© OECD

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

SIGMA Regional Conference on Public Procurement

Legal protection in public procurement

– Functioning of the review system from business

perspective

Beirut, Lebanon

3 June 2015

Zoran Blazevic, dipl. iur. Temporis Consulting Ltd, Republic of Croatia

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Content and acronyms

• Procurement cycle and its implementation

• Private sector and independent review body

• Role of the independent PRB in development of public

procurement system

• Lessons learned

_____________________________________________________________________________________________________

• EU – European Union

• PRB – Independent Procurement Review Body

• PP – Public procurement

• CA – Contracting authority

2

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

EU members and candidate

countries - Legislative Framework

• Transposition of the public procurement EU acquis into

national legislation.

• Implementation of good practice:

– Clearly drafted,

– Principle based,

– Value for money.

• Contracting authorities/entities should apply the provisions

of the public procurement legislation in a way to enable

effective procurement and efficient spending of public

procurement funds.

• Role of representatives of private sector?

3

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

4

Assessment of needs

Tender preparation

Selection of the bidder

Concluding of contract

Contract performance

Public procurement as a daily

business activity?

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Public procurement market

• The public procurement market should be open and

competitive.

• Invitation for tenders are published on central electronic

platforms and/or web sites of contracting

authorities/entities.

• Competition among tenderers is based on competence,

capacity, price and quality.

• How to ensure a proper level of competition?

• Role of review institution in public procurement?

5

“Only where these matters are dealt with adequately is it possible to ensure that procurement law is more than bits

of paper“ Arrowsmith/ Linarelli/ Wallace, Regulating Public Procurement (Kluwer, 2000)

6

Creating an adequate “Procurement

Environment”

Law

Clearly drafted

Principle-based

Reliable framework

Remedies

Independent

review body,

Clear procedure

Effectiveness

Accessible

Cost of procedure

Institutions

Independent Review body

Oversight body

Central purchasing

agency

Key questions

Procurement system

Training

Procurement personnel

Public Procurement Environment

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Competence of the PRB

• Possibility to submit the appeal in every stage of

procurement procedure.

• PRB should decide on the appeal authoritatively.

• There are three types of main decisions it can adopt:

• appeal can be dismissed as unlawful or late or…

• appeal can be rejected as ungrounded.

• appeal can be accepted and the decision or the procedure in

question partially or entirely invalidated.

• Why is this important for development of the pp system?

• Representatives of private sector, by appealing to the

PRB, are controlling CAs legal behavior.

• Can this be done by the executive government?

7

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

The most common reasons for appeal

In preparation phase?

• Description of procurement – technical specification.

• Conditions and evidence of suitability.

• Selection criteria.

In selection and award phase?

• Awarded company does not fulfill conditions from tender

specifications.

• Bid of the appeal company was illegally declared as invalid.

What is the cause of this kind of CAs behavior and why are

these mistakes happening in practice?

8

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

External impact on contracting

authorities (legal/illegal)

9

CONTRACTING

AUTHOROTIE

Employees

Stakeholders

Competitors

Unions

Suppliers

Users

Political

parties

National and

local

government

Educational

institutions

Public interest

groups and

NGOs

Financial

institutions

Legislation

and policy

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

What are the rights of the parties

in the remedies procedure?

• What can a representative of private sector do against

illegal external influence on contracting authorities?

• A dissatisfied party may appeal to the PRB and seek

protection of rights before the PRB’s against:

Decisions

Acts

Omission

• What if there is no possibility to file and appeal against the

CAs illegal behavior?

10

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Perception of public procurement

• Negative in most of the new EU members and candidate

countries.

• Distrust between public and private sector is evident.

• Functional vs. dysfunctional distrust?

• Delays in procurement procedure and execution of the

contracts.

• Difference between public procurement contracts and

procurement contracts in private sector?

• How to change this behavior and how to increase trust

from the side of the private sector and avoid distrust?

11

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Remedies available for economic

operators

• Pre-trial complaints before the contracting authority (if

available under national law).

• Interim measures against procurement decisions,

including the award decision.

• Set aside of unlawful procurement decisions, award

decision and annulment of concluded contract.

• Compensation for economic operators for all harm

suffered as a result of a breach of procurement law –

damages.

12

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Why is the independence of PRB

one of the key issues?

• Dispute between contracting authorities and

representatives of private sector.

• To whom the unsatisfied party may appeal?

• Executive government vs private sector…

• How to create trust from the side of private sector and

avoid distrust.

• Court system or independent review bodies?

13

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Review procedure

- best practice model (1/2)

• Standstill period and suspension effect of the appeal.

• Review of public procurement award procedure should be

a two-stage procedure:

1st stage: procedure before the contracting authority,

2nd stage: procedure before the Court or the PRB,

• Increased communication between public and private

sector.

• Legal protection against the PRB’s decision.

14

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Review procedure

- best practice model (2/2)

• Proceedings before the PRB or the Court should only

be initiated:

after an unsuccessful 1st stage review before the contracting

entity.

when the aggrieved party does not consent (partially or

entirely) to the decision of the contracting authority on the

demands from the appeal.

if it does not decide by specific time (CA does not respond to

the appeal for example in 10 days).

15

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Competence of the PRB

• The PRB should decide within the limits of the review

appeal (and with or with out an ex-officio legality test of the

procurement procedure).

• In case of violation of the basic principles of public

procurement, the PRB should be competent to examine all

evidence considered relevant for the clarification of the

subject matter of the claim and those necessary for

adoption of a legally correct decision.

• Why is this important for private sector?

16

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Benefits of an independent PRB

and review system

• Stimulation of competition in the market,

• Promotion of government of public finance,

• Decreased possibility for corruption,

• More participants on the side of private sector – increased

number of tenderers,

• Lower prices in public procurement procedures,

• Influence on the mistakes of contracting authority,

• Decrease of distrust between public and private sector,

• etc.

17

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

New EU and candidate countries

- Lessons learned in the last 15 years

• Transparent and efficient review system is a precondition

for development of public procurement system.

• Private sector is second party in the public procurement

contract with rights equal as a public side.

• Education of the private and public sector about public

procurement, integrity, and ethical behavior.

• Important role of media and journalist.

• To accomplish best value for public money, transparent

case law in remedies procedure is necessary.

• Judicial control over the PRB’s case law - protection of the

legal rights of all parties in the public procurement system.

18

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Time for….

Questions and comments ???

19

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

Thank you for your attention…

Zoran Blažević, LLB

Temporis Consulting Ltd., Republic of Croatia

E-mail: zoran@temporis.hr

Web: www.temporis.hr

20