April 9, 2013

Public tendering and legal aspects of project business in Romania

Ligia Cecilia Popescu/Fabiola Meister Wolf Theiss Bucharest, Romania

Public Procurement

plays key role in new Government’s

objectives to improve business

environment in Romania!

TO

PIC

S

1. Relevant Legislation - Government Emergency

Ordinance no. 34/2006 (GEO 34/2006)

2. Rules for the implementation of GEO 34/2006

3. Underlying principles according to GEO 34/2006

4. Art 8 GEO 34/2006 – contracting authorities

5. Government Emergency Ordinance 77/2012 –

significant changes in line with European

legislation

6. Remedies and Enforcement

RELEVANT LEGISLATION AND IMPLICATIONS OF BEING A EU MEMBER STATE • The most important legal act regarding public procurement procedures

is Government Emergency Ordinance no. 34/2006 on the awarding of

public procurement contracts, works concession contracts and services

concession contracts, with subsequent amendments – it represents the

general legal framework for public procurement in Romania, as

amended.

• As a EU member state, Romania has a varied legislation on public

procurement, especially due to the transposition obligation of the

European directives. All the regulatory acts are in accordance with the

Treaty on European Union, with the Treaty on the Functioning of the

European Union, as well as with the directives on public procurement.

RULES FOR THE IMPLEMENTATION OF GEO 34/2006 Government Decision no. 925/2006 on the approval of the rules for the

implementation of the provisions regarding the award of public

procurement contracts, public works concession contracts and

services concession contracts

UNDERLYING PRINCIPLES ACCORDING TO GEO 34/2006

• GEO 34/2006 provides for the fundamental principles of the public

procurement procedures:

The principle of nondiscrimination and equal treatment means

ensuring the necessary conditions for effective competition, by

establishing and applying, throughout the award procedure, identical

rules, requirements and criteria for all economic operators, so that any

of them may participate in the award procedure and can enjoy equal

opportunities to become contracting parties.

UNDERLYING PRINCIPLES ACCORDING TO GEO 34/2006

• The principle of mutual recognition means accepting goods,

services and works which are legally offered on the European Union

market, diplomas, certificates and other documents issued by

competent authorities of other states, as well as technical

specifications, which are equivalent to those required at national level.

• The principle of transparency means making public all information

regarding the application of the award procedure especially in regards

to the opportunity to participate in the procurement process, the

elements of the tender documentation, as well as the result of the

procedure.

UNDERLYING PRINCIPLES ACCORDING TO GEO 34/2006

• The principle of proportionality means ensuring the correlation

between the customer's needs, the object of the contract and the

requirements requested to be fulfilled.

• The principle of the efficient use of the public funds means applying

the procedures for the award of contracts by way of competition and

using criteria that reflect the offers' economic advantages in order to

obtain the best value for money.

UNDERLYING PRINCIPLES ACCORDING TO GEO 34/2006

The relevance of these principles resides in their

creating the general legal framework for the awarding

of public procurement contracts. Moreover, according

to the legislation, any situation for which there is no

express regulation shall be interpreted through these

principles.

ART 8 GEO 34/2006 – CONTRACTING AUTHORITIES

Contracting authorities may be:

a) any governmental agency – public authority or public institution -

operating at central, regional or local level;

b) any body other than those stipulated under letter a), having legal

personality, which has been established for the specific purpose of

meeting needs in the general interest, lacking the industrial or

commercial character and which fulfills at least one of the following

conditions:

ART 8 GEO 34/2006 – CONTRACTING AUTHORITIES

• it is financed for the most part by a contracting authority as defined

under letter a) or by other body governed by public law;

• subordinated or subject to supervision by a contracting authority or by

other body governed by public law;

• entities where more than a half of the members of the board of

directors/supervisory body are appointed by a contracting authority or

by other body governed by public law.

