Czech Republic gets new rules for awarding public contracts

Czech Republic: A new Public Procurement Act gives clients more freedom in choosing their contractor, and spares suppliers some of the obstinate formalism of the past.

On 1 October 2016, a new Public Procurement Act, which has been long in the making, will come into force and transpose the European Procurement Directive into Czech law.

The Public Procurement Act brings some welcome relief from what has been (in some cases) pure overblown formalism. In the future, contract awarding authorities are less straightjacketed when it comes to evaluating the qualifications of bidders or ordering extra work. Additionally, the list of reasons for which bidders may be excluded from a tender has been extended. Because of this, the contract awarding authority is allowed to respond more flexibly to the way in which a given tender procedure develops over time, and make decisions not solely based upon the submitted tender documentation but also based upon its broader knowledge of the individual bidders.

The new set of rules includes a number of changes, both small and big, but the fundamental structure of the tender procedure remains unchanged. For this reason, previous experience with awarding public contracts will still be useful under the new regulation.

Among the most important changes are these:

Contract awarding authorities will have the right to demand that the bidder supplement the documentation submitted with “data, documents, samples, or models which will not be evaluated using the evaluation criteria.”

For this reason, a bidder who has made formal mistakes in preparing their bid need no longer be “automatically disqualified” from participation in the tender, which is a huge step forward in the right direction. On the other hand, this more liberal approach by the new rules also creates new opportunities for abuse, in the form of preferential treatment for previously selected bidders.

The contract awarding authority will have the option to expand the subject matter of performance under a public contract by up to 10% of the original contract value (or 15% in the case of construction work) (known as commissioning additional work) without having to organize a formal tender procedure. In the past, any expansion of the subject matter of performance under a public contract (no matter how insignificant) necessitated a formal new tender procedure (usually in the form of a negotiated procedure without publication).

Where the statutory requirements are met, the original public contract may in fact be increased in size by up to 50 %. This allows the contract awarding authority to respond more flexibly to unforeseen obstacles during implementation of a public contract, which will be a welcome new development, especially in the area of building contracts.

However, we will have to wait for practical experience with the new law to see whether procurement procedures will become “better”, in the sense that superior quality becomes available for a reasonable price, or whether the new rules will incite foul play on an even bigger scale than previously, at the expense of fair and equitable tendering.

Source: Act No. 134/2016 Coll., on the procurement of public contracts


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