On June 19, 2024, the National Council of the Slovak Republic approved an amendment to the Public Procurement Act drafted by the Ministry of Investment, Regional Development, and Informatization of the Slovak Republic (MIRRI SR). The amendment was submitted for inter-ministerial review on February 8, 2024, and has been the subject of intense debate in recent months. The Ministry of Finance has discussed the proposed draft not only within parliament but has also discussed the draft amendment several times with representatives of the European Commission. Several significant changes that the amendment will bring will take effect on August 1, 2024. This article is only a brief overview of the changes; we will address individual selected aspects in separate articles, focusing particularly on the most significant changes and interventions in audit procedures.
What is the primary objective of the amendment?
According to the sponsor, MIRRI SR, the primary objective of the amendment is to achieve significant time savings and reduce the administrative burden. The approved amendment is also intended to significantly speed up the public procurement process itself. The amendment also unifies the rules for sub-threshold contracts and low-value contracts—by merging these categories—and, last but not least, it will also adjust review procedures.
Which provisions will the amendment to the Public Procurement Act affect?
Classification of individual types of contracts and changes to thresholds for individual public procurement procedures
First and foremost, the most significant change will be the classification of contracts according to financial thresholds within the meaning of Section 5 of the Public Procurement Act. The amendment to the Public Procurement Act will now distinguish exclusively between:
- above-threshold and
- below-threshold contracts.
The amendment to the Public Procurement Act thus eliminates low-value contracts, while simultaneously changing the thresholds for individual public procurement procedures.
Under the new rules, the Public Procurement Act will not apply to contracts with an estimated value of less than 50,000 euros; this means that public procurement will not be required for contracts valued at less than 50,000 euros.
Extension of deadlines for submitting bids
The contracting authority or contracting entity will be required to extend the deadline for submitting bids by its entire original duration if substantial changes are made to the documents necessary for preparing a bid, proposal, or for demonstrating compliance with the conditions for participation.
Notices Used in Public Procurement
The amendment to the Public Procurement Act now also addresses situations where technical problems arise when sending notices used in public procurement.
If technical problems occur, the contracting authority or contracting entity shall prepare and send the notices used in public procurement via an alternative electronic means, and the Office shall publish this information on its website.
Conditions for Participation – Personal Status
In addition to the persons specified in Section 32(1)(a), the condition of not having been convicted of the criminal offenses listed in Section 32(1)(a) must also be met by a person who has the right to act and the rights associated with decision-making or control in the economic entity that wishes to participate. 1(a), a person who has the right to act and rights related to decision-making or control within the economic operator wishing to participate in the public procurement, with a more specific identification of this person to be defined in § 32(8).
Compliance with the aforementioned condition shall be demonstrated by the bidder or interested party to the contracting authority or contracting entity by submitting a sworn statement.
In the case of an urgent legal interest, the contracting authority or contracting entity may state that the bidder will not meet this condition, and this exception will also apply to persons under Section 33(2) and Section 34(3).
Evaluation of Participation Requirements
Under the new rules, a bidder or interested party cannot be excluded on the grounds that they have, for example, outstanding social insurance contributions or tax arrears, if
- they have paid the arrears or have been permitted to pay the arrears in installments, regardless of when the arrears arose, or
- the cumulative arrears do not exceed 200 euros, regardless of when the arrears arose.
Bidding Documents
The Public Procurement Act will now explicitly stipulate that the contracting authority and the contracting entity shall be responsible for the accuracy and completeness of the bidding documents.
Evaluation of Bids
A correction to the itemized budget will no longer be considered a change to the bid under Section 53(1) of the Public Procurement Act, provided that the total bid price remains unchanged and the correction to the itemized budget does not affect any other bid evaluation criterion.
Awarding Below-Threshold Contracts and Below-Threshold Concessions
The amendment to the Public Procurement Act will introduce a completely new procedure for awarding below-threshold contracts and below-threshold concessions.
When awarding a sub-threshold contract, the contracting authority will proceed by inviting at least three economic operators to submit bids for the purpose of awarding the sub-threshold contract using the designated functionality of the electronic platform, or will be able to follow the simplified procedure for contracts for commonly available goods and services or the standard procedure for below-threshold contracts.
The amendment further explicitly stipulates that when awarding sub-threshold contracts, the contracting authority will not be able to conclude a contract with a bidder who does not meet the conditions for participation under Section 32(1)(e) and (f) or if there is a ground for exclusion under Section 40(6)(f). The contracting authority will be able to refuse to conclude a contract with a bidder for whom there is a ground for exclusion under Section 40(8)(d).
At the same time, for a below-threshold contract for construction works with an estimated value equal to or greater than EUR 800,000, the contracting authority will be strictly required to proceed in accordance with Section 110 of the amendment by sending, for publication via the designated functionality of the electronic platform, a call for tenders to a group of economic operators not previously specified.
With regard to sub-threshold concessions, the contracting authority will be required to send information on the award of a sub-threshold concession to the Office for publication.
Bulletin
Under the new rules, the Office will no longer be required to ensure, through a publicly accessible function of the Bulletin, that everyone has the option to activate or deactivate the receipt of information for all or certain goods, construction works, or services, in accordance with the classification in the procurement vocabulary at the group level.
