rights to the executive director of the AOP.
At the same time, however, the proposed amendments to Art. 19, para. 2 and the repeal of Art. 20 limit the status of the executive director, canceling his ability to appeal to the CPC, upon receiving a report, decisions approving public procurement notices containing discriminatory conditions.
Indeed, the proposed amendments prescribe a more intensive preventive control over the spending of funds from European funds compared to the current situation, but absolutely unjustified and completely neglect the orders whose financing is provided by the budget of the state or the municipalities. Even the minimal opportunity for citizens and civil society structures to report discriminatory conditions in contract notices to the AOP and to request an appeal before the CPC is taken away.
The aspiration to absorb the funds from the euro funds and the creation of an adequate regulatory framework does not justify the lack of such when spending the funds of the Bulgarian taxpayer. According to the proposed order, these public procurements remain solely within the competence of the CPC (or the court as a higher instance) and that as a subsequent control, for which official initiation is not applied. The Commission for the Protection of Competition, in order to initiate proceedings, should be referred to the appeal procedure and only by the holder, respectively for a fee.
Compliance with community norms in the field of public procurement must be guaranteed by the Bulgarian state, which is obliged to transpose them into national law, providing guarantees for control mechanisms that are effective, effective and transparent (Article 81 of the 2004 Directive /18/EC). Similar control mechanisms are not contained in the proposed change to Article 19.
4. One more thing about guarantees for control mechanisms to be effective, effective and transparent.
a. No transparency would ensure the proposed repeal of Item 3 of Article 22 of the law, according to which currently "the public procurement register contains: 3. information on the awarded public procurements". On the contrary, through the proposed change, it is proposed to take away the only practical opportunity for the public to be informed about the results of the procedures carried out and the contracts concluded and to exercise public control over how taxpayers' money is spent. It is possible that the indicated proposal for cancellation is a mistake, insofar as it is not proposed to cancel Article 44 of the Civil Code.
b. The proposal to drop the obligation to include external experts in the composition of the commissions for conducting the procedures and to make this an optional legal option does not contain any effective control mechanisms. Quite the opposite – the institution of external experts in commissions is a positive practice and should be developed, not canceled. External to the contracting authority disinterested experts (controlled and paid by the AOP) can contribute a lot, becoming a real means of preliminary control and prevention, as long as there is a will for it.
5. According to the proposed change of the text before item 1 of Article 51. The idea to completely drop the words "depending on the nature, quantity and object of the order" will lead to the legitimization of the current mass practice of contracting authorities requiring proof of technical capabilities and/or qualifications that are unrelated to or often exceed the necessary and sufficient level of these possibilities. If the "quantity and object" revision fails, another may be adopted instead of dropping the restriction altogether.
6. The proposed limitation in Art. 56, para. 2 for the quota of subcontractors up to 40% of the volume of the order is at least unclear, insofar as the volume of an order can be in money, in weight or volume units and any conceivable dimensions . If the generally valid is accepted, namely in money, then with the variety of orders and free negotiation, this limitation will be very easily bypassed and meaningless.
7. The proposed revision of Article 70, paragraph 1 is unclear. The relevant one should be that an explanation is due in the event of a 30% deviation from the average score for each indicator and regardless of the chosen "evaluation criteria".
8. The proposed new version of Art. 77, para. 4 has the same shortcoming as commented on in item 6 above, Art. 56, para. 2.
9. In matters of sanctions, the European Directive actually allows the application of alternative sanctions instead of declaring a contract invalid in certain cases. Along with this, however, the Directive imperatively determines that even in such cases: "Alternative sanctions must be effective, proportionate and dissuasive."
The property sanctions currently in effect, in the amount of 10 or 3% of the value of the relevant contract and at the expense of the contracting authority's budget, in the vast number of cases cannot be accepted as either effective, proportionate or dissuasive.
Such sanctions, which in practice transfer money to the taxpayer from the account of one subject of budgetary support to that of another, are inapplicable in the Bulgarian conditions, especially if they are imposed without severe personal sanctions against the guilty officials.
Now the fines in force under the Civil Code for persons under Article 8, Paragraphs 2 and 3 range from BGN 100 to BGN 10,000, and in the majority of cases they are between BGN 100 and BGN 2,000. The question of how many times they are imposed such sanctions even in these proportions. Similar are the now proposed sanctions with the ZID of ZOP.
Given the actual state of practices, it is currently imperative that the sanctions under the law be significantly increased in our country. Along with this, the sanctions for violations by officials during the imposition of penalties should be commensurate with the sanctions that are applied to violators of the law.
It is also necessary to introduce appropriate liability for cases where contracting authorities violate the participants' right to access the protocols of the contracting authority's Commission, as well as for violating the above-suggested new right of access to competitive bids after the ranking has been announced. This can be done by creating a new art. 131b with the following content:
"Art. 131b. A contractor who fails to fulfill his obligation under Art. 73, Para. 4, 5 or 6 within the statutory period shall be punished with a pecuniary sanction in the amount of BGN 1000 to BGN 5000 or a fine in the amount of BGN 500 to BGN 1500 , and the person under Article 8, paragraph 2 or 3 – with a fine in the amount of BGN 500 to BGN 1500."
10. Other necessary changes that are not provided for in the ZID of the ZOP.
a. The absence of an obligation to include in the documentation for the public procurement deadlines required by the contracting authority for the implementation of the various activities allows these deadlines to be selected as indicators in the tender evaluation methodology. This, in turn, creates an opportunity for cheating between the companies and does not meaningfully contribute to the quality of the offers.
b. The introduction of an obligation to include in the documentation for the public procurement the deadlines required by the contracting authority for the implementation of the various activities will allow the introduction of a limitation on the inclusion of indicators for the evaluation of offers, measurable in time.
c. It is imperative to regulate that the technical specifications cannot contain characteristics that are both not essential for determining the object of the order and are unique for a certain product, for a certain manufacturer/supplier, candidate or participant in the procedure and/or limit competition.
d. Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 regarding the fight against late payment in commercial transactions imposes an obligation on public authorities to fulfill their obligations under concluded contracts for public procurement within 30 days, and failure to do so an obligation is tied to the obligation for a certain late payment interest.
The current PPA indicates Directive 2000/35/EC as the relevant act of European legislation. However, its provisions have not been transposed into domestic law and are even less respected in practice. With the amendments to the law, order should be put in this matter as well.
e. It is appropriate to add a new paragraph 73 to Article 6 with the following content:
"(6) The contracting authority shall, within three days of receiving a written request from a ranked participant, grant him access to the offers of the remaining ranked candidates. The contracting authority may refuse access to an offer or part of it only if this contradicts a regulatory act. "
The proposal aims to increase the transparency of the procedures by giving the ranked but unsuccessful participants the opportunity to make an adequate judgment as to whether to challenge the ranking, which they currently do not have.
In conclusion, we believe that the draft law does not meet the needs of society, as some of the proposed new texts would lead to a deterioration of the quality of the current legislation.
The draft law for the next amendment and addition to the ZOP was prepared in a non-transparent manner and without the participation of business, despite the assurance received from Minister Tomislav Donchev that business representatives would be promptly involved in the preparation of the draft law.
The publication of the draft law and the opportunity provided for its discussion in such a short time, despite the great public interest, makes this act formal. This is also the reason why we insist that the draft law be returned for revision with the active participation of business representatives.
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