201507.01
Off
2

3 types of controversy in the Public Procurement Law

Possibility to exclude contractors from public tendering provided for in the draft Public Procurement Law

During the perusal of proposals included in the draft Public Procurement Law, my attention was drawn to three controversial provisions. They relate to obligatory circumstances requiring the Contracting Authority to exclude contractors from public procurement proceedings. These circumstances are specified in article 88 of the draft law, which constitutes the implementation of the Directive of 26 February 2014. In my opinion, the provision poses a threat to Contractors while offering the Contracting Party the opportunity to exclude Contractors in an easy and completely arbitrary manner.

The three proposals are:

Breach of obligations

The Contracting Authority may exclude Contractors who have breached the provisions of labour law, environmental protection law and the social security legislation.

The Contracting Authority has the power to decide on the satisfactory evidence of such infringements. What is more – we do not know how such infringement qualifies the Contractor for exclusion: will a lawsuit initiated against the Contractor by its employee or a negative administrative decision issued against the Contractor suffice to exclude it from the tendering procedure?

Agreement distorting competition

The Contracting Authority may exclude Contractors who have entered into an agreement aimed at distorting competition between contractors in the public tendering.

The proposed provisions stipulate that the fact of concluding such an agreement may be confirmed by the Contracting Authority itself based on reliable evidence. This clearly indicates that the Contracting Authority will be able to exercise complete freedom in this regard. We do not know what type of evidence qualifies as reliable for the arbitrary confirmation by the Contracting Authority of the fact of conclusion of such an agreement, and how such evidence may be contested – perhaps only in appeal proceedings?

Conflict of interests of the Contractor

Any Contractor subject to a conflict of interest should be excluded from the public procurement proceedings, provided that the conflict may not be effectively removed by less intrusive means.

In this proposal, concerns are raised by the term of conflict of interest. There is no point of reference here: what type of interest does such conflict apply to? In addition, we do not know the scope of the conflict. The Contracting Authority is to make an independent decision on the existence of the conflict of interest. At the same time, it will be authorised to decide if the conflict can be removed by less intrusive means (which have not been defined either). Such proposals will give rise to arbitrary settlements.

We do not need more conflicts between the parties

Due to the doubts described in this publication, I sincerely hope that the proposed regulations will be excluded from the public procurement law. By conferring such authorities to Contracting Parties, the principles of awarding public contracts may become seriously distorted. There may be cases where the Contracting Authority will decide on the award of the public contract based on completely biased and non-substantive arguments. Adoption of such proposals in the public procurement law would give rise to even more conflicts between Contractors and Contracting Parties.