Vol. XVII No.2
February 2012


Amendments to the Romanian Public Procurement Law...


Despite Romania’s significant need for public infrastructure development, arcane government procurement laws have hampered many projects over the last several decades. To better streamline the process, the Romanian authorities have recently amended Government Emergency Ordinance No. 34/2006 (“GEO 34/2006”). Law No. 279/2011, which took effect on December 12, 2011, will expedite the contracting process for public procurement, public works, and other government services.

To increase flexibility and encourage European Union investment, the new law streamlines public procurement documentation. It also centralizes control over the entire public procurement process to decrease procedural errors, such as a faulty drafting or breach of the selection criteria set for tenderers. Most importantly, the new law aims to prevent corruption, a frequent complaint in Romania, which can trigger sanctions from the European Commission.

This issue of The Romanian Digest will address the changes implemented through Law No. 279/2011 and other recent legislation. For a more detailed history of the Romanian public procurement system, please visit The Romanian Digest™ Archive at www.hr.ro. Our July 2006 article, “Romania’s New Public Procurement Law”, and our April 2009 article, “Romanian Public Procurement Law Amended,” address many related issues.

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Main Amendments Brought by Law No. 279/2011

The Public-Public Partnership
In anticipation of changes afoot within the European Union, Law No. 279/2011 includes new provisions that cover public-public partnerships. These joint development projects by two or more public entities, either national or international, now fall within the scope of Romania’s public procurement regulations. This will help contracting authorities coordinate and distinguish between when the EU public procurement directives are applicable to their joint projects and when they are not. Before the new legislation, this proved quite difficult and the issue was often referred to the EU judicial bodies for preliminary rulings.

The Contracting Authority
The definition of “contracting authority” has been extended to include new forms of association between contracting authorities.

ANRMAP’s Role in Analyzing the Compliance of the Contract Documents with the Applicable Legislation
The recent revisions to the domestic public procurement regulations have also substantially increased the role of the National Authority for Regulating and Monitoring of Public Procurement (“ANRMAP”). ANRMAP has been tasked with preventing any non-compliance with the applicable regulations for contract notices and contract documentation.

Following the lead of other EU countries, the Romanian government previously (through Government Decision No. 801/2011) commissioned ANRMAP to exercise ex-ante control over compliance of all contract documents (excluding technical specifications) issued by contract authorities in public procurement proceedings. This process occurs before the publication of the relevant contract notices/invitations to tender in the Electronic System for Public Procurement. These measures have both increased compliance with the applicable laws and decreased the number of complaints and court filings.

However, pursuant to the new provisions in Law 279/2011, ANRMAP’s ex-ante verifications shall not limit in any way the rights of those who consider themselves harmed by a specific provision of the contract notices/documents under review by ANRMAP. Prospective bidders may still lodge complaints against these notices with the National Council for Solving Complaints (“CNSC”) and request that the CNSC enjoin the contracting authority until remedial measures are taken.

Direct Procurement / Open Tender / Restricted Tender / Call for Tenders
Under Law No. 279/2011, when the contract value totals less than 15,000 euros (exclusive of value-added tax), domestic authorities may acquire goods, services, and works through direct procurement. The documents reflecting these acquisitions (such as fiscal invoices, written orders, calls for offers, etc.) will no longer be regarded as procurement contracts. Though the contracting authorities will still be required to duly register and file all such supporting documents.

According to the new provisions, contracts appraised at more than 15,000 euros, but less than 125,000 euros (for goods and services contracts) or 4,845,000 euros (for works contracts) must be awarded following a call for tenders. Contracts valued at equal to or greater than the thresholds will be awarded by an open or a restricted procedure, depending on the specific circumstances. And in cases expressly provided for in Articles 94, 110 (1) and 122 of GEO 34/2006, contracting authorities may award their public contracts through competitive dialogue or a negotiated procedure, with or without publication of the contract notice.

The Obligation to Request a Participation Guarantee
Under the previous legislation, the participation guarantee was mandatory on a general scale. According to the newly amended legal provisions, the contracting authorities are now permitted to require that participants in procurement proceedings submit a participation guarantee only in cases where prior publishing of contract notice is mandatory.

Amendments to the Criteria for Qualitative Selection and to the Contract Award Criteria
The newly adopted provisions offer a clearer picture of the criteria used to award contracts. This obviously benefits all potential candidates and tenderers who are now aware, from the beginning of the procurement process, of all applicable criteria.

