In late June, the government modified legislation on the awarding of public works, supply and service contracts, regulated by government emergency ordinance (GEO 34/2006), in an effort to increase the flexibility of the public procurement system and increase the public funds.
However, specialists say the powers of the body that has to oversee this field have been “severely reduced” through the changes.
Law 193/2013 which approves the amendments of GEO 77/2012 has increased the threshold for direct acquisition to EUR 30,000, VAT excluded, for products or services and to EUR 100,000, VAT excluded, for works.
Representatives of law firm DLA Piper commented that the increased thresholds are still lower that those provided by Directive 2004/18/EC on the coordination of procedures for the awarding of public works, public supply and public service contracts.
“On paper, the higher the thresholds applicable to direct acquisitions, the more flexibility is allowed to the contracting authorities. Therefore, the positive impact of the increased threshold would consist in accelerating the public procurement processes for small contracts,” Alin Buftea, partner at DLA Piper told BR.
They added that the thresholds for direct acquisitions should ensure a proper balance between controlling the spending of public funds on the one hand, and ensuring sufficient flexibility for contracting authorities to carry out their day-to-day activity on the other. The transparency of direct acquisitions exceeding the RON equivalent of EUR 5,000, VAT excluded, is still ensured by the publication in SEAP, the online tendering platform, of a notification regarding the public acquisition.
President Traian Basescu, who approved the bill, said that European thresholds could go up to EUR 200,000 for services and EUR 5 million for works.
Another amendment states that autonomous regions or national companies with an industrial or commercial character, such as state-owned airline Tarom or the Romanian Post, no longer fall under the provision of the GEO 34/2006.
DLA Piper specialists mentioned that exceptions may still exist for certain types of acquisition, such as for public works exceeding the RON equivalent of EUR 5 million or the acquisition of public services exceeding the RON equivalent of EUR 200,000.
“However, acquisitions exceeding the thresholds for direct acquisitions must still comply with an internal procedure, to be approved by the controlling authority. The internal procedure should reflect the public procurement principles of transparency, non-discrimination and equality of treatment, proportionality and mutual recognition. Compliance with these principles should ensure, at least in theory, a certain degree of control over the spending,” said Buftea. He commented that the implication of this amendment is uncertain, as its practical impact will depend on how the requirements are implemented in practice.
According to the Public Policy Institute (IPP), the volume of public acquisitions in Romania hovers around EUR 17 billion.
Reducing the supervision of public acquisitions
The recent changes have dented the authority of the ANRMAP (the National Authority for Regulating and Monitoring Public Procurements), which is the main national supervisory authority in this field.
Specialists at DLA Piper said that before the enactment of Law 193/2013, the ANRMAP had the right to file court actions seeking the annulment of contracts awarded in the event of the infringement of certain provision of GEO 34/2006. Court action could be filed only under certain conditions and only for certain reasons that were outlined in the emergency ordinance.
Following the latest amendments, the ANRMAP has been stripped of its right to file such court actions.
“We believe this amendment is unfortunate since this prerogative was very important for enforcing the ANRMAP’s supervisory role. Furthermore, GEO 34/2006 does not give authority to any other public institution to file court actions to annul the awarded contracts,” said Diana Ristici, senior professional support lawyer at DLA Piper.
The National Council for Solving Contensations (CNSC) may also be indirectly impacted by the changes.
DLA Piper representatives commented that the CNSC may see its volume of activity drop after the increase of the threshold for direct acquisitions and the repeal of provisions that assimilated autonomous regions and national companies to contracting authorities.
PM Victor Ponta said last week that he would analyze the recent changes in the public acquisitions law.