© OECD

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Seventh IPA Regional

Public Procurement Conference

Review and remedies procedure in

practice – Experiences of Croatia

Zoran Blažević, SIGMA expert, Croatia

Vlora, Albania 9 – 10 September 2014

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Content

Main focus on:

• Public procurement cycle and legal protection.

• Impact of the PRB decisions on public procurement

- Croatian example.

• Distrust between parties in public procurement

procedures.

• ECJ decisions and lessons learned.

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Assessment of needs

Tender preparation

Selection of the bidder

Concluding of contract

Contract performance

Public procurement activity

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Importance of the PRB decisions

• Transparent and efficient review system is

precondition for development of public procurement

system.

• Difference between public procurement contracts and

classical civil contracts?

• Private sector is the second party in the public

procurement with equal rights as public side.

• Role of the Courts is to ensure protection of the legal

rights of all parties in the public procurement system.

Judicial control over the PRB’s case law.

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State Commission for Supervision of

Public Procurement (SC), Croatia

– Legal practice

Main focus on:

• Question of professional and grave professional

misconduct.

• Question of the evidence of suitability –

administrative part.

• Clarification of the tenders after the opening date.

• Mixture of administrative procedure and civil

legislation in review and remedies system.

• Confusion of private sector – which way to go?

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State Commission

Case 1.

Minutes of examination and evaluation of tenders

- additional note in which the contracting authority

stated that after the public opening of tenders, he

received anonymous letter in which there is a

statement that the bidder XY committed

professional misconduct in terms of termination

of the contract by another contracting authority

(CA).

Contracting authority requested a statement from

CA, in terms of whether there was a such public

contract and if the same contract was terminated,

the reasons for doing so.

CA answers that the contract was terminated due

to poor execution of contractual obligations (the

bidder XY during the execution of the contract

could not deliver certain items, knowing at the

time of the bidding that the same products are no

longer produced).

CA also notes that the tenderer has filed a lawsuit

against the CA to Commercial Court and that the

court dispute is in progress.

KLASA: UP/II-034-02/12-01/1531

URBROJ: 354-01/13-15

17 January 2013

• Decision is available at www.dkom.hr for free

download.

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ECJ C-465/11: Question of professional

misconduct

• Concept of grave professional misconduct can be specified and

explained in national legislation, provided that it has regard for

EU law.

• ‘Professional misconduct’ covers all wrongful conduct which

has an impact on the professional credibility of the operator at

issue and not only the violations of ethical standards in the

strict sense of the profession to which that operator belongs,

which are established by the disciplinary body of that

profession or by a judgment which has the force of res judicata.

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ECJ C-465/11: Question of grave professional misconduct

• The failure of an economic operator to abide by its contractual

obligations can, in principle, be considered as professional

misconduct.

• The concept of ‘grave misconduct’ must be understood as

normally referring to conduct by the economic operator at issue

which denotes a wrongful intent or negligence of a certain gravity

on its part. Accordingly, any incorrect, imprecise or defective

performance of a contract or a part thereof could potentially

demonstrate the limited professional competence of the economic

operator at issue, but does not automatically amount to grave

misconduct.

• In addition, in order to find whether ‘grave misconduct’ exists, a

specific and individual assessment of the conduct of the

economic operator concerned must, in principle, be carried out.

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State Commission

Case 2.

The appellant states that the CA declared his bid

as invalid contrary to the provisions of the PPL

and ECJ verdicts.

From the Evaluation minutes it is evident, that the

CA had asked awarded company for clarification

and completion of the bid.

CA had requested form awarded company

additional documents and certificates relating to

specialist no. 8, while the bid of the appellant was

declared as invalid precisely because of the same

reason - lack of certificates for specialist under no.

8.

According to the appellant it was obvious that the

CA had different criteria for the appellant and for

the awarded company, thus this actions of the CA

where not in line with the provisions of the Public

Procurement Act.

KLASA: UP/II-034-02/14-01/567

URBROJ: 354-01/13-9

17 June 2014

• Decision is available at www.dkom.hr for free

download.

