Public Procurement

Public Procurement A short insight regarding public procurement in Romania

Șerban Nicolae Simion 2/5/14

Administrative Law of Goods

1 Șerban Nicolae Simion

Contents

INTRODUCTION 2

LEGAL FRAMEWORK 3

INSTITUTIONAL FRAMEWORK 6

SUPERVISORS 6

CONTRACTING AUTHORITIES 7

ECONOMIC OPERATORS 7

PRACTICES 7

CONCLUSIONS 10

BIBLIOGRAPHY 12


Introduction

The aim of this paper is to offer a general understanding of public procurement in Romania,

from a legal, institutional and practical point of view. In order to achieve these goals, we must

first establish what public procurement is and what it bases itself upon.

Perhaps the handiest definition that could be provided is by stating the fact that public

procurement describes the obtaining of works, products or services by the national, regional or

local public authorities. The European Union sets the rules of this activity by regulating

procedures in order to allocate contracts for products, works or services in its jurisdiction, across

the territories of all the 28 states comprising the EU today.

The mobility of goods and services are insured, guarded and provided by the European

Union through mechanisms of monitoring and sanctioning any situation of unfair competition.

Since the provenance of the contracted subjects are not nationally-bound, the public institutions,

utilities and other entities of the public sector (contractor authorities) must publish the results

of allocated contracts for the plethora of activities they pursue both nationally and community-

wise, according to the principles of public procurement stated by the EU.

The public procurement process has a number of principles that guard its wellbeing, which,

if in absence, would lead to a defection and a liability of the entire process.

According to the Order of the ANRMAP President, the public procurement principles are:

1. Non-discrimination – assuring conditions for the real competition to take place

and every economical agent, regardless its nationality, to be able to take part of the

attribution procedure and have the chance to become a contractor;

2. Equal treatment – represents the establishment and application during the whole

attribution process of the same requirements, rules and identical criteria for all the

economical agents so that they all would benefit from equal chances of becoming a

contractor;

3. Mutual recognition – represents the acceptances of:

Products, services, works done legally on the EU market;

Diplomas, certificates and other documents issued by legal authorities

from other countries;

Technical specifications equivalent to the national requirements.

4. Transparency – presenting to the public all the information regarding the

attributions procedure;


5. Proportionality – assuring the correlation between necessities of both the

contractor and the authority, the object of the public procurement contract and the

requirements that need to be fulfilled;

6. Efficiency in using the public procurement – represents the application of the

competition attribution process and the utilization of criteria which reflects the optimum

price-quality ratio;

7. Taking responsibility – represents the clear establishment of the responsibilities

and tasks of the persons taking part in the public procurement process, following the

assurance of professionalism, impartiality and independence of the decisions adopted

during this process.

Legal Framework

In 2004 the European Commission agreed on two new directives regarding the public

procurements, Directive 2004/17/EC and Directive 2004/18/EC. On this subject, the European

Union adopted several rules which are applicable to Romania, since it has assumed some

obligations through the European Union accession program.

The basic principles for these rules are the removal of the barriers and opening of a new

competitive and non-discriminatory market.

On December 13th 2013, the adoption of the European Commission Regulation no.

1.336/2013 modifying the 2004/17/EC, 2004/18/EC and 2009/81/EC Directives, altered the

quantum of the threshold values applicable to national public procurement procedures,

expanding all the values with a marginal 255000 € for public procurement. The alterations are

in force from the first day of 2014 and apply to all procedures carried out after this day.

On top of that, as notified by the national authority that is responsible for public

procurement, the National Authority for Reglementing and Monitoring Public Procurement1,

on January 15th 2014 in Strasbourg the European Parliament adopted a new legal package that

aims to modernize the legal framework regarding public procurement.

The new pack is composed of 3 directives, each of them aiming different issues of public

procurement, but the first is oriented directly at solving issues of the general public acquiring

of goods, another is intended to solve issues of the utilities sector (water, energy, transportation

1 Autoritatea Naţională pentru Reglementarea şi Monitorizarea Achiziţiilor Publice (ANRMAP)


and postal services) and the last is to address the attribution of concession contracts, establishing

common standards for concessions for the first time in the community’s legislation.

A key aspect in the new rules of attribution and the new criteria refers to innovative

approaches of the candidates, an ecological spirit and social consideration, encouraging fair

competition on the market and a balanced quality-price ratio. What is more, the new rules

facilitate the participation of SMEs to public procurement procedure and would provide stricter

provisions for subcontracting.

