The government approved a draft bill of the new Act on Public Procurement in October. The bill is currently before the Chamber of Deputies and has been sent to MPs. It will be subsequently discussed by the Steering Committee and then submitted for its first reading.

The new Act thus has a long way to go before its final approval, however, pursuant to Directive 2014/24/EU of the European Parliament and of the Council on public procurement (hereinafter “Directive”), the Act must be approved and come into force by no later than 18 April 2016.

In view of the short time available to bring legislation on public procurement into line with the Directive, Parliament is unlikely to return the whole Act to the government for revision, but will approve the bill submitted by the government with the incorporation of proposed amendments.
Thus, although the following is based on the bill submitted by government, and the approved final wording may differ, it can be assumed the approved Act will largely correspond to, or at least be based on the draft bill. The Act on Public Procurement will also cover the licensing procedure, which is currently governed by its own legislation in a separate Act.

1. Foundations of the new legislation

The primary aim of legislators in preparing the draft bill was to conceive the Act not as a detailed guide to the procedure for contracting authorities, but to set minimal legal regulation.

This approach can be demonstrated, for example, in the provisions governing the evaluation committee. Current legislation requires the contracting authority to appoint an evaluation committee for the evaluation of tenders, how many members the committee must have, who can become a committee member and regulates the conduct of the evaluation committee in detail. In contrast, the new legislation simply states the contracting authority may appoint an evaluation committee to evaluate tenders. The Act specifies no further rules for its constitution or conduct, and it is left entirely to the contracting authority’s will on how it will appoint an evaluation committee and what rules it sets for its conduct.

However, legislators plan to issue detailed methodology in relation to the Act, which, although not binding, will contain a detailed guide for contracting authorities on how to proceed when awarding public contracts to ensure they meet all legal requirements, both when actually awarding public contracts, in proceedings before awarding public contracts (e.g. when determining the value of the public contract, evaluation criteria, etc.) and following the award of public contracts (in particular, publication on the contracting authority’s profile and in the Public Procurement Bulletin).

2. Small-scale and below-threshold public contracts

Legislators have retained limits for small-scale contracts in the amount of CZK 2,000,000 for supplies and services, and CZK 6,000,000 for construction work. The Act will no longer apply for below-threshold contracts (except basic principles), however, under the new Act, contracts with a value exceeding CZK 500,000, excl. VAT, will continue to be published on the contracting authority’s profile.

The simplified below-threshold procedure may continue to be used for all below-threshold contracts for supplies and services, but only to a limit of CZK 50,000,000 for construction work. The limit has thus been reduced by half, which will significantly limit the ability to use the simplified below-threshold procedure for construction work.

The simplified below-threshold procedure itself remains virtually unchanged, with its associated shorter periods (11 days for the submission of tenders), the ability to address certain suppliers directly (at least 5) after publication of notice, or the ability to replace documents on qualifications by statutory declaration.

3. Periods for the submission of tenders

The new Act shortens the minimum period for the submission of tenders for above-threshold contracts to 22 working days (+ 5 working days if electronic instruments are disallowed), instead of the 52 calendar days under current legislation.

In the case of contracts for supplies and services, this period can be further shortened to 11 working days (on the publication of preliminary notice or due to unforeseeable urgent circumstances).

Other periods (deadlines) for the submission of tenders are newly given in working days rather than calendar days, but, as a rule, there are only minor differences.

4. Assessment and evaluation of tenders

The assessment and evaluation of tenders has also undergone several significant changes.

One change, in particular, that can particularly facilitate the assessment and evaluation of tenders for contracting authorities is the ability to choose whether the contracting authority first conducts an evaluation of tenders and subsequently assesses their completeness, or whether it proceeds according to current legislation, and initially assesses tenders and then evaluates them.

This reverse procedure will greatly facilitate the assessment and evaluation of tenders, especially in cases where evaluation criteria are quantified, e.g. if this only concerns the quoted price. In such a case, the contracting authority will first compare quoted prices and subsequently assess the completeness of the tender, but only for the selected candidate. The contracting authority will therefore no longer need to check the submission of all documents, permits and other documents required in tender documentation for all tenders, but only for the chosen candidate. The assessment of the completeness of tenders, especially in the case of a large number of candidates or foreign candidates, can be the most administratively demanding and costly activity. This procedure therefore allows contracting authorities to save considerable time and administrative costs.

Another change in the evaluation of tenders is the return of economic qualifications. The contracting authority is entitled to require a certain minimum turnover by the candidate, though not higher than twice the estimated value of the contract.

In turn, candidates will be able to reduce administrative costs under the provisions of the Act that instead of extracts from public registers (e.g. the Commercial Register) allow a reference to this register only, while it will be sufficient to submit a simple copy of remaining documents, where the original will only be required from the winning candidate.

5. Exclusion of a candidate who has not proved successful

The contracting authority will also be newly entitled to exclude candidates from the award procedure who, in the past three years, have either (i) been guilty of serious or continued misconduct in the performance of their obligations to the (any) contracting authority, which have led to the premature termination of the contract, damages or similar sanctions; or (ii) been guilty of serious professional misconduct that calls their reliability into doubt.

The contracting authority will thus be able to exclude those candidates who have not proved successful in the past and who pose the risk they will not duly fulfil the public contract in question. However, the contracting authority will have to prove the existence of such misconduct.

In a simplified below-threshold procedure, the contracting authority may also establish other qualification criteria in tender specifications than those stipulated in the Act, for example, the candidate having no outstanding debts payable to the contracting authority, and to exclude a candidate for their violation.

6. Additional work

One of the most significant changes introduced by the new Act is the ability to make changes to an already concluded contract that do not alter the overall nature of the public contract, whose value is lower than the financial limit for above-threshold public contracts and less than 10% of the original value of the contract for supplies and services, or 15% of the original value of the contract for construction work.

Furthermore, in a negotiated procedure without publication, it is possible to award additional construction work or services that (i) could not have been foreseen, (ii), cannot be awarded to another supplier for technical or economic reasons, (iii) would cause the contracting authority considerable difficulties or increased costs if awarded to another supplier, and (iv) do not exceed 50% of the value of the original contract. Current legislation only allows such changes to a value of 30% of the value of the original contract.

7. Conclusion

The proposed legislation shows a clear interest in simplifying and facilitating the procurement procedure for both contracting authorities and candidates, while accompanying methodologies should provide a clear and easy procedure for compliance with all the requirements of the Act.

These methodologies, however, have not yet been published and therefore their quality and real value for contracting authorities and candidates cannot be assessed.

In conclusion, we remind you that the above summary is based on the draft bill, which has yet to go through the approval process in Parliament. It is therefore possible that the approved wording will differ significantly to the evaluated version.

For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail: jkucera@kuceralegal.cz ; tel.: +420604242241.