Bulgarian Parliament adopted entirely new Public Procurement Act

Contact: Popov & Partners Law Office (Bulgaria)

On the 2nd of February 2016 the Bulgarian Parliament adopted a whole new Public Procurement Act (PPA), which will come into force on 15.04.2016 (a separate rules will come into force in the coming years) and will introduce the requirements of two new directives on public procurement.

According to the new Act entitiesare explicitly divided into public and sector entities and the possibility of joint procurement between domestic contracting authorities and contracting authorities from other Member States of the European Union is introduced.

Outside the scope of the PPA remain procurement and design contests that support the activities of the public contracting authority related to the provision or operation of public electronic communications networks or the provision of one or more public electronic communications services. Some new elements related to the regulation of contracts reserved for specialized enterprises or cooperatives of people with disabilities or entities whose main objective is the social and professional integration of disabled or disadvantaged people and programs creation of protected jobs are introduced. Within those the contracting authorities may award reserved contracts.

The possibility for contracting authorities to require guaranteefor participation by applicants/ participants is dropped. Moreover, the possibility of contracting authority to require a guarantee securing the advance payment is explicitly covered in the new Public Procurement Act.

The contracting authority may require the selected contractor to provide guarantees to ensure the contract performance or the advance payments provided in the following forms:

  1. Monetary amount;
  2. Bank guarantee;
  3. Insurance that provides coverage through the implementation of the contract, related to the responsibility of the contractor.

According to the new Act, the negotiated procedures are divided by the different categories of contracting authorities who conduct them. The public invitation has been replaced by other means of awarding contracts at low cost. The types of procedures under the Act are exhaustively set out. As an entirely new procedure we can point out the Innovation Partnership Procedure.

The Innovation Partnership is a new procedure whereby the contracting authority conducts negotiations with selected bidders after pre-selection in order to establish a partnership with one or more partners to carry out certain research and development activities.

The contract forInnovation Partnershipaims to developinnovative product, service orconstructionand the subsequent acquisition of the resulting it supplies, services or works, providedthat they comply withthe levels of performance and maximumcost agreed between the contracting authority andthe participant. The contract governs the implementation of the procurement in successive stages according to the steps in the process of research and innovation activities, which may include the production of products, the providing of the services or the carrying out of the construction.

The new Act outlines two types of procedures for procurement of lower value.

The term “Most Economically Advantageous Tender” as understood until now, has changed its meaning.

Under the new provisions, The Most Economically Advantageous tender is based on one of the following award criteria:

  1. The lowest price;
  2. Expenditure levels, taking into account the cost-effectiveness, including the cost of lifecycle;
  3. The optimal quality/price ratio, which is assessed on the basis of price or level of expenses and performance, taking into account indicators as quality, environmental and/or social aspects related to the subject of the procurement.

The Act provides the possibility for the contracting authority to conduct a market consultation, by seeking advice from independent experts or authorities or market participants, while respecting the principle of fair competition, non-discrimination and transparency.

In terms of the lots, the new Act provides various measures towards the separation of the procurements to lots and increasing the possibility of awarding contracts with different participants.

The required minimum turnover as a selection criterion may not exceed more than twice the estimated value of the contract, unless it is justified by the nature of the works, services or supplies.

In addition to the previously known requirements, related to the presence of experience in similar or identical activities and availability of personnel and equipment, the new act introduces possibility for the contracting authority to require participants to have a system for supplies management and tracking which will apply during the implementation of the contract as the contracting authority may not accept proof of technical and professional skills when it comes from a person who has an interest that can lead to benefit.

Payments to subcontractors shall be made by the contracting authority based on a request and a statement by the contractor on whether the payments are disputed to be an undue payment.

With the contract notice the contracting authority may determine a proportion of the contract to be performed by subcontractors, setting minimum and maximum percentage of the contract value, but not more than 30 percent.

The introduction of computerization in public procurement is delayed. The relevant provisions will take effect in stages- respectively in 2017, 2018 and 2020. However, since this year all decisions and notices may be submitted by the contracting authorities to the Public Procurement Register only electronically. The new Act establishes the opportunity for electronic submission of tenders, but there is no such obligation for the participants at this point.

The maximum duration of contracts with periodic performance is five years.

The new Act introduces some new grounds for amendments of the public procurement contracts.

The provisions concerning the presentation of the European single document procurement electronically in a form approved by an act of the European Commission and the prohibition for contracting authorities to require documents that can be provided by direct and free access to national databases of Member States enter into force 2018.

The new Act introduces significant changes on the control of public procurement. The Public Procurement Agency will no longer be subject to the control procedures based on the value of the procurement.

The control of legal compliance and the implementation of contracts for procurement will be carried out by the Bulgarian National Audit Office and the Public Financial Inspection Agency (PFIA).

According to the new Public Procurement Act, some of the rulings and decisions issued by the contracting authorities are not a subject to appeal.

A significant novelty in the administrative-penal provisions is that the amount of the penalty is relatively fixed as a percentage of the value of the contract including VAT. The maximum thresholds are determined. Fines will be imposed on individuals and not on the legal entity represented by them.

More information on the changes can be found on our website http://www.popov-partners.com/?p=8581&lang=en or you can send your further questions to att. Svilena Dimitrova - Head of “Public Procurement and Concessions” team in “Popov & Partners” Law Office: This email address is being protected from spambots. You need JavaScript enabled to view it.