The member states are given a 24 months term for transposing the 3 directives into national

legislation and therefore a serious reshaping and reconfiguration of the legal framework is to

follow this actions.

The actual legislation in Romania concerning the public procurements took effect in June

2006 and had as a main goal the conversion of the new directives, on this topic, of the European

Union, in a way which would guarantee the complete harmonization of the community’s legal

framework.

In terms of national legal framework of public procurement, in Romania the normative

rules are the following:

Government Emergency Ordinance no. 34/2006 about the allocation of the

public procurements contracts, public works‟ concession contracts and services‟

concession contracts, approved by the Law no. 337/2006, modified and completed by

Law no. 128/2007 and Government Emergency Ordinance no. 94/2007; Government

Decision no. 925/2006 for the approval of the Norms to apply the provisions concerning

the public procurements‟ allocation from the Government Emergency Ordinance no.

34/2006 about the allocation of the public procurements contracts, public works‟

concession contracts and services‟ concession contract;

Government Decision no. 1660/2006 for the approval of the Norms to apply the

provisions concerning the public procurements‟ allocation using electronic methods

from the Government Emergency Ordinance no. 34/2006 about the allocation of the

public procurements contracts, public works‟ concession contracts and services‟

concession contract;

Government Decision no. 71/2007 for the approval of the Norms to apply the

provisions concerning the public works‟ concession contracts and services‟ concession

contracts‟ allocation from the Government Emergency Ordinance no. 34/2006 about the


allocation of the public procurements contracts, public works‟ concession contracts and

services‟ concession contract;

Order of the President of NARMPP1 no. 155/2006 regarding the approval of the

Guide for the allocation of the public procurements‟ contracts;

Order of the President of NARMPP no.183/2006 concerning the application of

the provisions regarding the media contract;

Government Emergency Ordinance no. 30/2006 regarding the checking function

for the procedural aspect of the allocation process for public procurements contracts,

public works‟ concession contracts and services‟ concession contract;

Law no. 228/2006 for the approval of the Government Emergency Ordinance

no. 30/2006 regarding the checking function for the procedural aspect of the allocation

process for public procurements contracts;

Government Decision no. 942/2006 for the approval of the application norms of

the Government Emergency Ordinance no. 30/2006 regarding the checking function for

the procedural aspect of the allocation process for public procurements contracts;

Government Decision no. 1083/2007 for the modification and addition of the

application norms for Government Emergency Ordinance no. 30/2006 regarding the

checking function for the procedural aspect of the allocation process for public

procurements contracts, public works‟ concession contracts and services‟ concession

contract approved by the Government Decision no. 942/2006; Order no. 113/2008 for

the approval of the Regulation regarding the supervising of the allocation of the public


contract;

Directive 2004/18/CE of the European Parliament and European Council from

March 31, 2004 regarding coordination of the allocation’s procedures of the public


contract;

Directive 2004/18/CE of the European Parliament and European Council from

March 31, 2004 regarding coordination of the allocation’s procedures of the public

procurements contracts in the sectors: water, energy, transports and postal services;

Common vocabulary of the public procurement – CVPP – adopted by the

European Parliament and European Council through the Regulation no. 2195/2002/CE,

regarding the common vocabulary of the public procurement, published in the Official


Journal of the European Union no. L340 from December 16, 2002 and modified in

September 15, 2008.

According to ANRMAP, the national legislation is to be reshaped by the government,

increase the administrative capacity of national authorities to pursue public procurement, to

diminish the level of stability of the legal framework and to increase the efficiency of the

National Programme for Public Procurement, fluidization of the entire process for the

Economic Operators and the Contracting Authorities as well.

The new resort legislation would go to the extent of collaboration with other entities, like

the Society for Excellency in Public Administration (SEAP) and the way this entity carries out

its attributions. In addition to this, it eliminates chances of penalties and provides for the

possibility to delay or extend the terms of attributed contracts in a given interval.

This new framework is to provide information for aspects unclear or not stipulated before

in legislation like minimum requirements for qualification for candidates, the publication of the

call for procurement in SEAP and the method of attribution, clarifications for the process of

calling for proposals and terms and conditions for rejecting a proposal, the depositing and

retribution of the guarantee for participating in case of a framework agreement, price adjustment

situations, electronic use for transmission of documents and many other sections that are to

improve the entire process of procurement.

