The Public Procurement Act and European Union directives

Estonia: Changes to the Public Procurement Act will solve many practical public procurement issues.


In 2014, the European Parliament adopted three new public procurement directives. These give Estonia until 18 April 2016 to implement them, so the Ministry of Finance is working on a draft revision of the Public Procurement Act. The changes should enter into force by April next year.

The draft gives the contracting authority a wider discretion when evaluating tenders. Under the current law and the former directive, all public contracts must be awarded on the basis of the most economically advantageous tender. This principle does not change but according to the new directive authorities need only take the price-quality relationship into consideration. One problem with public procurement is abnormally low tenders leading to low quality work and tax evasion. Changes to the Public Procurement Act will enable contracting authorities to take other matters into consideration when creating the award criteria (e.g. environmental influence, qualifications of the tenderer’s employees or social aspects). This ensures higher quality of public procurement.

The new directives give until 2018 to implement e-procurement. However, in Estonia 80% of all procurements are already tendered electronically and these provisions will be in force by 2016 because what will become mandatory with the new provisions has already been largely implemented in Estonia. Reducing the administrative burden will also be achieved by raising the limits on domestic state tenders to 20 000 euros for supplies and services and 150 000 euros for construction work. The Act will have unified rules for procurements between domestic and international limits. The simplified procurement procedure, which ironically turned out to be very complicated and confusing for all parties involved, will be eliminated from the Act.

With the revision of the Public Procurement Act and adaption to the Directives of the EU, the Estonian State can, in future, transfer assignments to the private economy even more effectively.

Source: Public Procurement Act draft explanatory memorandum. May 13 2015.

 

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