Law 279/2011 also explicitly states that any change to the minimal criteria in the initial announcement for a tender will trigger the cancellation of the entire procedure, unless the change is expressly ordered by the CNSC or a court of law.

Rules to Avoid Conflict of Interests
A candidate/tenderer can no longer also be a third-party supporter for another candidate/tenderer in the same procedure. Violation of this rule will result in the exclusion of either the individual offer or the offer in which the initial candidate/tenderer is a third party supporter. The new law fails to clarify which of the two offers must be excluded in such a case.

Assignment in Public Procurement Procedures
The new version of GEO No. 34/2006 expressly allows for the assignment of the receivables from a public procurement contract. Assignment is not allowed for the corresponding obligations, which shall continue to be borne by the initial debtors.

Cancellation of the Public Procurement Procedures
Under the old version of GEO 34/2006, a contracting authority only had the right to cancel a public procurement contract in certain situations. Law No. 279/2011 now redefines and restructures the situations allowing for rescission. The amendment states that contracting authorities are specifically compelled to cancel a tender in some cases, but in other cases are given the discretion to cancel the procurement process if they choose.

Procedure before CNSC
Under Law 279/2011, the CNSC may no longer retain any money from the participation guarantee submitted by a tenderer unless the complaint filed by the tenderer has been dismissed as unfounded.

Moreover, according to the newly amended provisions, CNSC is obligated to resolve all cases on its docket regardless of whether a claim concerning the same tender has been submitted to a court of law.

Other Amendments
Other important amendments contained in Law 279 address the negotiated procedure without publication of a contract notice (where the overall value of the additional products and services may no longer be greater than 20% of the main contract value). The overall value of the additional products and services may no longer be greater than 20% of the main contract value. Some other changes concern the water, energy, transport, postal services and telecommunications sectors, where contracting authorities are now permitted to reject offers referring to products which are, in a percentage higher than 50%, originating from countries outside the European Union. This rule will apply only in cases where the EU has not created a multilateral or bilateral agreement with another country.

Further, the thresholds set by GEO 34/2006 for the publication of the relevant contract notices in the Official Journal have been implicitly amended by EU Regulation No. 1251/2011 of November, 30 2011. This EU Regulation amended Directives 2004/17/EC, 2004/18/EC and 2009/81/EC of the European Parliament with respect to the application thresholds for awarding public procurement contracts. Also, for consistency, the Commission contemplated the necessity to re-establish the thresholds set in Regulation (EC, Euratom) No 2342/2002, laying down detailed rules for the implementation of the Financial Regulation. In response, on January 31, 2012, the EC enacted Decision No. 2012/56/CE, which adjusts the thresholds referred to in Articles 157(b) and 158(1) of Regulation (EC, Euratom) No 2342/2002.

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Secondary Legislation
In an attempt to standardize the documentation for public procurement contracts, ANRMAP has issued several significant orders clarifying certain provisions and also standardizing the forms of documents used in the bidding process. While this article does not exhaustively present the orders issued by ANRMAP during 2011, it is important for entities intending to bid on public procurement contracts to be aware of these secondary regulations and closely analyze all applicable provisions.

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Public Procurement in the Field of Security and Defense
Close attention should also be given to projects where the procurement agreements concern security and defense. Following the EU’s adoption of Directive 2009/81/EC, the Romanian Government instituted Emergency Ordinance No. 114/2011, detailing specific public procurement procedures applicable in these special situations.

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The EU Legislation: Amendments, Proposals, Interpretations, Recommendations

EU Modernization of the EU Public Procurement Market
In its attempt to facilitate access to public funds, the European Commission launched in January 2011 a project on the modernization of the European Public Procurement Market. As a result of its efforts, the EC released the “Green Paper on the modernization of EU public procurement policy – Towards a more efficient European Procurement Market.” The Commission considered that, in times of economic upheaval, public procurement policy must ensure the most efficient use of public funds to target job creation. Flexible and transparent rules applicable to both government authorities and their contracting parties would help to achieve this.

