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 consultation on February 8, 2024, and has been the subject of intense debate in recent months. The Ministry of Finance discussed the submitted proposal not only within the parliament, but the draft amendment was also discussed several times with representatives of the European Commission. Several significant changes brought about by the amendment 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 on the most significant changes and interventions in the audit procedures.
What is the primary objective of the amendment?
According to the submitter, MIRRI SR, the primary objective of the amendment is to significantly save time and reduce the administrative burden. The approved amendment should also significantly speed up the public procurement process itself.
The amendment also harmonizes the rules for sub-threshold contracts and low-value contracts by merging these categories and, last but not least, revises the review procedures.
Which provisions of the Public Procurement Act will be affected by the amendment?
Classification of individual types of contracts and change of limits for individual procedures in public procurement
First and foremost, the most significant change will be the classification of contracts according to financial limits 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 removes low-value contracts, while at the same time changing the limits 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 EUR 50,000, which means that public procurement will not be required for contracts with a value of less than EUR 50,000.
Extension of deadlines for submitting bids
The contracting authority or contracting entity will be obliged to extend the deadline for submitting tenders by its original length if substantial changes are made to the documents necessary for preparing the tender, proposal or for proving that the conditions for participation have been met.
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 arise, the contracting authority or contracting entity shall draw up and send the notices used in public procurement by alternative electronic means and publish this information on its website.
Conditions for participation – Personal status
In addition to the persons referred to in § 32(1)(a), the condition of not having been convicted of any of the criminal offenses referred to in § 32(1)(a) a) must also be met by a person who has the right to act and rights related to decision-making or control in an economic entity that wishes to participate in public procurement, with more specific identification of this person being defined in § 32(8).
The tenderer or candidate shall prove that they meet the above condition to the contracting authority or contracting entity by submitting a declaration on their honor.
In the event of an urgent legal interest, the contracting authority or contracting entity may specify that the tenderer does not have to meet this condition, and the exception shall also apply to persons referred to in Section 33(2) and Section 34(3).
Evaluation of conditions for participation
Under the new rules, a tenderer or candidate cannot be excluded on the grounds that they have, for example, outstanding social security contributions or tax arrears, if
- They have paid the arrears or have been allowed to pay the arrears in installments, regardless of when the arrears arose, or
- The cumulative arrears do not exceed EUR 200, regardless of when the arrears arose.
Tender documents
The Public Procurement Act will now explicitly stipulate that the contracting authority and the contracting entity will be responsible for the accuracy and completeness of the tender documents.
Evaluation of tenders
A change to a tender pursuant to Section 53(1) of the Public Procurement Act will no longer be considered a correction to the itemized budget if the total price of the tender remains unchanged and the correction to the itemized budget does not affect any other criterion for the evaluation of tenders.
Awarding sub-threshold contracts and sub-threshold concessions
The amendment to the Public Procurement Act will introduce a completely new procedure for awarding sub-threshold contracts and sub-threshold concessions.
When awarding a sub-threshold contract, the contracting authority will proceed in such a way for the purpose of awarding a sub-threshold contract, it will invite at least three economic operators to submit a tender using the designated functionality of the electronic platform, or it will be able to follow the simplified procedure for contracts for commonly available goods and services or the standard procedure for sub-threshold contracts.
The amendment also explicitly stipulates that when awarding sub-threshold contracts, the contracting authority will not be able to conclude a contract with a tenderer who does not meet the conditions for participation under Section 32(1)(e) and (f) or if there are grounds for exclusion under Section 40(6)(f). The contracting authority will be able to refuse to conclude a contract with a tenderer for whom there are grounds for exclusion under Section 40(8)(d).
At the same time, in the case of a sub-threshold contract for construction works with an estimated value equal to or greater than EUR 800,000, the contracting authority will be strictly obliged to proceed in accordance with Section 110 of the amendment by sending a call for tenders to an unspecified group of economic operators for publication via the designated functionality of the electronic platform.
In relation to sub-threshold concessions, the contracting authority will be obliged to send the Office information on the award of a sub-threshold concession for publication.
Bulletin
Under the new rules, the authority 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 option to receive information for all or some goods, construction works or services, in accordance with the qualification according to the procurement vocabulary at group level.
If technical problems arise at the same time, during their duration, the contracting authority shall draw up and sendthe notice used in public procurement for the award of sub-threshold contracts and sub-threshold concessions electronically by means of a substitute electronic means for publication in the place and manner specified by the authority. The authority shall publish the information referred to in the first sentence on its website.
