Articles

AMENDMENTS TO PUBLIC PROCUREMENT LEGISLATION

11 March 2004 (Invest Romania)

After more than a decade of uncertainties in the area of public procurement legislation (due to various causes, ranging from lack of enactments to abundance of rapidly changing amendments), the applicable legal framework was finally set in 2001 by implementation of the Emergency Government Ordinance no. 60/2001 on public procurement, as subsequently amended and approved by the Law no. 212/2002 (“EGO no. 60/2001”).

By successive amendments promoted in October 2003 , the EGO no. 60/2001 has been again modified. Although these changes seemed to aim at mere adjusting certain issues met in practice, the real effects induced might be actually rather different, as it has been failed to notice all side-effects incurred.

In concrete terms, changes have regarded art. 41 which regulates the price denomination within the offers made under public procurement procedures. In order to prevent frauds, additional restrictive conditions, along with a series of intricate exceptions, have been placed with respect to price updating within the public procurement agreements.

Thus, according to par. 2 and 3 of art. 41 of the EGO no. 60/2001 , as a general and imperative rule, the price within the public procurement procedures must be expressed exclusively in Romanian Lei (“ROL”), excluding the previously existing possibility of alternative EURO denomination.

Besides, the enactment dictates that for agreements lasting 12 months or less , the price shall remain firm (i.e. unmodified), irrespective of the causes which might require its update (such as, inter alia, potential severe inflation).

As to the agreements exceeding 12 months , the updating possibilities remain restrictive, since the parties may agree thereupon but only in case of circumstances unforeseeable at the conclusion of the public procurement agreement (whereas foreseeable occurrences such as normally predictable inflation rate remain apparently uncovered).

Nevertheless, par. 5) and 6) of art. 41 set several important exceptions from the requirements provided at said par. 2), as follows.

First, the restrictions of art. 41 par. 2) do not apply to agreements involving EU and international financing.

Second, there are exempted from the restrictions of art. 41 par. 2) the public procurements regarding interchangeable merchandise listed on commodities exchange, as well as equipments, machineries and services.

Third, in case of purchases from import, the price may be denominated in hard currency (EURO or USD).

Leaving apart further considerable critiques regarding each of the above-mentioned exceptions (based on defective drafting of the divergent legal texts which may cause additional difficulties of interpretation), we note that the row of big issues created by the small art. 41 is not completely ended.

Thus, pursuant to par. 4 of art. 41 of EGO no. 60/2001, “the delay beyond the contractual timing can not be invoked as reason for the contractual price updating”. Unfortunately, the wording is again rather confusing and may trigger erroneous application thereof.

It should be noticed in this respect that the legal text quoted may seem to refer to, inter alia: (i) deliberate delay of the timely performance of the public procurement obligations, with a view to determine undue rise of the agreement price (case in which the legal text would be futile, since the practice therein referred to is being severely punished as fraud by the enactments in force, anyway); (ii) any delay by the public authority as regards the payment of price agreed or the fulfillment of its own obligations under the procurement agreement (case in which the text would contravene the existing legislation regarding recovery of damages created by delayed performance of obligations, opening way for abusive conduct by public authorities under public procurement procedures).

In consideration of the above-mentioned and of the unquestionable truth that a sound and fair fulfillment by all parties of obligations under public agreements serves both public and private interest, specific remedies should be further sought and implemented in respect of the public procurement projects, on a case-by-case basis, prior to their execution.