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Substantial changes to Slovak public procurement

Daniel FutejRudolf Sivak Radka Gerzova
Recently, two amendments were passed introducing novelties into the public procurement process in Slovakia. The changes do not enter into force at once, but will take effect gradually up to January 1 2014; however, most of the changes will already be effective as of July 1 2013.

A new obligation to use an electronic auction by respective authority will apply only to goods which are readily available on the market. As regards other goods, services and construction works, it will be up to the authority whether it will use an electronic auction. It is not clear what criteria should be used when the authority is deciding whether or not it will use an electronic auction.

Electronic auctions should be replaced by an electronic marketplace (similar to eBay). This form of tendering must be used, in case of orders under the limit, for goods, services and construction work which are readily available on the market. For other under-the-limit orders (not readily available on the market), there is no obligation to use an electronic marketplace.

Only two categories of orders will exist: under-the-limit and over-the-limit. Financial limits for under-the-limit orders range from €1,000 ($1,330) to many thousands of euros depending on what is being procured.

According to new rules, the proof of meeting the participation criteria can be replaced by the bidder making a declaration under oath. The real review of meeting the participation criteria will be done by the contracting authority only with respect to the best bidder.

After the completion of contract or premature termination, the contracting authority will be obliged to rate the supplier with a grade from zero to 100. If a supplier receives a grade lower than 20 in three consecutive tenders, that supplier will be banned from public procurement for one year. Even though the supplier may ask for a change of its grade, there is no legal remedy if the authority does not oblige.

The fact that an applicant has won the tender does not guarantee the conclusion of a contract. If the winning applicant does not provide the proper cooperation necessary for the conclusion of the contract, the authority may offer conclusion of a contract to the applicant whose offer was rated as second. If the second applicant does not provide proper cooperation either, the authority may offer conclusion of a contract to the third-placed applicant. It is not clear what is regarded as provision of cooperation except for the signing of a contract. This ambiguity presents a risk that successful applicants will be excluded from tenders.

The recent changes introduce a new possibility for review of procurement decisions. Applicants may file appeals against decisions of the public procurement office which rejected an objection of the applicant. The appeal will be dealt by a newly-created committee of the public procurement office. This committee will decide on the appeal within 45 days. The appeal must be filed within 10 days of delivery of the decision.

An appeal has a suspensive effect only with respect to decisions regarding over-the-limit orders. Moreover, the applicant filing the appeal has to make a deposit of an amount of money which can be several hundreds of thousands of euros in case of tenders worth millions of euros. This fact may prevent applicants from filling appeals. A decision of the committee is subject to court review by filing a court action.

Amendments to contracts which increase the price will be possible only upon approval by the committee. It may only allow an amendment only if, after conclusion of the contract, the conditions changed so substantially that it would not be justifiable to ask the supplier to perform the contract based on the initial conditions. Moreover, a change of conditions must not have been foreseeable using the duty of care.

The new rules provide for stricter and more widely-varied sanctions for applicants in the public procurement process. An applicant may be excluded from participating in the public procurement process for up to three years in the case where the authority has withdrawn from the contract due to substantial breach of obligations of supplier. This is a very drastic measure, particularly when taking into account that the legality of the withdrawal does not need to be confirmed by a court. There is a big risk that this measure may be used to prevent successful applicants from participating in tenders.

Daniel Futej, Rudolf Sivak and Radka Gerzova

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