Institutional Framework

The institutional framework is divided in 3.

Supervisors

The supervisors consist of:

The ANRMAP – the public institution, legal entity, subordinated to the

Government, whose fundamental role is the conceptual formulation, promoting and

implementation of the policy regarding public procurement

The Ministry of Finance and Economy through the Coordination and

Verification Unit for Public Procurement2 – speciality organ of public administration

and is responsible with the verification of the procedural aspects regarding the

attributing process of the contracts which are regulated by the legislation for public

2 Unitatea pentru coordonarea și verificarea achizițiilor publice (UCVAP)


procurement contracts, public work concession contracts and the services concession

contracts and verifies the steps of the public procurement contract from the publishing

of the participating announcement until the attributing and signing of the contract.

National Council for Solving Complaints3 - the entity with administrative-

jurisdictional activity able to solve the contestations formulated during the attribution

procedure of the contract.

Contracting Authorities

According to existing law, contracting authorities may consist of:

Any state entity, public authority or institution that operates at a local, regional

or central level

Any organ regulated by public law, other than the ones from the first category,

being a legal entity, and has been created in order to satisfy needs without commercial

or industrial character

Any association of the organs mentioned at the first two categories

Any public institution which operates in any of the activities mentioned in

Chapter VIII, Section 1 from Government Emergency Ordinance no. 34/2006

Any other law subject, other mentioned at the first four categories, which

involved in any of the activities mentioned in Chapter VIII, Section 1 from Government

Emergency Ordinance No. 34/2006.

Economic Operators

According to existing law, this category is represented by any product manufacturer,

service provider or work executor – individual or legal entity, governed by public or private

law, or a group of such entities which offer legal good, services or executes works.

Practices

To provide with an example of practices for public procurement, an example has been

chosen form the array of test cases at the High Court of Cassation and Justice of Romania.

In line with the imperative nature contained in art. 286 G.E.O. No. 34/2006, the disputes

concerning public procurement are the exclusive competence of the administrative courts, so

it's illegal to insert an arbitration clause in the contents of a public contract.

3 Consiliul Național pentru Soluționare a Contestațiilor (CNSC)


Non-invoking by the parties, under art. 385 of the Code of Civil Procedure in the arbitration

proceedings, the exception concerning the validity of the arbitration agreement does not

preclude the court vested with the action for annulment of arbitral dispute the parties this

exception, finding that the dispute is not capable of settlement by arbitration to annul that

judgment, applying art. 364 para. (1). a) of the Code of Civil Procedure.

Decision No. 3483 of 29 June 2010

By sentence No. 381 of 22 October 2009 Craiova Court of Appeal - Administrative and

Fiscal, rejected the action for annulment of the Decision no. 21 of 12 December 2008, the

Arbitral Tribunal issued by the Chamber of Commerce and Industry Oltenia, in case no. 2/2008,

action brought by the applicant SC P SA Craiova in contradiction with the defendant council

G.

To that judgment, the court held the parties to a contract for services under GEO. No.

34/2006, concerning the award of the public contract in which SC P SA as provider was required

to provide design services for "Upgrading roads in village G, Dolj County."

The parties concluded a protocol whereby they agreed that within 30 days after signing the

contract, to be taught the feasibility study, including surveying and geotechnical study and after

approval and payment of this phase, 30 days , to surrender documentation phase CAP PT + oF.

Between the parties arose disagreements that were not resolved amicably, so that SC

Project SA under contract, resorted to arbitration City Council requesting the defendant to pay

the sum of 35 700 lei, representing consideration for the unpaid work and the imposition of

penalties for delay.

By Decision no. 21 of 12 December 2008 the Arbitration Court of the Chamber of

Commerce and Industry Oltenia, the application was rejected.

The court noted that according to art. 35812 para. 1 of the Code of Civil Procedure, any

exception concerning the existence and validity of the arbitration agreement, the Arbitral

Tribunal limits arbitrators' authority and the proceedings must be raised, under penalty of

forfeiture until the first hearing.

The applicant did not invoke the arbitration proceedings exception of setting up the

tribunal, appreciating so that, in the light of the text of the law on hold, it is deprived of its right

to invoke the exception to this.


Article 364 lit. f) the Code of Civil Procedure deals with situations of extra, minus and plus

petition, applicant invoking two of the three situations, namely extra minus petition and petition.

