Amendment to the Public Procurment Act

Martin Kluch

Richard Jacko

What the amendment to the Public Procurement Act brings from 01.08. 2024?

The National Council of the Slovak Republic has approved an amendment to the Public Procurement Act (“PPA”), which, effective 01.08.2024, and in case of cancellation of the request for redress and shortening of the period for submitting objections effective 27.06.2024, brings several significant changes in the field of public procurement. Among the most significant are:

1.   Increasing the limit of the PPA to € 50,000.

Effective 01.08.2024, the PPA is oriented and can apply only to public procurement with an estimated procurement contract value equal to or higher than € 50,000 excluding VAT instead of the previous € 10,000 excluding VAT. This means that the contracting authority or contracting entity is not bound by the provisions of the PPA in the case of small-scale contracts with a value of less than or equal to € 49,999.99.

2.   New exceptions which shall not fall under the public procurement mode.

Public procurement exceptions are situations in which it is not necessary to apply the procedures defined in the PPA and the procurement contract can therefore be awarded directly to the selected economic operator.

Effective 01.08.2024, it is therefore possible to directly award a sub-limit contract relating to:

• the creation and delivery of the results of one’s own creative intellectual work resulting in an audiovisual work,
• the supply of foodstuffs where the customer is a school catering establishment or a purpose-built catering establishment for higher learning institutions,
• the supply of food intended for catering in the context of a social service provided and commissioned by a higher territorial unit, a municipality or a social service provider; and
• the production, publication and purchase of textbooks, teaching texts and workbooks commissioned by the school.

The possibility of directly awarding contracts for the supply of foodstuffs has already been regulated in the Slovak Republic. Despite the reintroduction and extension of this exception to colleges, a number of problems have not been resolved. The law does not differentiate between different types of foodstuffs, but takes them as a whole, which results in many contracting authorities falling into the mode of above-limit contracts.

Another of the exceptions, which applies to both large and small procurement contracts, is the security interests of the state.  The explanatory memorandum to this exception states that it may not only apply in times of war or imminent danger to life, health and property, but may also apply in the event of preventive measures. This exception is therefore, in our opinion, poorly formulated, as it may be abused in practice.

3.   Cancellation of low-value procurement contracts.

The amendment intends to maintain three types of contracts, namely small-scale, sub-limit and above-limit procurement contracts. Therefore, only sub-limit and above-limit procurement contracts shall now be regulated in the PPA. 

4.   Changes in the procedure of awarding sub-limit procurement contracts.

From 01.08.2024, the procedure of awarding of sub-limit procurement contracts shall be carried out in two modes, namely with and without publication.

It shall be possible to procure goods and services without publication by approaching at least 3 instead of the previous 2 economic operators for the purpose of submitting a tender. In this respect, the law does not address the situation where at least 3 economic operators do not exist at all. The solution to this situation is, in our opinion as well as in the established practice, to publish the tender in the Bulletin of the Office for the Protection of Competition. In case the contracting authority finds 3 economic operators, the deadline for submission of tenders is arbitrary, i.e. at the will of the contracting authority.

From 01.08.2024, the procedure of awarding of sub-limit procurement contracts shall be carried out in two modes, namely with and without publication.

Goods and services can be procured without publication by approaching at least 3 instead of the original 2 economic operators for the purpose of submitting an offer. However, the law does not address in this regard the situation where at least 3 economic operators do not exist at all. The solution to this situation is, in our opinion as well as in the established practice, to publish the offer in the Bulletin of the Office of Public Procurement. In case the contracting authority finds 3 economic operators, the deadline for submission of offers is left to the decision of the contracting authority. Then, with the entry into force of the amendment, the contracting authority is also obliged to publish a contract report within 10 days of the publication of the concluded contract in the Central Register of Contracts.

In the case of construction works, the procedure without publication may be applied for contracts up to EUR  800,000 by addressing at least 3 economic operators. In this case, the contracting authority may address at least 3 economic operators or decide to proceed with the publication procedure.

