a guide to public procurement in cee

8/13/2019 A Guide to Public Procurement in CEE

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Love me tenderA guide to Public Procurement in CEE

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Contents

Introduction 04

Public Procurement in CEE

Potential for Growth? 06

Public Procurement Legislation in Central Europe More European or More Central? 08

Submitting a Bid 26

What is Happening Behind Closed Doors 36

Veni, Vidi but not Vici 40

Conclusion 52

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Every business has a product or service to sell, andit is at the heart of any successful business that you

will nd the key elements that make it so: theability to oer a superior product in terms of

quality, eciency, design, innovation and reliability;and the ability to provide that product either more

cheaply than ones competitors, or at a price whichis amply justied by its superior features.

Small wonder then, that any business which trulybelieves in either the quality or the value for

money (or both) of its products gets upset when

told that, in a fair ght, a competitors productdelivered the same capability at a cheaper price or

delivered superior capability which justied its

higher price.

And then it begins was the ght really fair, wasthere a level playing eld, if there had been,

shouldn't we have won, was price the only

criterion (and if not why not, and if so why so),

did money change hands or was informationleaked about our price, were we disqualied on a

technicality, should the competition have beendisqualied for being non-compliant, why didnt

we win? In short, I want another go, and this

time I want to win.

So, in spite of the rather dry nature of public

procurement, in the end nothing gets abusinessperson hotter under the collar than the

perception that a tender was run badly, or worse

unfairly, or worst of all, illegally.

Part 1Introduction

A Guide to Public Procurement in CEE is not exactly a titlethat will have people dancing in the streets.

Nonetheless, scratch the surface and you will nd a topic whichtouches the hearts of many businesses in a way which is notimmediately apparent.

A guide to Public Procurement in CEE |20114

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nothing gets a businessperson hotterunder the collar than the perception

that a tender was run badly

When the dust settles, and the general feeling of being hard

done by fades, a bidder may realise that, had it prepared

itself better, it could have signicantly improved its chances

of a successful bid, or radically reduced the chances of its

disqualication. With a better understanding of the culture

and overall framework of tender procedures in CEE, it

could have organised itself much more quickly on the legal

and administrative side, lessened its chances of being

tripped up on a technicality, and got on with the business

of doing what it does best concentrating on presenting its

product in the most favourable light possible, and

demonstrating its inherent value for money.

Of course, in some circumstances, that is exactly what it

had already done, and it lost in circumstances that justify

a second look: a review, an appeal, a chance to ask why

and in some cases, an opportunity to have another goin a reconvened tender (or, most gratifying of all,

disqualication of a competitor and the wrenching back

of rst place to the challenger).

There is a disappointing side to the topic of public

procurement as well. In some of the countries in CEE,

many business people talk openly about the worsening of

corruption and the lack of transparency in tender processes,

be these tender rules that have been framed to favour a

particular bidder, tenders published in places where

outsiders could not possibly have been expected to have

been able to view the tender notice, or simply wheredemands for bribes have been made. It is worth spending

some time thinking practically about what steps can be

taken to reduce this worrying trend.

EU membership by itself does not seem to have been

enough to reverse this blight, and only the latest wave of

EU entrants have been placed under slightly tighter

supervision on the use of EU funds. If the panacea of EU

entry has failed to live up to expectations on the reduction

of corruption, what other measures could succeed?

There is some feedback that e-tenders/electronic auctionshave the capacity to signicantly increase transparency on

tenders, and the authors of this publication encourage

public authorities to press on with the implementation of

these systems. Another suggestion made in an earlier

version of this publication included the pre-vetting of

tender rules and this suggestion seems to have been taken

on board, for example in Hungary. Also, the idea of the list

of pre-qualied entities also removes much of the

uncertainty of being disqualied on a rather irrelevant

technicality, used for example in Slovakia.

As a result of the economic crisis, deeply felt at the time of

this publication, the pressures to deliver value for money

and the pressures to win new business are stronger than

ever. It is therefore doubly important not to throw away a

chance of new business through carelessness. Further, for

governments facing increasingly stretched public nances,

there is pressure to procure better value for money services,

and to ensure that public money is being spent wisely.With pressure on government budgets, governments must

also look for ways to proceed with public works not only

using public money, but private money too. These public

private partnership nance (PPP) projects are extremely

useful, but again care must be taken to understand how

public procurement law still impacts on these projects.

