18. 6. 2020
Dear Clients and Business Friends,
We would like to use this opportunity to inform you about a partial, albeit significant, section of the forthcoming amendment to Act No. 134/2016 Sb., the Public Procurement Act (the “PPA”). The bill aims to clarify ambiguous interpretations of the commencement of the blocking period when raising objections to the procurement terms and to steps taken by the contracting authority when awarding sector-specific below-the-threshold public contracts and minor contracts outside the PPA regime.
Currently, the comment procedure (for up-to-date status, click here) that is part of the bill-drafting process has just been terminated – the amendment to the PPA can now be passed on to the government’s Legislative Council for comments and to the government for approval before it can be passed on to the Chamber of Deputies.
One of the major achievements during the comment procedure contributing to the clarification of the law interpretation practice is that the current wording of the bill that is about to be published on the above mentioned website lays down in Section 241(1) PPA that “Objections may be raised by the supplier who has suffered damage or is facing impending damage (the “complainant”) as a result of the contracting authority’s actions when awarding a public contract or as a result of special procedures pursuant to Part Six. Objections may be raised against steps taken by the contracting authority when awarding minor contracts, small-scale concessions pursuant to Section 178 or sector-specific public contracts pursuant to Section 158(1); this does not apply when the contracting authority or another person initiate procurement procedure pursuant to Section 4(4) or (5).”
This confirms the opinion that when legitimately proceeding outside the PPA regime, e.g. when awarding contracts below set financial limits, the contracting authority is not bound by mandatory provisions, e.g. by the consequences of raising objections, among other things.
The amendment makes the rule more specific by inferring from case law, specifically from the decision of the Regional Court in Brno of 11 April 2019, case no. 62 Af 69/2017-193, in which the court ruled that “objections may be raised only against acts or omission of the contracting authority during the procurement procedure, the selection of the type of the procurement procedure, or steps taken by the contracting authority with the intention of awarding a public contract outside the procurement procedure […] The rule pursuant to Section 241(1) PPA, however, does not imply a comprehensive category of cases allowing objections (this is not a general clause governing the rules provided in Section 241(2) PPA) as the exhaustive list of cases allowing objections is implied from the same Section 241(2) PPA. Where the commencement of the blocking period pursuant to Section 246(1)(b) of the PPA is conditional upon the raising of objections, the objections raised must be justified, not excluded pursuant to Section 241 PPA.”
Furthermore, the bill appropriately reacts to concerns arising from a potential interpretation of conclusions drawn in the judgement of the Regional Court in Brno dated 7 August 2019, case no. 62 Af 90/2017-54, namely that any complaint filed to the contracting authority proceeding outside the PPA regime although the complainant was not challenging the legitimacy of such procedure but merely, for example, the set terms governing the selection of a supplier, should be considered an objection within the meaning of Section 241(1) PPA, thus commencing the blocking period pursuant to Section 246(1)(c) PPA.
In our opinion, however, such interpretation does not necessarily follow from the current PPA wording because if the contracting authority is legitimately proceeding outside the PPA regime, the contracting authority should not be required by law to handle any complaint by a supplier as an objection, i.e. be obliged to reject it in line with all the formal requirements under Section 245(3) PPA.
It should be noted that this does not leave suppliers defenceless vis-à-vis possible mistakes made by the contracting authorities; if there are any doubts about whether the contracting authority has correctly decided to proceed outside the PPA regime, suppliers always have the right to raise objections pursuant to Section 241(2)(c) PPA and, subsequently file a petition pursuant to Section 250(1)(f) PPA, on the basis of which the Office may prohibit the contracting authority from continuing to proceed with the challenged actions, or a petition to impose a ban on the performance of a contract that has already been executed outside the PPA regime.
The bill in no way makes a possible defence against an unlawful procedure by the contracting authority toothless. At the same time, it makes it more difficult to raise bullying objections as it removes ambiguities regarding the meaning of the term “objections”, thus confirming our interpretation.
This is another clause in the amendment to the PPA following up on case law (just like in the event of the judgement upholding the exclusion of a purchase of shares, interests and businesses from the applicability of the PPA, which we covered earlier, see here) which makes the existing wording of the act more clear and lucid. We sum up the key points of the amendment in our article in Veřejné zakázky, the public procurement magazine (No. 2/2020, pp. 50–51).