The publication procedure is obligatory for construction works with a value equal to or greater than EUR  800,000. The contracting authority is also obliged to publish a call for submission of bids via an electronic platform to an undetermined number of economic operators.

In the case of a sub-limit concession, with the entry into force of the amendment, the contracting authority is obliged to send to the Office for Public Procurement (“the Office”) for publication the information on the award of the sub-limit concession. 

At the same time, the establishment of a committee is no longer necessary for the evaluation of bids in the case of sub-limit procurement contracts, unlike in the case of above-limit contracts, where such obligation remains.

5.   How long are the periods for the procedure with publication?

The publication procedure requires compliance with minimum time limits for the submission of bids, namely:

• 9 working days from the date of sending of the call for procurement contracts for the supply of goods or services; and
• 14 working days from the sending of the call for construction works contracts.

6.   Extension of the time limit for the submission of bids.

If, in the course of the clarification process, the contracting authority made substantial changes to the documents necessary for the preparation of the offer, it was obliged to extend the time limit accordingly. At the same time, it was obliged to extend the time limit accordingly when proving fulfilment of the conditions of participation in the proceedings. With the entry into force of the amendment, the contracting authority is obliged to extend the time limit for the submission of bids in these cases by the full length of the original time limit.

The obligation still remains to extend the time limit for the submission of bids accordingly if the contracting authority fails to reply to a request for clarification received in time and within 6 days before the expiry of the time limit for bid submission.

In the case of strategic contracts, the contracting authority is obliged to provide the clarifications necessary for the preparation of the tender at the latest 6 days before the end of the time limit for bid submission.

The contracting authority is not obliged to provide clarification if the request for a clarification is not received in time, i.e. at least 5 days before the end of the time limit, i.e. 11 days before the deadline for submission of bids. In the event of a change in the tender documents, the time limits shall be extended accordingly.

7.   How to proceed if eForms does not work?

The amendment to the PPA also addresses the situation if eForms does not work. If eForms does not work, there is an obligation to send a notification via the European Bulletin.

8.   Setting a ceiling for social and environmental considerations.

Under the previous legislation, a contracting authority was obliged to use social or environmental considerations in at least 6% of the public procurement contracts in a calendar year in which it launched or carried out at least 10 public procurement procedures (excluding low-value contracts). This obligation is changing as of August this year.

Since August, this obligation applies to sub-limit procurement contracts for goods and services as a whole and for construction works with an estimated contract value of less than EUR 300,000.

9.   New financial limits from 01.08. 2024.
   • Financial limits for Municipalities, Higher Territorial Units, Associations and Legal Entities within the meaning of the PPA.

With the removal of low-value procurement contracts, the financial limits for sub-limit and above-limit procurement contracts for municipalities, higher territorial units, legal entities and associations in the position of contracting authorities have also been adjusted effective 01.08.2024 as follows:

• Financial limits for the State.

Financial limits for sub- and over-limit contracts in which the State is the contracting authority. They are as follows from 01.08.2024:

10.   Cancellation of the request for redress effective 27.6.2024.

On 27.06.2024, the request for redress was cancelled by Act No. 142/2024 Coll. on extraordinary measures for strategic investments.

The institute of the request for redress served the contracting authority as a tool for correcting a detected inaccuracy in the procurement documents. The institute of request for redress always preceded the submission of objections and therefore the objection proceedings.

After the amendment to the PPA, it is only possible to obtain a remedy on the basis of a request for clarification or directly by means of an objection.

In public procurements that started before 27.06.2024, this change does not apply and it is still possible to use the institute of a request for redress.

11.   Shortening of the period for submitting objections to 10 days effective 27.06 2024.

Objections are one of the basic instruments for the protection of entities participating in the public procurement process. The Office decides on them in the context of public procurement supervision. Together with the cancellation of the institute of the request for redress, the periods for submitting objections were shortened as of 27.06.2024.

