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From revolution to compromise

Amendment to the Public Procurement Act

From revolution to compromise

On 7 October 2021, the National Council of the Slovak Republic approved the long-awaited amendment to Act No. 343/2015 Coll. on Public Procurement and on Amendments and Additions to Certain Acts ("the Act" or "the Amendment"), which introduces a number of new and innovative elements to public procurement, with their effectiveness divided into several time periods, starting from 31 March 2022.

Adjustment of financial limits

In the context of the ambition to simplify and, in particular, speed up public procurement, the Amendment increases the financial limit for contracts that are exempted from the scope of the Act from the current EUR 5,000 to EUR 10,000. These public purchases will not be subject to legal regulation and public scrutiny at all.

The amendment has also significantly affected the limits for low-value contracts, as follows:

  • goods and services from the previous EUR 70,000 to EUR 100,000 if the contracting authority is the Slovak Republic represented by its authorities (e.g. a ministry);
  • goods and services from the original EUR 70,000 to EUR 180,000 if the contracting authority is a local authority or other contracting authority (Article 7(1)(b) to (e) of the Act);
  • the services listed in Annex 1 from the original EUR 260 000 to EUR 400 000,
  • construction works from the original EUR 180 000 to EUR 300 000

On the other hand, despite the relaxation of the limits, contracts above EUR 70.000 (goods, services) and above EUR 180.000 (works) will continue to be subject to the obligation to publish a call for tenders as well as to the obligation of electronic communication, including the submission of tenders.

As of 1 January 2022, the financial limits for above-the-limit contracts have also been increased, a change triggered by a delegated regulation issued by the European Commission.

Over the-limit civil contract 

 

The contracting authority 

Procurer

Goods/service

≥ EUR 140.000

≥ EUR 215.000

(the limit shall be determined according to the type of contracting authority) 

 

≥ EUR 431.000

Services according to Annex 1 of the Act

≥ EUR 750.000  

 

≥ EUR 1.000.000  

Construction works

≥ EUR 5.382.000 

≥ EUR 5.382.000

Food  

≥ EUR 140.000

≥ EUR 215.000

(the limit shall be determined according to the type of contracting authority) 

The intention to relax the rules is also linked to the new regulation of the procedure for so-called subsidised entities. They will only have to comply with the law if they receive a subsidy from the contracting authority for the award of an above-limit works contract or an above-limit service contract which is linked to an above-limit works contract. The proportion of the grant awarded must exceed 50 %. 

Estimated value of the contract

One of the ways of determining the price of a comparable performance will be a newly introduced price tracking system, accessible via an electronic platform. This method will neither be the only possible nor the mandatory preferred method.

Restrictions on participation in public procurement 

In the case of economic operators from third countries, in accordance with the principle of reciprocity, contracting authorities and contracting entities are explicitly allowed to restrict the right to participate in public procurement to economic operators (candidates, tenderers, groups of suppliers, subcontractors) with which the Slovak Republic or the European Union has not concluded an international agreement guaranteeing equal and effective access to public procurement in that third country for economic operators established in the Slovak Republic. 

On 23 March 2022, the Parliament approved another amendment to the Public Procurement Act, effective as of 01 April 2022, which allows the Government of the Slovak Republic to establish by regulation the third states, possibly in conjunction with the type of contract, for which this mechanism of limitation of participation will be applied compulsorily. The reason for this is to enable the Government of the Slovak Republic to respond to situations where it is necessary, particularly from a security point of view, for contracting authorities and contracting entities not to enter into contractual relations with suppliers from specific countries in certain areas.

New grounds for withdrawal

The amendment extends the legal grounds for withdrawal from a contract by the contracting authority/entity in the following cases:

  • if, after the conclusion of the contract, a sanction was imposed on the supplier by the European Commission, the Slovak Antimonopoly Office or a competition authority of another Member State on the grounds of a breach of the prohibition of an agreement restricting competition which consisted in the coordination of undertakings;
  • where it is established that the tenderer has submitted false or altered information or documents in the tender and this has had an impact on the evaluation process (evaluation of the conditions of participation or evaluation of the requirements for the subject of the contract or the binding nature of the tenders);
  • if the Office for Public Procurement, in the procedure for the review of the actions of the audited entity prior to the conclusion of the contract in the case of a sub-limit contract, finds such a violation of the law that could have or had an impact on the outcome of the public procurement. This reason is applicable to cases regulating the deviation from the rules of review procedures for a sub-limit contract, where it is left to the contracting authority's decision whether to proceed with the conclusion of the contract despite the pending procedure or to wait for the Authority's decision, which subsequently finds a breach of the law.
  • where, after the conclusion of the contract, a designated public official has become the final beneficiary of the supplier or its subcontractor.

Extension of the optional grounds for exclusion

The newly conceived ground for exclusion is explicitly aimed at dishonest contractors who, in the context of the performance of a contract or concession, have committed a serious breach of contractual obligations, as a result of which the contracting authority or contracting entity has withdrawn from the contract, or as a result of which the contracting authority or contracting entity has suffered serious damage or other serious harm (e.g. harm to life or limb). The aim is to give contracting authorities a greater degree of flexibility in applying these exclusion grounds, in particular when confronted with suppliers who have committed serious breaches of contractual obligations.

Direct negotiated procedure

The amendment introduces a specific ground for the use of the direct negotiation procedure also in the event that, in the course of performance under a contract which was the result of a competitive procedure for a sublimit contract, it would not have been possible for the successful tenderer to actually perform the contract.

In such a case, the amendment offers the contracting authority the possibility of concluding a contract with the tenderer who came next in the ranking in the original procurement procedure, but only if one of the following conditions is met:

  • if it validly withdraws from the original contract or framework agreement on the grounds of a material breach of an obligation by the original contractor, or
  • where the original contractor withdraws from the original contract or framework agreement in breach of generally applicable law or the terms of the contract; or
  • the original contractor loses the ability to fulfil the contractual obligation in the course of the performance of the original contract or framework agreement.
  • However, the contract price may not exceed the contract price of the original supplier by more than 20 %.

Computerisation of public procurement

An innovation to increase transparency is the introduction of a single and publicly accessible electronic platform for the entire public procurement process for all

  • sub-limited contracts; and 
  • low-value contracts, provided that they are procured by approaching more than one tenderer.

The electronic platform will be used for the procurement of both commonly available and non-commonly available goods, services and works. At the same time, the use of criteria other than price will be allowed through this platform. The use of the platform will be compulsory for sub-limit contracts, but for above-limit contracts it will continue to be possible to use private electronic procurement systems.

As regards low-value contracts, the amendment introduces a new obligation related to the electronic platform. If contracting authorities/entities decide to invite multiple economic operators to submit tenders, they will have to use the functionality of the electronic platform. It will not be sufficient to address them only by e-mail, as has been the case so far.

A positive aspect of the amendment is the mandatory requirement for the functionality of the electronic means, which consists in the ability of the electronic means to deliver the means of review (requests for redress and objections) to the contracting authority or contracting entity.