Slovakia: Substantial Changes In Public Procurement - Every Detail Counts

Over the past few months, two substantial amendments to the Act No. 25/2006 Coll., on Public Procurement, as amended, (the "Act") became effective, namely as of 1 February 2013 and 1 July 2013. These two amendments represent the biggest change of the public procurement rules since the adoption of the Act in 2006. Besides several substantial changes to the entire public procurement process, many small, seemingly inconspicuous, changes were also introduced -- and in public procurement, every detail counts. The most important changes are outlined below.

New regime of bids submission

The one stage tender process has been replaced by a two stage tender, which involves a "two envelope system." Bids in the tenders are to be submitted in two parts: the "Criteria" part contains the offer with respect to the award criteria, i.e. in most cases only the price; while the "Other" part contains all other documentation and information related to the bid. The "Other" part is opened first and only after evaluation of whether the selection criteria (e.g. technical equipment) have been met can the "Criteria" part of all submitted bids be opened and evaluated. Generally, such a two stage process should ensure that the price does not influence the technical evaluation of the bid.

Electronic marketplace

A new tool - central electronic marketplace - for easier procurement of those goods, services and construction works that are commonly available on the market has been introduced. The electronic marketplace is designed mostly for municipalities and small contracting authorities, but also for other contracting authorities procuring a lot of goods or services, such as public hospitals. It can be used only for low value, "below-limit" procurements (e.g. procurement of goods of value up to EUR 200,000). In general, the electronic marketplace should prove to be a very useful tool, but some of its features have been criticized, in particular the impossibility of filing an objection against public procurement conducted via the electronic marketplace. 

Review procedures

The review procedure and the means available for bidders not satisfied with the tender process have been changed substantially.

A new possibility of an appeal to the Council, a newly established second instance within the Public Procurement Office ("PPO"), has been introduced. As a result, the review procedure comprises four stages (instead of the previous three): (i) request for remedy to the contracting authority, (ii) objection to the PPO, (iii) appeal to the Council of the PPO against the decision on objection, and (iv) an administrative claim to the court.

The second most significant development involves the changes made to the objections procedure. In the past, each objection to the PPO had a suspensive effect and the contracting authority had to wait until the PPO decided upon the objection before it could proceed with the tender.

Now, the PPO handles the objections only at two stages of the tender proceedings (at each stage by a single decision with respect to all objections) and their submission does not have a suspensive effect, i.e. the contracting authority may proceed with the tender. The PPO decides on the first "set" of objections after the "Other" part of the bids containing the selection criteria is opened. It is only at this point that the tender process is suspended until a decision has been reached on all objections submitted to PPO up to this point and also upon the appeals against such decisions. Afterwards, the contracting authority may proceed with opening of the second "Criteria" part and evaluate the bids. Following this evaluation, the bidders may submit a second "set" of objections, which initiates a second stage of objections evaluation. The tender process is suspended for the second time until it the objections and appeals (if any) have been decided upon.

A highly criticized aspect of these changes is that, although the Act still provides for a suspension of the tender process following a submission of objections, it does so only for a certain period of time (45 days following a submission of an appeal against the decision on objections). If the Council of the PPO does not decide within these 45 days, the contracting authority may proceed with the tender and also award and conclude the contract – even if the PPO has not yet reached a decision upon the appeal.

Ex ante review

A new institute of ex ante review of public procurement documents has been introduced. The contracting authority may request the PPO to review the documents before it announces the tender. This tool is available only to "above-limit" contracts financed from European Union funds. It is still possible to file an objection against a public procurement that was subject to ex ante review, but if the PPO deviates from its opinion in the ex ante reviews, it must provide reasons for doing so.

Procurement of legal services 

Under the amended Act, a contracting authority is entitled to use a simplified procedure for the procurement of legal services (and in the case of low value "below-limit" contracts, also of certain other advisory services). Under the revised rules, having previous experience with the bidder can be used as a criterion for the evaluation of the bids. In addition, the contracting authority is entitled to award the contract to any of three best bidders, i.e. it does not have to award the contract to the bidder with the best offer provided that this winning bidder's offer is not more than 20% higher than the best offer. These changes seem on first sight harmless, but in practice they can lead to legal services procurements being won by "close" advisors and may create an uncompetitive and even discriminatory public procurement process.

Other changes

Further changes include inter alia (i) a new restrictive regime on amendments to agreements concluded via public procurement; (ii) a new sanction regime for bidders who during public procurement provide documents or information of sworn affidavits which are forged or altered on purpose; (iii) the division of contracts only to two categories – "below-limit" and "above-limit" contracts; and (iv) the limitation on subcontracting.

The abovementioned changes represent only those changes that we regarded as being the most important. Due to the very extensive amendments, there are several aspects not analysed in this text. It is safe to say that almost every aspect of public procurement procedures has been amended.

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.