This content is from: Local Insights

Changes in public procurement

Regarding public-private partnership (PPP) practice in Slovakia, the previous year was significant for the launch or continuation of tender procedures on the basis of which the state has been seeking to involve the private sector in the financing of large infrastructure projects for the first time. This was in line with the government's plans to speed up the process of construction of the highway infrastructure by way of PPP. More specifically, the subject matter of these tenders is the procurement of construction, operation and maintenance of highways and an electronic toll system for lorries weighing more than 3.5 tonnes.

However, as it turned out in the course of these tender procedures, governed by the Slovak Public Procurement Act (PPA), the frequent recourse of unsuccessful tenderers to available remedies caused delays in their conduct. Government deadlines for completion of the highway construction and its intention to obtain funds from the operation of the electronic toll system as quickly as possible were thus disrupted. This situation motivated the government, together with the Office for Public Procurement (Office), to draft an amendment to the PPA limiting possibilities of tender participants to seek the review of decisions of contracting authorities. The parliament of the Slovak Republic passed it into law on October 28 2008.

According to a statement of reasons accompanying the draft of the act, its aim was to prevent the abuse of the review procedures resulting "in the inadequate postponement of the public procurement process and increase of financial and administrative costs of public authorities". In particular, the tenderers often sought review on the basis of a provision of the PPA that enabled them to challenge virtually any act of the contracting authorities and at any time before the conclusion of the contract, which resulted in immediate suspension of the possibility of concluding the contract at a first stage of the review procedure (at this stage, the application is dealt with by the contracting authority: the person concerned may then lodge a protest with the Office as an independent review body). The new provisions provided that tenderers may file an application for review of this other act of the contracting authority only directly before the Office, thus leaving out the first step of the review process before the contracting authority. This effectively means that there will be no automatic suspension concerning the contract conclusion in the event of this type of review. In addition, the amendment considerably increased a bail paid by the tenderers seeking this remedy after the opening of the bids: it now amounts to 1% of the offering price up to €600,000 ($797,000).

The aforementioned changes came into effect on November 15 2008. Therefore, it might be too early to tell whether they have had any substantial affect on the use of the review procedure concerned. The question is whether tenderers will not be dissuaded from applying for review as a result of the newly modified review mechanism.

Filip Krajcovic

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