Whilst nominally the public regulations apply to PPP, the

more specic issues that arise when addressing PPP mean

that PPP could not be addressed fully in this publication.

However, many observations in this brochure will also

apply to PPP. This is particularly true for cases where bothpublic procurement and PPP are regulated under the same

law. This is the case for instance in Slovak procurement law

although this dual regulation has often been criticised. On

the other hand, in the Czech Republic and Poland PPP is

regulated by a separate act, but in both cases the act still

contains many references to public procurement law.

The objective of this publication is to provide a brief

overview of some of the main issues that we have identied

in the public procurement rules in CEE whilst advising our

clients in tender processes, as well as providing somepractical tips that may help in the bidding process either

to avoid disqualication, seek a review, or simply bid in the

future on a more informed basis.

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Part 2Public Procurement in CEE Potential for Growth?

Public procurement legislation has recently

undergone substantial changes in the CEEregion. This is primarily as a result of the

harmonisation process which aims to transpose

the European public procurement directives intonational legal frameworks. The idea behind

harmonisation is to achieve a set of public

procurement rules that share the same principlesand modes of operation throughout Europe.

From the bidders point of view, harmonisationshould bring the advantage of being able to bidin dierent countries under comparable terms

and conditions, leading to a more advanced stateof preparedness, greater eciency, and savings

on bidding costs. As for contracting authorities,

the legislation aims to ensure that a transparent

and uniform set of rules governing the processof procurement of goods, works and services is

adopted, leading to more transparency, fewer

challenges and failed bids, and more successfullyconcluded tenders.

As a result of the legislative changes, public

procurement is an increasingly attractive area. Forexample, even in a comparatively small country

such as Slovakia, in 2010 the contractingauthorities awarded contracts in the total value ofapprox. EUR 3 billion and contracting entities

spent a further EUR 1,7 billion through tenders

conducted under public procurement rules.

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1 except for Czech Republic where the value is from 2008

Public procurement is mainly used in

two areas, the rst in relation to

public sector entities seeking to

procure goods or services, and the

second in relation to sectors of the

economy. With regard to the rst area,

the provision of goods, services,

buildings and works for the state and

municipalities can be done only

through the public procurement

process. In the second area, publicprocurement will also apply to certain

specic sectors such as network

industries and transport.

The process of public procurement is

crucial for the construction market, in

particular the construction and

modernisation of roads. It is also

prevalent in environment protection

schemes, for example water

management projects including

sewage systems. In addition, public

procurement has a signicant impact

on other sectors of the economy in

which the state is an active player, for

example the provision of public

services in the health, energy and

defence sectors.

Despite the growing importance of

public procurement in the CEE

economy, and despite the legal

changes that have taken place, it

cannot be said that public

procurement is fully harmonised.

Naturally, national dierences still

exist. Before entering a market with

the intention to bid on a public

procurement tender, it is advisable to

be acquainted with how the bidding

process operates specically in that

market, what the biggest challenges

are likely to be, and what problems a

bidder may face or should be aware

of. Proper knowledge of the public

procurement rules in advance maysave considerable time, costs and

unpleasant surprises it may even

save a bidder from rejection from a

tender altogether.

VALUE OF CONTRACTS AWARDED THROUGH THE PUBLIC

PROCUREMENT PROCESS IN INDIVIDUAL CEE COUNTRIES IN 20101

TOTAL

64.5 bn(Excluding Romania not available)

41.8 bnPoland

4.9 bnSlovakia

11.8 bnCzech Republic

6 bnHungary

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Part 3Public Procurement Legislation in Central Europe More European or More Central?

(A few words about the rules for participating in a tender)




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3.1 Implementation of European public procurement rulesin CEE legislation

Over the last decade, on their journey of accession to the

EU and beyond, CEE countries have had to align their

respective national public procurement legislation (the

National PP Laws) with EU legislation. The results of this

process are two-fold. On the one hand, the National PP

Laws are a step towards adopting the principles which are

embedded in EU legislation: they have transposed a new

denition of the contracting authority, provided new

nancial limits for above-threshold and below-threshold

public contracts (having reference to the thresholds

specied in Article 7 of Directive 2004/18 and Article16 of Directive 2004/17), introduced processes for

challenging decisions and remedies (in line with

Directives 89/665 and 92/13), notications in tenders

and administration as well as providing numerous new

concepts that did not exist under previous legislation.

