Stop to Contractors Providing False Information

The amendment to the Public Procurement Act came into force at the beginning of this year.

At the same time, another proposed draft amendment to this act is being discussed by legislators. Some significant aspects related to or talked about in connection with public contracts at present are mentioned below.

Changes as of 1 January 2010

Adopted in order to transpose EU Directive 2007/66/EC, the amendment to the Public Procurement Act came into force on 1 January 2010, aiming at increasing the efficiency of public contract awarding reviews and removing the most distinct formalisms brought about by the former legal regulation.

The amendment, for instance, introduces a list of persons banned to perform public contracts. On this blacklist, contractors having submitted bids with false information on their qualification shall be placed, whereas an entry in the blacklist shall result in a ban on performing public contracts for a period of three years.

Effective as of 1 January 2010, the amendment further implies an unambiguous right of contracting authorities to disclose information on the bid prices in the course of opening the envelopes with individual bids and simplifies the legal regulation of challenging the acts of the contracting authorities and conducting review proceedings before the Office for the Protection of Competition (hereinafter referred to as the “Office”).

Another significant novelty the amendment introduces as of 1 January 2010 is the ban on performing contracts. Performance of public contracts concluded by contracting authorities having failed to notify of commencing the tender may be banned by the Office and sanctioned by absolute nullity making the contracts legally invalid, whereas this relatively influential instrument may be adopted by the Office within a maximum period of six months from the day the contract in question is concluded. As of 1 January 2010, the area of public procurement is further affected by a decree amendment reducing the limits of excess public tenders, introducing new ones as follows:

Further Amendment

In addition to the effective changes mentioned above, it shall be noted that a subsequent amendment to the act was proposed in the Chamber of Deputies in May 2009. Going through a rather complex law-making procedure involving a few amending motions submitted by deputies and senators, the amendment was finally approved by the Chamber of Deputies on 18 May 2010. Introducing several interesting changes, the amendment – if signed by the President – is to come into force on 15 September 2010.

Aiming at reducing the administrative costs of contractors, this amendment enables the contractors to prove their qualification against simple copies of the documents required, whereas the originals may only be requested by the contracting authorities from the winner before the contract in question is concluded. Simplifying the process of completing the bids significantly, the documents may also be submitted in the Slovak language. Enabling the contracting authorities to draft thorough answers to the questions raised by the contractors, the amendment additionally introduces longer periods for submitting further information to the contractors. Implementing further partial changes, the amendment provides for defining the individual sub-evaluation criteria by the contracting authorities in a way expressing the value-for-money relation. Further regulated, public contracts worth a minimum of CZK 500 million that are concluded for a minimum period of five years (or an indefinite period of time) require the contracting authorities to request a preceding opinion of the Ministry of Finance, whereas failure to request the opinion makes the contract invalid.

Government Activities

A recent matter worth mentioning is Government Resolution No. 158 of 22 February 2010 that imposes a duty on the government members in advance to submit for consideration the basic parameters of conditions regulating tenders worth over CZK 500 million excluding VAT and additionally inform the cabinet on excess tenders called for either beyond the scope of law (i.e. subject to exemption) or within the procedure without notification. Following the Resolution, a non-legislative intent of the amendment to the Public Procurement Act was approved by the cabinet in April 2010. Including potential options of regulating the sensitive activity in the Public Procurement Act, the intent aims at providing for the security credibility of selected persons participating in tenders with a high expected amount involved.

Other Discussions

Discussing nearly 40 ideological intents of the partial changes to the Public Procurement Act, the initiative of the American Chamber of Commerce in the Czech Republic taken within the Platform for Transparent Public Procurement is another matter winning an attention of both the media and politicians, clearly implying the Public Procurement Act and its potential modifications long remain an object of interest.

Jan Strelička

ROWAN LEGAL