Czech Republic: Amendment To The Public Procurement Act – Selected Changes Effective Since 6 March

On 6 March 2015, amendment No. 40/2015 ("the Amendment") to Act No. 137/2006 Coll., on public procurement (the "Act") was enacted. The Amendment removes some of the more problematic obstacles in the area of public procurement; at the same time, it also imposes stricter conditions on the review procedure before the Czech Competition Authority ("Office").

Some key changes which the Amendment has brought are of particular note.

1. Annulment of the obligation to cancel a tender procedure that has resulted in a single bid

The Amendment removes the obligation to cancel a tender procedure if the contracting authority receives only a single bid or, if after assessment of the bids, there is only one left for evaluation. Thus, a tender procedure may continue even when there is only a single bid. This does not, of course, preclude the right of the contracting authority to cancel the tendering procedure. This might enable the contracting authority to speed up the process of choosing the winning bid and otherwise bringing about a realization of the contract. On the other hand, this particular amendment brings back the regulation that had been criticized a few years ago due to the fact that it could be easily misused by the contracting authority.

2. Reduction of legal requirements for contracting 'additional work'

The Amendment sets out less stringent requirements on contracting authorities as regards the awarding of additional construction work and services ("additional work"). The Act previously required that should the need for additional work not described in the original tender description arise, this need had to be as a result of objectively unforeseen circumstances. In many cases, such a requirement put impossible demands on the contracting authority and significantly limited the utility of the provisions of the Act, as the limitation seemed to be too strict in practice primarily due to insufficient flexibility in cases where unplanned circumstances occurred. Therefore, the Amendment replaced the problematic requirement with a less stringent one, allowing for the awarding of additional work if the contracting authority, acting with due diligence, could not have anticipated the need for such additional work. In this regard, the Amendment has increased the limit for a direct award of additional work from 20% to 30% of the price of the original contracted amount.

3. New category of partial evaluation criteria

The Amendment introduces a new category of partial evaluation criteria. It is now possible to evaluate bids according to the organisation, qualifications and experience of bidders, if such criteria would have a significant impact on the performance of a public contract. Such criteria can be used particularly in the field of intellectual services (e.g., for the services of designers, architects or lawyers) and specialised craft activities (e.g., restorers). Therefore, it is possible to apply new partial evaluation criteria in cases where the quality of performance directly depends on the skill and experience of the specific individuals supposed to carry out the work pursuant to a public contract. The evaluation of these criteria is largely subjective, which makes it difficult to qualify or define them in a transparent manner. It has yet to be determined if this particular amendment will prove to be sufficient to enable the contracting authority to evaluate the individual skills and experiences of the relevant persons.

4. Payment of deposits in proceedings before the Office

The Amendment increases the maximum deposit from CZK 2 mn to CZK 10 mn. The amount of the deposit is calculated for contracts concluded for an indefinite period as 1 % of the bid price for the entire period of the public tender over the first four years of performance of the contract (thereby clarifying how to determine the total bid price for a contract of an indefinite duration, which the Office, in the past, calculated in various imperfect ways). In the event that the bid price cannot be determined, the required deposit remains unchanged at CZK 100,000.

5. Reduction of time for paying a deposit to the Office

Under the Amendment, the petitioner must pay a deposit to the account of the Office no later than on the last day of the period for filing a proposal to the Office (i.e., usually within 10 calendar days from the day when the petitioner received the decision from the contracting authority). Since 6 March 2015, it is no longer possible to pay a deposit afterwards.

6. Forfeiture of the deposit

The Amendment introduces a forfeited deposit of 20% for cases when the petitioner withdraws its proposal before the Office issues a decision. The aim of this provision is to restrict the practice of nuisance bids - proposals primarily intended to block further steps on the part of the contracting authority. These bids were typically used as a delaying technique, and were usually withdrawn before the Office issued the decision. This new provision makes this strategy less attractive by making those who back out pay a portion of their deposit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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