Invoked provisions are not applicable in the case before, as the arbitral tribunal in relation

to the evidence given, the applicant retained fault in the execution of the contract and dismissed

the action.

Against this decision, the legal term appealed SC P SA Craiova, criticizing it for illegality

in two ways:

1) The arbitral tribunal has not been constituted in accordance with the arbitration

agreement and the provisions of law, in the sense required by art. Of 364. (1). c) of the Code of

Civil Procedure;

2) The arbitral tribunal to decide on some things that were not asked, however did not rule

on those required for the purposes of art. Of 36. (1). f) of the Code of Civil Procedure.

At the hearing held on 22.06.2010, the High Court questioned the admissibility of the

arbitration clause in the parties' contents contract between the two parties.

This dispute arose between the parties following disagreements occurred on the service

contract, pursuant to Ordinance no. 34/2006, concerning the award of the public contract in

which SC P SA as provider was required to provide design services for "Upgrading roads in

village G, Dolj County."

In terms of legal text cited above, the rule relating to the jurisdiction of the court in this

matter has been established as follows:"

(1) Processes and requests for documents issued by the contracting authority before the

contract and provide compensation for damages caused during the procedure award shall be

settled in the first instance by the administrative department of the fiscal court and the

jurisdiction of which the contracting authority is situated.

(1.1) The processes and applications for performance, nullity , cancellation, termination ,

cancellation or termination of unilateral public procurement contracts shall be settled in the first

instance by the commercial section of the district court in which the contracting authority is

situated . The provisions of this section shall apply accordingly.

(2) Disputes concerning the conduct of award procedures falling within the scope of the

provisions of this ordinance, and the rights and obligations under these procedures shall be


resolved urgently and in particular, according to art. 7202, 7207 and art. 7209 of the Code of

Civil Procedure, which apply accordingly."

Thus, inserting the arbitration clause in the contract between the parties violate the legal

text mentioned above, not observing that this court ruled unlawful, dismissing the action for

annulment of the arbitration award. In this case, it is required that the first court to apply art. Of

364. (1). a) of the Code of Civil Procedure to annul the arbitration award, holding that the

dispute was not capable of settlement by arbitration, legal text operant these proceedings.

Also the first court misapplied the provisions of art. 358 of the Code of Civil Procedure.

Based on the text of the law, the court found that the applicant failed to raise in arbitration

proceedings related to the establishment of the tribunal no exception, so the formula disqualified

from exceptions. Same legal text refers to the invocation of other exceptions, including the

relative validity of the arbitration agreement, but non-invoking of arbitration proceedings to

such an exception does not preclude in any way the court vested with the action for annulment

of the decision arbitration the parties to discuss the question of whether such an agreement is

valid for public contracts.

Compared to the preceding, seeing art. GEO 286. 34/2006 and art. Of 364. (1). a) of the

Code of Civil Procedure, the High Court upheld the appeal by SC P SA Craiova, amended

judgment under appeal, that allowed the action for annulment and, accordingly, set aside the

Decision no. 21/12.12.2008 of the arbitral tribunal. The cause is for the Court Dolj, the

administrative court, the case was sent to the court, the settlement application filed by SC P SA

Craiova.

Conclusions

The public procurement process has proven to bring necessary added value to the public

sector, as its importance does not prove to be cumbersome for society. Public procurement helps

mitigate the situation in which the public sector does not have the necessary resources to

provide for its citizens or its own entities in their activities.

It is a solution that the public sector has found to limit, legitimize and cover its limitations

and failures to provide with goods, services or works as a result to the rapid development of

economy and technology in an international context characterized by competition, innovation

and social pressures for more, better and cheaper. The melting national borders of the European


Union make up for what one state cannot provide and offer him the chance to get what it needs

form the international community.

Nationally speaking, Romania has seen an improvement in transparency and development

towards procurement, but that only happened because those criteria are mandatory by law. On

top of that, a set of modifications is to be thrown at the system. It is still uncertain to say whether

the alterations would fulfil their goals of making public procurement more stable, clear and

open for participants without liabilities. The limits the changes would impose on participation

from economic operators is only aiming at a better selection processes, where the fittest is

attributed the contract and the effect is reflected in a cost-effective and cost-aware behaviour.


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1. Word Count:

a. Without bibliography, front page, table of contents: 3271

b. Complete: 3571

2. Total number of pages: 14

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