Entry in the register of economic operators
Pursuant to the amendment to the Public Procurement Act, the authority shall enter an economic operator in the register of economic operators within 15 working days of the date of receipt of the complete application for registration, including all annexes. This means that the authority will now have 15 working days for registration, rather than 15 days as was previously the case.
Review of the actions of the audited entity
Review of the actions of the audited entity pursuant to Section 169(1) The authority may carry out exclusively:
- within the framework of an inspection based on a request by the inspected party to inspect a contract or concession awarded by it, unless it is a contract or concession pursuant to 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 review of the actions of the audited entity pursuant to Section 169(2) will no longer be carried out by the Office on the basis of a request from a person who was not entitled to lodge objections.
At the same time, in the objection proceedings, the Office will be bound by the scope of the facts against which the objections are directed and will not be able to decide beyond that scope.
Objections
Objections pursuant to Section 170 may be lodged only exclusively
- by the applicant,
- Interested party whose rights or legally protected interests have been or could have been affected by the procedure of the audited entity, or
- Participant.
Objections may no longer be lodged 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 administration body that certifies a legal interest in the matter, if the audited entity was provided with funds from the European Union for the delivery of goods, the exercise of construction rights or the provision of services.
In relation to objections, Section 170(7) has also been amended to the effect that an objection may not be lodged in the case of
- the award of a sub-threshold contract for the supply of goods or services, or the procedure for awarding a sub-threshold contract,
- the award of a sub-threshold contract for the performance of construction works, if the estimated value of the contract is equal to or less than EUR 1,500,000
- Awarding contracts in the field of defense and security, if the estimated value of the contract is lower than the financial limit according to § 5(4).
Commencement of review of the actions of the audited entity
Obligation to deliver documents to the office pursuant to Section 173(1) The audited entity shall be obliged to do so within five working days of the date of delivery of the objections to the audited entity.
At the same time, in relation to the commencement of the review of the audited entity's actions, the Request for Remedial Action has been completely deleted.
Suspension of the review of the actions of the audited entity
Amendment to the Public Procurement Act It will no longer be possible for a decision to suspend proceedings for the review of the actions of the audited entity to be reviewed by a court.
Appeal proceedings
A new procedure is being introduced, namely an appeal procedure under Section 175a of the Act, pursuant to which the audited entity may lodge an appeal against a decision under Section 175(1)(d) imposing a fine.
The appeal must be lodged 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 on the basis of a proposal by a commission appointed by him.
The chair of the senate shall be bound by the content of the appeal. 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 in the contested decision.
The deadline for deciding on an appeal is 30 days and, in particularly complex cases, 60 days from the date of delivery of the appeal to the chair 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 contractual penalty. The amendment to the Act sets the amount of fines at between 0.1% and 5% of the contract price. This change will make it possible to take into account the circumstances of each individual case and ensure that the penalty is proportionate to the seriousness of the infringement.
Under the new rules, proceedings to impose a fine for an infringement of the Public Procurement Act may be initiated no later than three years from the date on which the infringement occurred.
The authority shall not initiate proceedings to impose a fine for a breach of the law for which:
- A financial operation has already been proposed in a report by the supervisory authority pursuant to Section 184x following an inspection after the conclusion of the contract, or
- The authority has imposed an obligation to return the financial correction by a decision pursuant to Section 184z.
Conclusion
The amendment to the Act will bring a number of changes that may be potentially useful in terms of speeding up public procurement, but to a significant extent at the expense of transparency and the possibility of control and protection of individual tenderers, and it is debatable to what extent the potential positives outweigh the significant interference with the possibility of applying review procedures, both ex ante and ex post controls. In addition to reduced transparency, the negative impact of the changes in question may also result in more expensive contracts or other associated negative effects caused by reduced control.
Changes in public procurement may potentially create scope for an increase in unfair practices. If public procurement is not properly advertised, there is a risk that entrepreneurs who could offer more advantageous solutions than the companies approached will not have the opportunity to participate. This may lead to the promotion of clientelism and unfair practices.
Only in practice, after some time, will it become clear what impact the amendment will have on the business environment and the procurement of goods, services and construction works, and whether it will speed up and improve the ability of public entities to draw on European Union funds, and at what “cost.”