 Objections can now be lodged within 10 days of:

• publication of the notice in the European Bulletin or publication of the notice in the Bulletin of the Office,
• the provision of the documents necessary for the preparation of the request to participate, bid or proposal provided by the auditee,
• the delivery of a notification of non-inclusion in a dynamic purchasing system (“DPS”) or a qualification system,
• the delivery of a notification of the result of the evaluation of bids or proposals.

12.   Change in the range of procurement contracts that are not open to objection.

Objections as one of the means of review procedures may not be lodged against any contract. The amendment changes this scope of contracts effective 01.08.2024.

Thus, objections cannot be lodged against:

• the award of an sub-limit contract for the supply of goods or services, or the award procedure for a sub-limit concession,
• the award of a sub-limit contract for the execution of works if the estimated value of the contract is equal to or less than EUR 1,500,000.00,
• the award of a contract in the field of defence and security where the estimated value of the contract is less than EUR 300,000.00 for a contract for goods and services and EUR 800,000.00 for the execution of works.

Objections as one of the means of review procedures may not be submitted against any contract. The amendment changes this scope of contracts effective 01.08.2024.

Therefore, objections cannot be lodged against:

• the award of a sub-limit procurement contract for the supply of goods or services, or the sub-limit concession award procedure,
• the award of a sub-limit procurement contract for the execution of construction work where the estimated value of the procurement contract is equal to or less than EUR 1 500 000,
• the award of a procurement contract in the field of defence and security where the estimated value of the procurement contract is less than EUR 300 000 for a contract for goods and services and EUR 800 000 for the execution of construction work.

13.   The right to submit an objection is limited to tenderer, candidate and participant.

The amendment of PPA has reduced the range of subjects entitled to submit objections.

Objections can no longer be submitted by a third party (other than a candidate, tenderer and participant) whose rights or legally protected interests have been or may have been affected by the procedure of the auditee.

At the same time, an objection may not be submitted by a state administration authority that certifies a legal interest in the matter, if the auditee received financial resources from the European Union.

As of 01.08.2024 of this year, only candidate, tenderer and participant whose rights or legally protected interests have been or may have been affected by the procedure of the auditee are entitled to submit objections.

14.   New definition relating to the remedy of errors in the itemized budget.

The new legislation reflects the practice where, in the case of large, itemized budgets, there were often errors in writing and counting which could lead to the exclusion of a tenderer.

Now, a modification of the itemized budget shall not be considered as a modification of the bid, provided that the total price remains unchanged and the remedy does not affect any other criteria for the evaluation of the bids.

15.   Application of the conditions of participation to those having representative, decision-making or control powers.

Only an economic operator in compliance with the conditions of participation in a procurement procedure relating to personal status may take part in the procurement procedure.

One of the main conditions is integrity. As of 01.08.2024, the range of persons required to prove their integrity is being extended. In addition to the economic operator, the members of its statutory and supervisory bodies and the proxy, any person who has representative, decision-making or control powers in the tenderer, is required to submit a criminal record statement.

The integrity of such persons shall be proved by an affidavit containing a list of such persons. If there are no such persons in the firm, the tenderer must submit an affidavit stating so.

The problem is the implementation of this provision in large conglomerates, where the verification of integrity can be very difficult.

16.   Tax and insurance arrears are no longer an obstacle to participation in public procurement.

Another condition for participation in public procurement is the absence of arrears of social insurance premiums, health insurance and tax arrears. Now, it shall not be possible to exclude a tenderer from public procurement if its arrears do not cumulatively exceed EUR 200.00.

A tenderer may not be excluded from a public procurement procedure if he has already paid his arrears or has been allowed to pay them in instalments.

17.   Extension of the period for registration of a person on the list of economic operators.

In accordance with the amendment to the PPA, the Office is obliged to enter an economic operator in the list of economic operators within 15 working days of receiving a complete application for registration, including all annexes. Therefore, the Office has 15 working days to do this instead of previously worded 15 days.