If, at the same time, technical problems occur, during their duration, the contracting authority shall prepare and sendthe notice used in public procurement for the award of sub-threshold contracts and sub-threshold concessions electronically via an alternative electronic means for publication at the place and in the manner determined by the Office. The Office shall publish the information referred to in the first sentence on its website.
Registration in the List of Economic Operators
Pursuant to the amendment to the Public Procurement Act, the Authority shall register an economic operator in the List of Economic Operators within 15 working days from the date of receipt of a complete application for registration, including all attachments. This means that the Office will now have a 15-working-day deadline for registration, rather than 15 days as was originally the case.
Review of the actions of the entity under inspection
Review of the actions of the entity under inspection pursuant to Section 169(1), the Office will be able to conduct such a review exclusively:
- as part of an inspection based on a request by the inspected entity regarding the performance of a contract or concession awarded by it, unless the contract or concession falls under Section 184q(1), or
- in objection proceedings based on objections.
The Office will no longer review the actions of the audited entity pursuant to Section 169(1) on its own initiative, as was previously the case. The Office will no longer review the actions of the audited entity pursuant to Section 169(2) based on a request from a person who was not authorized to file objections.
At the same time, in objection proceedings, the Office will be bound by the scope of the identified facts against which the objections are directed and will not be able to decide beyond that scope.
Objections
Objections under Section 170 may be filed only exclusively by
- A bidder,
- An interested party whose rights or legally protected interests were or could have been affected by the actions of the inspected entity, or
- A participant.
Objections may no longer be filed by
- A person whose rights or legally protected interests have been or could have been affected by the procedure of the audited entity, or
- A state administrative body that certifies a legal interest in the matter, if the audited entity was provided with funds from the European Union for the supply of goods, the performance of construction works, or the provision of services.
With regard to objections, Section 170(7) has also been amended, pursuant to which an objection may not be filed in the case of
- the award of a below-threshold contract for the supply of goods or the provision of services, or the procedure for awarding a below-threshold contract,
- the award of a below-threshold contract for the performance of construction works, if the estimated contract value is equal to or less than EUR 1,500,000,
- the award of a contract in the field of defense and security, if the estimated value of the contract is lower than the financial limit under Section 5(4).
Initiation of a review of the actions of the audited entity
Obligation to deliver documents to the Office pursuant to Section 173(1) the auditee shall be required to do so within five working days from the date of delivery of the objections to the auditee.
At the same time, in relation to the initiation of the review of the auditee’s actions, the Request for Remedial Action has been completely omitted.
Suspension of the review of the auditee’s actions
Under the amendment to the Public Procurement Act, it will no longer be possible to challenge a decision to suspend proceedings for the review of the auditee’s actions in court.
Appeal Proceedings
A new procedure is being introduced, namely appeal proceedings under Section 175a of the Act, pursuant to which the audited entity may file an appeal against a ruling under Section 175(1)(d) imposing a fine.
The appeal must be filed within 15 days of the date of delivery of the decision against which it is directed, and the appeal will be decided by the President of the Office based on a proposal from a commission appointed by him.
The Chair of the Senate shall be bound by the content of the appeal filed. However, this shall not apply if the contested decision was issued on the basis of insufficiently established facts or is based on an incorrect legal assessment, and these defects justify a change to the contested decision.
The time limit for deciding on the appeal is 30 days, and 60 days in particularly complex cases from the date of delivery of the appeal to the President of the Office.
Amount of Fines
Pursuant to Section 182(1) of the Public Procurement Act, the amount of fines for administrative offenses is fixed at 5% of the contract penalty. The amendment to the Act sets the fine amount within a range of 0.1% to 5% of the contract price. This change will thus make it possible to take into account the circumstances of each individual case and ensure that the sanction corresponds to the severity of the violation.
Under the new rules, proceedings to impose a fine for a violation of the Public Procurement Act may be initiated no later than three years from the date on which the violation occurred.
Proceedings to impose a fine will not be initiated by the Office for such a violation of the law for which already:
- A financial correction was proposed by the supervisory authority in a report pursuant to Section 184x during an inspection conducted after the contract was concluded, or
- The Office imposed an obligation to return the financial correction by a decision pursuant to Section 184z.
Conclusion
The amendment to the law will bring a number of changes that may be potentially effective in terms of speeding up public procurement, but largely at the expense of transparency and the ability to monitor and protect individual bidders; it is debatable to what extent the potential benefits outweigh the significant interference with the ability to apply review procedures, including both ex ante and ex post controls. In addition to reduced transparency, the negative impact of these changes may also result in overpriced contracts or other associated negative effects caused by reduced oversight.
Changes in public procurement may potentially create room for an increase in unfair practices. If public procurement is not properly announced, there is a risk that entrepreneurs who could offer more advantageous solutions than the invited firms will not get the opportunity to participate. This may lead to the promotion of cronyism and unfair practices.
Only in practice, after some time, will it become clear what impact this regulation will have on the business environment and the procurement of goods, services, and construction works, and whether such a regulation will accelerate and improve the ability of public entities to draw funds from European Union funds, and at what “cost.”