ART 8 GEO 34/2006 – CONTRACTING AUTHORITIES

c) any association including one or more of the contracting authorities;

d) any public undertaking that carries out one or more of the following

activities: water, energy, transport and postal services;

e) any legal entity, other than those indicated under letters a) - d),

which carries out one or more of the following activities: water,

energy, transport and postal services, based on a special or

exclusive right.

ART 8 GEO 34/2006 – CONTRACTING AUTHORITIES

Legal entities that are not deemed to be contracting authorities now

have an obligation to comply with public procurement laws if

cumulatively they award services or works contracts that are financed

50% or more by a contracting authority and are worth at least

EUR 5,000,000 (for a service contract) or at least EUR 200,000 (for

works contracts)

GOVERNMENT EMERGENCY ORDINANCE 77/2012 – SIGNIFICANT CHANGES

1. Public Procurement Contract – an administrative contract;

2. New thresholds for the awards of contracts;

3. Publicity rules;

4. Awarding procedures;

5. Notification of direct acquisition over EUR 5,000;

6. Joint offers;

7. Selection Criteria;

8. Rules for Avoiding Conflict of Interest;

9. Remedies and Enforcement.

PUBLIC PROCUREMENT CONTRACT - AN ADMINISTRATIVE CONTRACT

GEO no. 77 re-classified the public procurement contract as an

administrative contract (as opposed to a commercial contract).This

means that the administrative courts will have the competence to handle

complaints against already-concluded public procurement contracts.

NEW THRESHOLDS FOR THE AWARDS OF CONTRACTS

GEO 77/2012 has fully implemented the Commission Regulation (EU)

No 1251/2011 of 30 November 2011 amending Directives 2004/17/EC,

2004/18/EC and 2009/81/EC of the European Parliament and of the

Council in respect of their application thresholds for the procedures for

the awards of contract.

NEW THRESHOLDS FOR THE AWARDS OF CONTRACTS

• Participation Notice shall be published in the EU Official Journal in

case the value of the contract exceeds the Lei equivalent of:

i. EUR 130,000 for supply or services contracts granted by authorities

and public institutions;

ii. EUR 400,000 for supply or services contracts granted by public

companies or other entities performing relevant activities in one of

the sectors of public utility – water, energy, transports and postal

services;

iii. EUR 5,000,000 for contracts for works, and concession of public

contracts.

PUBLICITY RULES The contracting authority must publish a Participation Notice in the SEAP

in the following cases:

i. procedures of Open, or Limited Public Tender, Competitive Dialogue,

or Negotiation with the prior publication of a Participation Notice are

launched in order to conclude a public procurement contract, or

framework agreement; or

ii. an electronic purchasing system is initiated, which means that the

public procurement procedure is carried out electronically on the

Electronic System of Public Procurement ("SEAP") and all the users

registered with SEAP participate to such procedure; or

iii. a Tender for a Solution Project is organized.

AWARDING PROCEDURES

The contracting authorities have an obligation to specify in the

participation notice and within the tender documentation the awarding

criteria and procedure. These may be:

i. Open Public Tender – takes place in a single stage and any

interested provider can submit a tender;

ii. Limited Public Tender – consists of two stages, and only the bidders

selected by the contracting authority at the first stage will be invited

to submit bids in the second stage;

iii. Competitive Dialogue – any interested provider can submit a bid; the

contracting authority may perform the dialogue only with the

accepted candidates and only the candidates selected by the

contracting authority from the accepted candidates are invited to

make the final offer;

AWARDING PROCEDURES

iv. Negotiation – the contracting authority discusses and negotiates the

contractual clauses, including the price, with the candidates selected

from suppliers, contractors and providers; the negotiation may be

with or without the publication of a participation notice;

v. Offer Request – a simplified procedure according to which the

contracting authority requests offers from several suppliers,

contractors and providers;

vi. Tender for a Solution Project – allows the contracting authority to

obtain a plan or a project which was selected by a jury on a

competitive basis, especially in the territorial planning, urban, and

zoning sectors.