18.   Extension of the duration of framework agreements to 12 months.

Under the previous legislation, a framework agreement can be concluded in the DPS for a maximum period of 6 months. Since the amendment of the PPA, it is possible to conclude a framework agreement for 12 months.

19.   Reviewing the actions of the auditee before and after the conclusion of the contract.

With the entry into force of the amendment of the PPA, the Office shall now only be able to review the acts of the auditee before the conclusion of the contract:

• at the initiative of the auditee to carry out an audit of the contract or concession awarded by it, except for contracts and concessions concluded and implemented with EU funds; or
• in objection proceedings on the basis of objections.

On the other hand, the Office shall be able to review the acts of the auditee after the conclusion of the contract:

• at the Office’s own initiative,
• at the initiative of the managing authority under a specific regulation; or,
• at the initiative of an audit authority under a special regulation.

20.   Examination of the actions of the auditee in the case of sub-limit procurement contracts which cannot be opposed by objection.

In the case of sub-limit procurement contracts which are not open to objections, the internal control body of the auditee shall carry out the review of the actions.

After the conclusion of the contract, in the case of sub-limit procurement contracts where no objections can be submitted, the Office shall carry out the audit only on the basis of an initiative of the law enforcement authorities, the Supreme Audit Office of the Slovak Republic, the Antimonopoly Office of the Slovak Republic or based on the plan of audit activities.

21.   The concentration principle is strengthened in objection procedure.

In the objection procedure, the Office is bound by the scope of the facts to which the objections are directed.  At the same time, it cannot rule beyond the facts stated. Outside the objection procedure, the Office is bound by the notification of the complaint.

22.   Merging the audit procedures with procedures for an administrative offence.

With the entry into force of the amendment to the PPA, there is also a merger of the audit procedure with the administrative offence procedure. This means that if the Office initiates a procedure for audit of the acts of the auditee, it shall also include a decision whether to impose a fine for any administrative offences defined in the PPA. The decision to impose a fine shall include the possibility of appeal.

23.   New appeal procedure.

Following the possibility to submit an appeal, a new appeal procedure was introduced, which shall allow inspected parties to submit an appeal against a decision imposing a fine. The appeal must be submitted within 15 days of the date of delivery of the decision against which it is directed and shall be decided by the President of the Office based on a proposal from a committee appointed by him or her.

The President of the Office shall be bound by the content of the appeal. Exceptions to this rule are cases where the contested decision was taken based on an incomplete finding of fact or on an error of law justifying a change in the contested decision.

The time-limit for the decision on the appeal shall be 30 days and, in particularly complex cases, 60 days from the date of delivery of the appeal to the President of the Office.

24.   Reduction of fines for administrative offences and their review by the courts.

For the most serious offences, the fixed 5% of the contract price is reduced to a range of 0.1% to 5% of the contract price in cases where the contracting authority has avoided the obligation to conclude the contract, where it has not complied with the criteria for evaluating tenders and where this has affected the outcome of the procurement procedure.

Where the subject-matter of the procurement contract is divided with the intention of avoiding the use of the procedure for the award of an above-limit procurement contract or the award of a sub-limit procurement contract, the penalty shall be set at between 0.1 % and 5 % of the sum of the contract prices. At the same time, no fine shall be imposed for fund procurement contracts in which a remedy has been imposed.

For fines imposed for administrative offences, the possibility of a review of the amount of the fine by a court is introduced.

If the party to the proceedings notifies the Office that it fully, unconditionally and irrevocably accepts that it has committed the administrative offences, the Office shall impose a 50% reduction of the fine in the decision. The decision to impose a fine reduced by 50% cannot be appealed. The decision to impose a 50% reduction of the fine is not reviewable by a court.

25.   Proceedings initiated before 01.08.2024.

In the final provisions of the amended PPA, we do not find the procedure for public procurements initiated before the amendment of the PPA. Therefore, it can be assumed that public procurement procedures commenced before 01.08.2024 shall continue to be governed by the old legislation in force until 01.08.2024.