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Romania's new public procurement law

de     The Romanian Digest
Vineri, 14 iulie 2006, 0:00


Introduction
Romania aligned its public acquisition legislation with European Union regulations last month through the adoption of Government Emergency Ordinance 34/2006 concerning the award of procurement agreements and of concession agreements for public works and services (“GEO no. 34/06”), effective as of June 30th.

The change will result in modifications to contracts where one of the parties is the Romanian State.

By revoking all the acts containing provisions regarding public acquisitions, such as Government Ordinance 60/2001, Law 219/1998, Government Ordinance 20/2002 -- the most important ones -- the new law merges EU 2004 Directives 17 and 18 into a sole act. The unitary law facilitates easy usage by all of the participants in the public acquisition process.

Amendments
The most significant amendments in the revised law relate to the methods imposed for calculating the estimated value of a procurement contract, the specific procedures for awarding the contract (as detailed below) and the settlement procedures to be followed by a bidder who contests any measures taken during the auction process.

Based upon the relevant EU Directives, the new law emphasizes the importance of the pre-evaluation stage of a public contract, the types of products to be procured and the possibility to anticipate any possible increase or decrease in their value.

Once the price is determined, no further changes may be imposed as related to it and both parties (the contracting authority and the winning bidder) are bound by it.

Pursuant to GEO no. 34/06, the contracting authority has the obligation to disclose within the documentation annexed to the procurement agreement all the criteria, regulations and other necessary information required to ensure that each bidder has received complete information as related to the acquisition procedure to be followed.

This documentation is supposed to focus particularly on those technical facts that must be explicitly defined within the tender book regarding the qualitative, technical and performance factors of the tender. The old law required only minimum conditions, in contrast to the new law which focuses more on the technical details.

One such new technicality is the so called “ecologic label” or “eco-label”- which implies some sort of environmental management standard to be fulfilled by the economic operator in order to be permitted to participate in a bid. However, the new law does not provide any definition for such environmental requirements.

In any event, should contracting authorities require the production of certificates drawn up by independent bodies attesting to the compliance by the economic operator with certain environmental management standards, they must refer to the European Community Eco-Management and Audit Scheme (EMAS) or to environmental management standards based upon the European or international standards certified

as conforming to European Community law or to relevant European or international standards concerning certification. The Romanian contracting authorities must recognize equivalent certificates from bodies established in other Member States. They must also accept other evidence of equivalent environmental management measures obtained from other economic operators.

In the event that the Romanian contracting authorities set forth any distinctive environmental requirements in terms of performance or function, they may use the detailed specifications or, if necessary, parts thereof, as defined by European or (multi-) national eco-labels, or by and any other eco-label, provided that:

● the specifications are appropriate to define the characteristics of the goods or services that are the object of the contract,
● the requirements for the label are drawn up on the basis of scientific information,
● the eco-labels are adopted using a procedure in which all stakeholders, such as government bodies, consumers, manufacturers, distributors and environmental organizations can participate, and
● they are accessible to all interested parties.

Contracting authorities may indicate that the products and services bearing the eco-label are presumed to comply with the technical specifications laid down in the contract documents. They must accept any other appropriate means of proof, such as a technical dossier of the manufacturer or a test report from a recognized body.

The contracting authority must publish through the mass-media, a contract notification setting out its needs and requirements, which it must define in the notice and/or in a related descriptive document.

The Official Gazette may continue to be used for this purpose along with two new specific methods of informing potential contractors: a public acquisition electronic system to be used inside Romania starting with January 1, 2007, and the Official Journal of the European Union for European wide use (also commencing with January 1, 2007).

Until December 31, 2006, the contracting authority must continue to publish the contract notice within the Official Gazette and must use the two new methods only in cases where it considers it to be appropriate.

To ensure transparency, the new law introduces changes to the provisions regarding conflicts of interest. The new provisions enlarge the depth of relationships between a bidder and the contracting authority.

Persons who are prohibited from participation in the evaluation/certification process are any members of the board of directors or other ruling board of a bidder, their husbands/wives or relatives up the 4th degree, as well as any other person having an interest that could in any way affect their impartiality.

However, the new law does allow persons who contributed to the preparation of the request for a proposal to bid, provided that doing so would not distort fair competition.

Procedures
As regarding the specific procedures to be followed for awarding the procurement contract, the new law keeps in force the main procedures - (i) open auction (takes place in one single stage; any interested supplier, contractor or provider is free to submit an offer); (ii) limited auction (takes place in two distinct stages, only the candidates selected in the first stage being permited to

participate in the second one); (iii) negotiation with a single source (the contracting authority discusses and negotiates the contracting clauses, prices included, with a specific supplier, contractor or provider; only candidates selected by the contracting authority in the first stage will be invited to make an offer in the second stage); (iv) offer request (a simplified procedure according to

which the contracting authority requests offers from several suppliers, contractors and providers); (v) solutions contest (permits the contracting authority to obtain, especially in the territorial planning, urban and zoning field, a plan or a project selected by a jury on a competitive basis) but also brings some amendments and novelties such as: negotiated procedure with prior publication of a

contract notice, negotiated procedure without prior publication of a contract notice, request for tender, design contests and, respectively, the competitive dialogue instead of former competitive negotiation.

