On 16 July 2009, the Latvian Parliament (Saeima) passed a large number of amendments to the Law on Public Procurement, extending the scope of the exemptions when the law is not applicable, as well as changing various details concerning the tender procedures and their application. The amendments entered in force on 13 August 2009.
The amendments to the Public Procurement Law have introduced a new specific exemption for the loans from the international financial organizations in which Latvia is a member state, as well as simplified the exemption conditions for the procurement of goods and services from the entities that are fully controlled by the tenderer. A surprising new exemption has been made in respect of contracts whose value is below LVL 70,000 (approx. EUR 100,000) – thus, according to the new amendments, the Public Procurement Law will not apply to procurement of goods and services by credit institutions for their own needs if the contract value is below LVL 70,000. The amendment is surprising since the credit institution per se is not among the subjects subject to the public procurement obligation under the Public Procurement law.
The former state interests and public security exemption has been revised and split into two new exemptions allowing the Cabinet of Ministers (the Government) very broad latitude in determination of which of the government contracts could be excluded from the public procurement obligation. Thus, pursuant to the new amendments, the Public Procurement Law will not be applicable to any contracts information in respect of which or whose performance has been declared by the Cabinet of Ministers (the Government) as a state secret. The concept of a "state secret" is governed by a special Law on State Secret, according to which state secret means all information determined as such by the Cabinet of Ministers based on the criteria specified in the law. As such it excludes particularly secret information, secret information, as well as all other information declared as confidential. In addition the Law will not apply also if its application could cause harm to protection of material state interests, as decided by the Cabinet of Ministers on a case by case basis. In past the concept of "protection of material state interests" has been interpreted and applied quite flexibly and broadly.
The amendments have also increased the contract value thresholds below which the tenderer is not required to apply the public procurement procedures. Thus, the former threshold of LVL 10,000 (approx. EUR 14,000) has been doubled to LVL 20,000 (approx. EUR 28,000) for procurement of goods and services and increased to LVL 120,000 (approx. EUR 169,000) for construction works. A new internal procurement procedure is introduced for the procurement of goods and services where the contract value exceeds LVL 3,000 (approx. EUR 4,225) but is less than LVL 20,000 and for the construction works the value of which exceeds LVL 10,000 but is less than LVL 120,000. In respect of procurement of these goods, services and construction work the tenderer must organize an internal tender committee. The tender committee's decisions may be appealed in the courts but the appeal would not suspend the decision.
The amendments were opposed by the President of Latvia and were returned to the Parliament for reconsideration. The Parliament, however, disagreed with the President's objections and has reconfirmed the law. Due to this reason a constitutionality claim has been made to Satversmes tiesa (the Constitutional Court) and is currently pending.
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