AWARDING PROCEDURES

As a general rule, contracting authorities shall apply the open or

restricted procedure. Only in the specific circumstances, expressly

provided by the legislation, the contracting authorities may award the

public contracts by means of other award procedures.

NOTIFICATION OF DIRECT ACQUISITION OVER EUR 5000

According to the provisions of GEO 34,

the contracting authority may procure

products, services, or works without a

tender, if the value of the acquisition

does not exceed the Lei equivalent of

EUR 15,000 for each acquisition.

Any direct acquisition over EUR 5,000

(without VAT) is required however to be

recorded in the SEAP.

JOINT OFFERS

Art 44. of GEO 34/2006 allows economic operators to associate for the

purpose of submitting a joint offer, without having the obligation to

officially register their association.

The contracting authority is entitled to request that the association/joint

venture is formally registered only in case the joint offer is declared as

winner, and only if such measure represents a condition necessary for

the appropriate performance of the contract.

Without any derogation from its liability with regard to the manner of

performance of the future public procurement contract, the bidder may

include in the technical proposal the possibility to subcontract part of the

works or services covered by the tendered contract.

SELECTION CRITERIA

The contracting authority is entitled to apply qualification and selection

criteria only with regard to:

i. status of the candidate;

ii. capacity to carry out its business activity;

iii. economic and financial status;

iv. technical and/or professional capacity;

v. quality assurance standards;

vi. standards regarding the environment protection, in certain cases

mentioned by GEO no. 34.

SELECTION CRITERIA

All amendments to the selection and evaluation

criteria are to be published in an erratum and the

period during which participants may submit

their offers should be extended accordingly. It is

unlawful to amend any information from the

invitation to participate or the announcement by

giving clarifications without the issuance of an

erratum. This may lead to the award process

being annulled.

RULES FOR AVOIDING CONFLICT OF INTEREST

It is expressly stated that the contracting authority discloses in the

tender documentation the persons with decision-making powers who

are deemed to be managers of the contracting authority, members of

the boards of the authority who are involved in the public procurement

process as well as any other person within the authority who has power

to influence the content or the public procurement process.

REMEDIES AND ENFORCEMENT

Any bidder, whose rights or interests were infringed by an action of a

contracting authority, is entitled to challenge the respective action by

filing a complaint with the CNSC. CNSC is a special body created to

review and take decisions with regard to any challenge brought against

any deed issued with regard to an award procedure. According to the

GEO no. 77, the Decisions of CNSC must be published in SEAP and on

the website of CNSC. The decisions of CNSC may be challenged before

the Administrative Litigation Section of the Court of Appeals competent

in the jurisdiction where the contracting authority is located. The court

decision is final and irrevocable.

REMEDIES AND ENFORCEMENT

In case that CNSC dismisses the complaint as unfounded, the

contracting authority shall retain a percentage of the participation bond

calculated function of the estimated value of the tendered contract.

The claims for damages caused during the awarding procedure may be

filed only with the administrative contentious sections of the tribunal

from the jurisdiction in which the contracting authority has its registered

office, according to the rules provided by GEO 34/2006, or by filing a

separate legal action, according to the civil procedure.

CONCLUSIONS

• New Government prioritizes public procurement as efficient means to

boost business environment. Good allocation of funds to highways,

national road and rural infrastructure, energy projects.

• The public procurement legislation in Romania has rigorously

transposed EU legislation.

• Public contracts have always lured private companies - the

opportunities and the benefits are significant now in light of a cohesive

legislative regime.

THANK YOU FOR YOUR ATTENTION!

Ligia Cecilia Popescu Wolf Theiss Bucharest, Romania Tel : F +40 21 308 81 00

E-mail: ligia.popescu@wolftheiss.com

www.wolftheiss.com

Fabiola Meister Wolf Theiss Bucharest, Romania Tel : F +40 21 308 81 00

E-mail: fabiola.meister@wolftheiss.com

www.wolftheiss.com