The latter is applicable only in case of complex contracts when the contracting authority is not objectively able to define the technical means capable of satisfying their needs or objectives and/or is not objectively capable of specifying the legal and/or financial make-up of a project.

With regard to the offer request a new threshold (without VAT) is provided to make this procedure applicable. For public works contracts, the ceiling was raised to €250,000 from €100,000 that existed under the former law.

Pursuant to the requirements of the EU Directives, the new law provides other specific procedures such as: a framework agreement, a dynamic purchasing systems procedure and an electronic auction.

A framework agreement may be concluded between the contracting authorities and more than three economic operators for the purpose of establishing the terms to govern the procurement contracts to be awarded during a given period - usually not exceeding four years.

The dynamic purchasing systems procedure is an electronic process which may be applied for making commonly used purchases, the characteristics of which, as generally available on the market, meet the requirements of the contracting authority. Such procedure is limited in duration and open throughout the entire period of its validity to any economic operator that satisfies its conditions.

Described as a special procedure, the electronic auction can be applied only after a previous full evaluation of bidders participating in open, restricted or negotiated procedures where the contract specifications can be precisely established.

In the same circumstances, an electronic auction may be held on the reopening of competition between the parties to a framework agreement as well as on the opening for competition of contracts to be awarded under the dynamic purchasing system.

The electronic auction may be based either solely on the price criteria, when the contract is awarded to the lowest price, or on the price and/or on the new cost of the features of the tenders indicated in the specification criteria, when the contract is awarded to the most economically advantageous offer.

The contracting authority can purchase products services and works without resorting to the procedures described above directly from the economic operators only in case the value of each procured product, service or work does not exceed €5,000 (as compared to the prior regulation where the threshold was €2,000 per product, service or work during a year).

Qualitative Selection and Contract Award
The contracting authority must make clear within the contract notification and also in the descriptive documentation the award criterion upon which the winner is selected. Once set, the criterion cannot be subsequently changed.

The contracting authority can award a public contract based either on the most economically advantageous tender, or on the lowest priced offer only.

When speaking about the most economically advantageous tender, criteria linked to the subject matter of the public contract in question may be considered -- for example, the quality, the price, the technical advantage, aesthetic and functional characteristics, environmental characteristics, running costs, cost-effectiveness, after-sales service and technical assistance, the delivery date and

delivery period or the period of completion. The establishment of such new criteria for qualitative selection is an improvement over prior Romanian legislation.

It should provide a better assessment of each candidate by referring to its suitability to pursue the professional activity, to its economic and financial standing, technical and/or professional ability, quality assurance standards and environmental management standards.

In contrast with the prior regulations, under the new law the contracting authority must conclude the public contract with that candidate whose offer was selected only after a certain period of time from the date the winner is announced.

This period of time is either 7 or 15 days depending on whether the value of the procurement agreement is equal or less than €40,000 (for supply and service contracts)/ €250,000 (for public works contracts) and, respectively, for those above €40,000/€250.000.

Objections raised by bidders will be settled by a new public institution - the National Council for Settlement (in Romanian “Consiliul National pentru Solutionarea Contestatiilor”) - whose main responsibility will be to answer to objections raised by bidders within a maximum of 10 days from the date it is lodged. In special circumstances, the period of time can be extended for up to 20 days.

The new law also contains certain new specific provisions regarding concessions, utilities procurement and other specific contracts - like procurements in the defense field.

In regard to utilities procurement agreements, the main change worth noting is that in the case of multiple bids having the same winning score, the law grants the contracting authority the right to award the contract to the economic operator whose offer contains more than 50% EU-made products, over any other party with a lesser percentage.


Conclusion
The new GEO no. 34/2006 copies ad-literam the main provisions of the relevant EU Directives and thus makes it far easier to determine the requisite procedures and obligations incidental to the public procurement process in Romania.

The new law is, by its nature, rather complex and parts of it are not easily discernable to less experienced bidders. Consequently, the rapid introduction of the requisite, but still unseen, methodological norms and supplementary instructions is imperative. This is all the more true since right on the heels of the effective date of GEO no.

34/06, two additional laws were adopted (the Government Emergency Ordinance no. 54/2006 on the concession agreements for goods publicly owned, and the Regulation for Organizing and Functioning of the National Council for Settlement, both of which impact upon GEO no. 34/06 in ways that may not be all together clear until the regulations for GEO no. 34/06 are issued.

One has to wonder why there is a predisposition in Romania to persistently institute new laws that require regulations well in advance of their advent. Can a law not be made effective upon a date set for the issuance of the relevant regulations?

The article " ROMANIA’S NEW PUBLIC PROCUREMENT LAW" was published based upon approval of:
Rubin Meyer Doru & Trandafir
SOCIETATE CIVILA DE AVOCATI / LAWYERS PROFESSIONAL CORPORATION
IN ASOCIERE CU / AFFILIATED WITH HERZFELD & RUBIN, P.C.
http://www.hr.ro
























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