The Green Paper spotted a number of key areas ripe for reform and asked for the stakeholders’ opinion on the proposed legislative changes. The results of the Green Paper were subsequently discussed at a high level conference on public procurement reform in June 2011 and also reiterated through the 2011 reformed version of the Single Market Act. Consequently, on December 20, 2011, the EC released several proposals to underpin the streamlining of the EU procurement market and to support growth and employment. In these proposals, the EC identified several objectives: to simplify rules and procedures and make them more flexible; to encourage access of SMEs to public procurement; to ensure greater consideration for social and environmental factors; to improve the existing rules aimed at combating conflicts of interest, favouritism and corruption; to encourage the appointment by each Member State of a single national authority responsible for monitoring public contracts.

The EC's proposals have been forwarded to the Council and the European Parliament for negotiation and adoption. Should they be adopted by the end of 2012 in the Single Market Act, member states, including Romania, will need to implement the new directives by June 30, 2014 at the latest.

EU Guide: Buying Social
The European Commission made additional efforts to modernize the procurement market in response to the concerns in the Green Paper. In January 2011, the EC published a new guide on public procurement, aiming to increase the contracting authorities’ awareness to the social effects of public procurement projects.

Guide to help public authorities provide high quality and efficient services of general interest
This new Guide, released on January 28, 2011, is intended to modernize the European rules regarding organization and financing of contracts for services of general interest. This will support public authorities in their attempt to provide high quality and efficient services in line with the EU rules.

Consultation on access to external public procurement markets; WTO’s government procurement negotiation
Following a consultation process at the EU level, it was agreed that flexible legislation should be immediately adopted to expand market access for foreign companies and open EU procurement markets to foreign bidders. With that goal in mind and after fruitful negotiations, on December 15, 2011, the parties to the Government Procurement Agreement (GPA) reached a deal to overhaul the existing tender rules and open market access.

Measures to Support E-Procurement
The European Commission has proposed, based on recent Deutsche Bank research, a set of revisions to public procurement rules to better integrate e-procurement and support member states in their transition to e-procurement. This would also enable suppliers to participate in the online procurement process across a single market.

Revised Version of Buying Green
In October 2011, the revised version of the Buying Green Guide was published. Based on the previous versions of this Guide, Romania initiated in 2008 a market study on products and services contracts’ compliance with ecological standards in Romania. The end goal was to create the first public database of ecological products and services. Based on the conclusion of the study, Romania started the enactment of a set of norms regulating the procurement of products and services with ecological impact. Potential bidders should carefully analyze the entire applicable legislation in this field.

Proposal for a Directive on the Award of Concession Contracts
In December 2011, the EU Parliament and the European Commission launched a proposal for a new directive on the award of concession contracts, as part of the broader strategy created through the 2011 Single Market Act and in the EC proposals concerning the modernization of the EU procurement market.

Currently in Romania, the concession of public works and services is regulated by GEO 34/2006. However, at the EU level, the importance of having an autonomous norm to govern public concessions relates to the fact that, unlike public contracts, the award of service concessions is currently not subject to any distinct piece of EU legislation. Rather, it is guided by the general principles of transparency and equal treatment laid down in the Treaty on the Functioning of the EU. Concessions require a distinct set of rules since they have features different from public contracts, which justify more flexibility.

As for the connection between concessions and public-private partnerships, the recitals accompanying the proposal for a new directive on concession contracts clarify that concessions involving private partners are just a particular form of public-private partnership. Up to now, this term remained undefined in EU public procurement legislation. Regardless of terminology, these agreements span a significant share in the market.

The Commission's proposal regarding the new directive on concession contracts is now before European Parliament and the Council of Ministers for adoption under the co-decision procedure.

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Romania continues to need a huge infusion of capital for infrastructure development. A robust public procurement system is key to facilitating these projects. The new law should allow for greater flexibility in the procurement process, but the actual implementation of these policies is yet to be evaluated. The high interest in public procurement reform across the European Union indicates that significant changes are yet to be broadly incorporated. Romania will need to consistently adjust and swiftly absorb all future changes into its own national system.

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Editors Note: It is our policy not to mention our clients by name in The Romanian Digest™ or discuss their business unless it is a matter of public record and our clients approve. The information herein is correct to the best of our knowledge and belief at press time. Specific advice should be sought from us, however, before investment or other decisions are made.

Copyright 2012 Rubin Meyer Doru & Trandafir, societate civila de avocati. All rights reserved. No part of The Romanian Digest™ may be reproduced, reused or redistributed in any form without prior written permission from the publisher.

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