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ECJ case: C-336/12

Ministeriet for Forskning, Innovation og Videregående Uddannelser vs

Manova A/S, from 10 October 2013

• CA authority from the tenderer must request in writing clarification of the

offer. Request for clarification regarding the offer, and which can be

activated only after the CA is aware of all the deals, must in principle be

equally entitled to all other tenderers who are in the same position, to

prevent discrimination.

• requirement shall apply to all points of offers that should be clarified.

• CA is entitled to a discretionary decision on the need to seek

clarification regarding the bids, however, is obliged to treat all tenderers

equally.

• The CA, in fact, obliged to act strictly in accordance with the conditions,

which are specified in the tender documents.

According to the Court, the CA may request in this way the data from the

records, documents or amendments, but to a limited extent. For example if

such request relates to the elements or data, such as, for instance: published

balance sheet, whose existence is fixed, prior to the expiration of the period

for submission of tenders, and can be objectively verified. 9

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Impact of PRB decisions

• On contracting authorities – tender preparation.

• On representatives of private sector – bid preparation.

• On Executive government – strategic planning and

legislative amendments.

• On end users - lack of understandable information.

• Number of SC cases in 2012: 1676

• Value of SC cases in 2012: 1.520.467.000,00 EUR

• Number of cases in 2013: 2098

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State Commission

Case 3.

The appellant states that in the process of

evaluating the technical and professional ability,

CA rated the reference of the awarded company

as valid and fulfilling the conditions specified in

tender documentation, although the individual

references are not listed in the „List of references”

which List was demanded by the tender

documentation and PPL.

After examining the minutes of evaluation of

tenders, it was found that the needed references

of the proper fulfillment of contract A, B, and C

where in accordance with the conditions from

tender documentation. However, the awarded

company did not submit a List of references.

Given that the public procurement is strictly

formal, the references submitted in the bid without

proper List of refrences, according to the SC

represents the breach of the PPL. This decision is

in line with the judgment of the Administrative

Court, No. Us-11911 / 2008-5 of 21.04. 2011, thus

appellant's allegation was well founded??

KLASA: UP/II-034-02/13-01/1014

URBROJ: 354-01/13-8

22 August 2013

• Decision is available at www.dkom.hr for free

download.

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State Commission

Case 4.

The appellant claims that the awarded

company has failed to prove its financial

capacity. Tender documents specified that

in the purpose of proving financial capacity,

official documents called: BON-2 or SOL-2,

should be submitted and a tenderer with

this evidence of suitability, must prove that

in the last 6 months, from the date of the

start of the procurement procedure, were

not blocked and that there are no recorded

liabilities for which there is no coverage on

the business account…

The awarded tenderer submitted in the

tender, BON-2 with date 18 March 2014

Public procurement procedure was

published on 7 March 2014.

KLASA: UP/II-034-02/14-01/416

URBROJ: 354-01/14-9

16 May 2014

• Decision is available at www.dkom.hr for free

download.

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Perception of public procurement

• Negative in most of the regional countries.

• Distrust between public and private sector is evident.

• Lack of integrity and missus of the remedies system.

• Delays in procurement procedure and execution of

the contracts.

• How to change this behavior?

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

avoid distrust?

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How to avoid distrust – Major risks

Independent PRB

Lack of experience, both

in public as in private sector

Lack of financial independence

Lack of visibility of PRB’s work and clear channels of communication

Influence of the political

structure

Increased administration in procedure

Delays in procurement procedure

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Internal organisation

• Necessary step for establishment of successful PRB

institution.

• Update of the internal rules.

• Distribution of the cases – key question?

• Roles and responsibilities of people involved in the

review process has to be clearly written.

• Rights and obligation of all parties in the procedure

have to be clear and understandable.

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Final conclusion

• The review and remedies system has to provide

speedy, effective and competent handling and

resolution of complaints and sanctions, including

comprehensive publication of judgments and their

rationale.

• The review organisation should have capacity and

capabilities to handle complaints and sanctions in

accordance with the law and to ensure their

effective and competent implementation.

• Data on the functioning of the remedies system

should be published without delay.

• Transparency and independence of the institution has

to respected.

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Time for….

Questions and comments ???

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Thank you for your attention !

Zoran Blažević, LLB

Temporis Consulting Ltd, Croatia

E-mail: zoran@temporis.hr

Phone: + 385 98 406 393

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