What will the recovery plan look like? Will public procurement be necessary, and in what cases? Will the amendment to the Public Procurement Act also affect the Recovery Plan? We bring you an interview with our public procurement expert.
When does a company need to procure publicly?
This is a relatively broad question that requires a comprehensive answer. Under Act No. 343/2015 Coll. on Public Procurement and on Amendments and Supplements to Certain Acts (hereinafter referred to as the “Public Procurement Act”), entrepreneurs will only procure if the level of support for their project through non-repayable financial resources (hereinafter referred to as “NFP”) is 50% or more. In such cases, they must comply with the Public Procurement Act. If a private sector entity implements a project worth €500,000 and receives NFP from the state amounting to 50% or more, it must comply with the Public Procurement Act. Subsequently, we are talking about individual procurement procedures, namely sub-threshold and above-threshold procedures. If the level of project funding through NFP is less than 50%, the entity procures according to the Central Coordination Body's handbook No. 6 and 12 (hereinafter referred to as CKO), which contains procedures and methodology for public procurement worth more than €100,000 and less than €100,000. These procedures are very similar to those under the Public Procurement Act, but to put it in layman's terms, they are far less formal and faster than those under the Public Procurement Act, with contracts being published on the CKO website and not in the public procurement bulletin.
Does this apply equally to the private sector and the public sector?
No, this 50%+ support rate applies only to the private sector. Public authorities always follow the Public Procurement Act. It does not matter whether it is a municipality, city, state, state-established organization, or even a private company established by a state or local government authority; the vast majority of these must also proceed in accordance with the Public Procurement Act. In fact, the only case where this does not apply is when the value of the procurement is less than €5,000, although an amendment to the Public Procurement Act states that, with effect from January 1, 2022, this lower limit will change to €10,000. This means that if an entity subject to the Public Procurement Act procures something with a value less than this amount, it does not have to procure the item or service publicly.
Therefore, if I procure anything with a value greater than €10,000, I must do so publicly.
Yes, as soon as the estimated value of the contract exceeds €10,000, the entity must procure it publicly. The estimated value of the contract itself is also subject to specific calculation rules. For example, in the case of a recurring monthly service, I must calculate the estimated value for the entire 12 months, which may already be a sub-threshold or, for example, an above-threshold contract. If the obligated entity fails to do so and procures a low-value contract every month instead of using the sub-threshold procurement procedure, it would be committing a relatively serious violation of the Public Procurement Act. The above applies across the entire spectrum of thresholds, whether within the meaning of the Public Procurement Act or the Public Procurement Office's decree regulating individual thresholds.
Our law firm has extensive experience in public procurement. What is our added value compared to other entities that prepare public procurement?
The public procurement services market is relatively saturated and highly competitive, with some entities, for example, preparing tender documentation by automated means. This completely eliminates the possibility of individualization. The aim of every procurement should be to find the most advantageous offer in terms of cost-effectiveness, but the qualitative aspect should not be overlooked, which, unfortunately, public procurers do not take into account, and the conditions for participation in terms of professional competence are set very formally or not at all. The conditions for technical and professional competence are a relatively effective tool for finding a supplier who has experience with the specific requirements of public procurers. Unfortunately, they are also a tool that is relatively often abused, which is not our cup of tea – whether this is an advantage or a disadvantage for us, I will leave to potential clients to judge. The added value of the services provided in conjunction with consulting firms in the field of grants and subsidies lies primarily in the mutual synergy and participation of the law firm in the entire process, which, by the nature of its activities, provides professional supervision of the public procurement process and, at the same time, is able to provide bidders with individualized business terms and conditions. The tender documents always include the contract that will be the result of the public procurement, and in our view, this gives us a significant advantage over many other providers of public procurement consulting services. Another added value from our point of view is that we also provide public procurement consulting to many interested parties and bidders, whom we assist in preparing requests for clarification, requests for correction, or even in the process of filing objections. As a result, we are able to look at public procurement with a broad perspective and from different angles – from the perspective of both the contracting authority and the tenderer – and provide valuable advice. The fact that we can provide contracting authorities applying for NFP in cooperation with grant agencies with a package that includes everything from project setup, NFP applications, procurement, setting business terms and conditions, representation before intermediary bodies or the Public Procurement Office is just the icing on the cake.
Can you give an example?
One example is the procurement of construction work for a public contracting authority that wanted a high-quality atypical steel roof structure with wooden infill, as it had had bad experiences with suppliers who claimed to have experience with such structures, which turned out to be a big mistake. In this context, in order to avoid any doubts, we also requested an opinion from the authority itself through an ex ante assessment, explaining the setting of the condition with the intention of avoiding such a condition being assessed as discriminatory. I know that many grant agencies also publish case studies, where one can find the added value of our cooperation. In such cases, various “hackers” who fill out the same competition documents over and over again at home without any individualization will simply not help you. The same applies to consultants who use automated programs to prepare documents. Unfortunately, in such an environment, it is quite difficult to find partners who appreciate the approach and added value of our project.
You mentioned that you do public procurement in cooperation with a grant agency that obtains non-repayable funds from Eurofunds, EU or Slovak subsidy schemes, and other international schemes such as the Norwegian Funds or the Visegrad Fund, etc. Public procurement is usually part of obtaining NFP, when something tangible is procured – whether it is a new roof or a new production line. Why is it important for companies applying for NFP to have a quality advisor in the field of public procurement?
Basically, the answer to this question can be compiled from the previous answers. As far as the pre-procurement process is concerned, it is a relatively demanding process, which grant agencies will be best placed to talk about. As I mentioned, these processes are relatively less formal and less time-consuming, but then comes the proverbial “but.” Unfortunately, there are many intermediary bodies whose role is to monitor individual calls, and each of them interprets the same rules in their own way. At the same time, they take a very bureaucratic approach to checking documents and handling funds, unwilling to listen to explanations of the circumstances that led us to proceed in this way due to the specific nature of the contract in question. In this case, too, it is our task to explain the justification and legitimacy of our approach to the individual control bodies using the means available to us, and we are able to resolve individual shortcomings on an ad hoc basis. Apart from that, however, what I said in response to the previous questions basically applies.
The Recovery Plan has been a major social issue recently. Why will public procurement be important in the Recovery Plan?
It simply won't work without it...
So it is assumed that the recovery plan will work in a similar way to the Eurofunds. In other words, a call for proposals will be announced, to which NFP applicants will have to submit their projects, and public procurement will also be part of these projects.
Yes, no other method has been announced, and I cannot really imagine any other method. However, one change should be that on July 1, 2020, the Ministry of Investment, Regional Development, and Informatization of the Slovak Republic was established, and it has been announced several times that inconsistencies in interpretation and procedures will be eliminated, as the funds should be distributed by a single body.
Given the adoption of the much-debated amendment to the Public Procurement Act, it can be said that procurement will be carried out in a new way. What does this mean?
The financial limits known from public procurement have been the subject of many changes and various proposals, and this case is no different. With effect from January 1, 2022, the financial limits for above-threshold contracts should be determined by a regulation of the Government of the Slovak Republic, and not by a generally binding legal regulation issued by the Public Procurement Office. The changes in Section 11 of the Act, which deals with the exclusion of certain entities from the possibility of concluding a contract, concession contract or framework agreement with a public contracting authority, can be considered positive. The Public Procurement Act will now also include optional grounds for exclusion of tenderers and other changes, which we discussed in a recent article on this amendment.
Mgr. Samuel František Mičuda - public procurement specialist
