UK: Romanian Legal Update: New package of laws on public procurement and concessions

Last Updated: 4 July 2016
Article by Claudiu Munteanu-Jipescu, Diana Poputoaia and Anda Todor

Law 98/2016 regarding public procurement

Law 98/2006 is the core law of the new package of four laws regarding the public procurement framework in Romania and transposing EU Directive 2014/24/EU. It sets out the main general rules and means of awarding public procurement contracts. It aims to provide only general guidelines on awarding public procurement contracts, leaving the operational details to be further regulated by secondary legislation.

Here are the essentials you need to know:

Who can be grantor?

Contracting authorities – authorities, local or general public institutions or associations therewith

General thresholds applied against the contracts' total value:

  • Acquisition value for works contracts/ framework agreements: RON 23,227,215
  • Acquisition value for products and services contracts/ framework agreements: RON 600,129
  • Acquisition value for social services and other specific services contracts/ framework agreements: RON 3,334.050

Thresholds for direct procurement:

  • Acquisition value for products and services is below RON 132,519
  • Acquisition value for works is below RON 441,730

European Single Procurement Document (ESPD / DEAU):

  • Electronic self-declaration document of the candidate, pre-confirming that it meets the qualification/ awarding criteria
  • Prior to awarding a contract, the awarding authority shall oblige the 1st ranked candidate to submit updated documents attesting the accuracy of the information comprised by the ESPD

Qualification requirements:

  • Possibility to use financial-economic indicators relevant for the financial status of a potential contractor (others than the solvability indicators)

Conflict of interests:

  • Broad definition which covers any type of direct/ indirect financial, economic or other personal interest
  • Several potential conflict of interest situations are regulated, not only the commercial and family relationships

Awarding criteria: most economically advantageous offer

  • Lowest price
  • Lowest cost (the life cycle)
  • Best quality-price ratio
  • Best quality-cost ratio

Awarding procedures:

  • New awarding procedure, i.e. the partnership for innovation
  • New supplementary products, services or works, in relation with the initial public procurement contract, may be acquired from the initial contractor without organizing a new awarding procedure

Amendment of public procurement contracts:

  • Amendments to the agreements are allowed without running a new procurement procedure under specific cases extensively regulated.
  • Concept of substantial amendments is introduced:
    • Implementing new conditions which, if they would have been included in the initial awarding procedure, they could have led to the selection of another candidate.
    • The amendment impacts the economic balance of the contract.
    • The object of the contract is substantially extended.
    • In certain cases, the initial contractor is replaced by another one.

Other notable additions:

  • Sub-contracting – direct payments to sub-contractors under a mechanism which shall be further detailed in secondary legislation
  • Publicity and transparency requirements:
    • Participation, awarding and launching procedures notices are published in the EU Official Journal and national Official Gazette.
    • As a general rule, such notices may not be published at the national level before being published in the EU Official Journal.
    • The awarding authority shall assure, by electronic means (through SEAP), direct, complete and free access of candidates to the documents of the procedure starting with the date of publishing the participation notice.

Law 99/2016 regulating sector level procurement procedures

Part of the new package of four laws regarding the public procurement framework in Romania and transposing the EU Directive 2014/25/EU, Law 99/2016 regulates sector level procurement procedures alone and aims to clarify the interpretation and application of the legal framework by the contracting entities.

Here are the essentials you need to know:

Relevant activities:

  • Gas and heat
  • Electricity
  • Water
  • Transportation services
  • Harbors and airports
  • Postal services
  • Oil and gas extraction as well as prospection and extraction of coal and other solid fuels

General thresholds applied against the contracts' total value:

  • Acquisition value for sector level products, services and solutions contracts is equal to or exceeding 1,858,177 lei.
  • Acquisition value for sector level works contracts is equal to or exceeding 23,227,215 lei.
  • Acquisition value for sector level contracts for social services and other specific services is equal to or exceeding 4,445,400 lei.

Thresholds for direct procurement:

  • Acquisition value for products and services is less than 132,519 lei.
  • Acquisition value for works is less than 441,730 lei.

Awarding criteria: most economically advantageous offer

  • Lowest price
  • Lowest cost
  • Best quality-price ratio
  • Best quality-cost ratio 

The framework agreement:

  • Increased regulatory flexibility, as only general rules are outlined
  • General maximum duration of 8 years
  • Agreements under the framework are awarded under objective norms and criteria, which may include resuming the competitive procedure between the operators under the framework.

Amendments to agreements without a new procurement procedure

Amendments to the agreements are allowed without running a new procurement procedure under specific cases extensively regulated.
Other notable additions:

  • European Single Procurement Document (ESPD) – electronic self-declaration document of the candidate, pre-confirming that it meets the qualification/ awarding criteria.
  • Sub-contracting – direct payments to sub-contractors are allowed under a mechanism which shall be further detailed in secondary legislation.

Law 100/2016 regarding concession of works and concession of services

Part of the new package of four laws regarding the public procurement framework in Romania and transposing the EU Directive 2014/23/EU, the recently enacted Law 100/2016 replaces the provisions regarding concession of works and concession of services from the now abrogated GED 34/2006.

Here are the essentials you need to know:

Who can be grantor?

  • Contracting authorities – authorities, local or general public institutions or associations therewith
  • Contracting entities – contracting authorities, public enterprises (provided they perform a relevant activity in sectors such as gas and heat, electricity, water, transport, mail, ports and airports)

Concessions start with a substantiation report

  • Contracting authorities prepare substantiation reports to prove that awarding a long term contract is both necessary and adequate and that the operation risk is transferred to operators.
  • Substantiation reports should be based on feasibility studies for execution of works projects.

The economic operator carries the operation risk of the concession

Threshold for procedures is set at a value equal to or exceeding 23,227,215 lei determined as the total turnover achieved by the operator for the term of the concession agreement (VAT excluded) by carrying out the works and / or services covered by the concession.

Awarding procedures:

  • Open tender – usually in just one round, but a second round for negotiations is also allowed.
  • Competitive dialogue – any economic operator can request to participate in the procedure but only those meeting eligibility requirements are entitled to participate in next rounds.

Awarding criteria: the most cost-effective offer

  • Assessed based on objective criteria to ensure a real competition
  • Criteria must be weighed in relation to the object of the concession and may include environmental protection, innovation or social impact.

Duration of the concession is limited, based on the nature of the awarded works or services, but should allow the operator to recover the investments made and costs incurred and also make a reasonable profit.

Grantors can make direct payments to subcontractors under certain conditions.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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