On the other hand, many practical issues (in particular

those that directly aect bidders) remain unchanged or in

certain respects have become even more burdensome.

In awarding public contracts, national contracting authorities

must adhere to national procedures, which must follow the

rules and principles set forth in Directive 2004/18 (also

known as the Public Sector Directive), which applies to

contracts awarded by the public sector, i.e. state authorities

(central, regional or local) and certain entities nanced or

controlled by the State (referred to as bodies governed by

public law), as well as Directive 2004/17 (also known as the

Utilities Directive) which deals with contracts awarded by

entities operating in the water, energy, transport and postal

service sectors (even if these entities are privately owned,but operate on the basis of special or exclusive rights

granted by a Member State). These directives introduce the

use of open, restricted and negotiated procedures and

competitive dialogue into the public procurement process,

which are further specied in national public procurement

legislation. The main features and scope of application of

the respective procedures in CEE are briey summarised in

the table at the end of this publication.

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3.2 National problems remain

Lack of exibility of legal, nancial and technical standing

requirements of non-CEE bidders

The Slovak Public Procurement Act sets out general

requirements which must be complied with by the bidder

in order for it to participate in a tender. These

requirements concern the legal and nancial status of the

bidder as well as its technical capabilities. The problems

encountered under the Slovak tender requirements result

from the lack of exibility with regard to bidders from

outside Slovakia, and from a failure to consider more

generic drafting in favour of basing the legislation on

purely national concepts. This is because the Slovak Public

Procurement Act still requires documents to be recognisedunder Slovak legislation, which can in practice be very

dicult to achieve for bidders from outside Slovakia,

even in an equivalent form.

A good example of this inexibility is the requirement to

provide a document which proves that the bidder is subject

to no bankruptcy or liquidation proceedings and that a

petition for bankruptcy has not been dismissed due to lack

of assets. The document satisfying this requirement is, in

Slovakia, issued by the courts. However, in our experience,

a similar document is not issued in many otherjurisdictions because the courts in other jurisdictions

do not keep records of bankruptcy proceedings.

Furthermore, obtaining a document stating that there are

no litigation proceedings is very impractical as litigation

may be commenced in a number of courts in dierent

parts of the relevant country, or indeed, in many

dierent jurisdictions.

In general, a document that is not issued in the country of

the registered oce of the bidder may be substituted by an

adavit, but only if a suciently equivalent document isnot issued in that particular country. Without going into

too much theoretical detail on what is considered

suciently equivalent, the two examples above

demonstrate that satisfying the tender criteria may cost

the bidder considerable time and eort, trying to establish

how it can formally satisfy the requirements without any

guarantee that the documents which are eventually

produced will be satisfactory, or even give the contracting

authority the desired comfort that the document was

intended to provide.

With regard to nancial standing, tender rules often

stipulated that a set of accounts of the bidder should be

provided. As a result of the unclear nature of this

requirement, bidders often found themselves contemplating

whether or not they needed to prepare a full translation of

their annual reports. Fortunately, frequent clarication

requests made to the contracting authority usually revealed

that only nancial statements of the bidder needed to be

provided. Of course, where a bidding vehicle is only a

special purpose vehicle set up for the bid, in practice, the

bidder would have to assume that it should submit the

consolidated nancial statements of the group, which again

in practice may be onerous if the tender is time constrained(as it usually is). One of the ways that nancial standing can

be proven under the current wording of the Slovak Public

Procurement Act is by submitting the turnover gures solely

for activities which are relevant to the public procurement in

question. Although this is a welcome attempt to clarify the

problem described above, again a lack of certainty still leaves

the requirement open to interpretation and could result in a

bidder wasting valuable time trying to establish what it

should supply to satisfy this requirement. Furthermore, it

may be very dicult to calculate the revenue from such

activities and to separate those revenues from the revenues

derived from other business activities.

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afailure to consider more generic draftingin favour of basing the legislation on

purely national concepts

The list of technical requirements can be specied by the

contracting authority according to the specic needs of

the tender. Usually, a list of successfully completed

contracts which have a similar subject matter to that of

the tender will be required, with such list being conrmed

by the contracting authority or a client of the bidder.

However, clients in the private sector receiving goods or

services which are similar to or the same as those being

oered under the tender may understandably be reluctant

to provide references or divulge condential information,

particularly in the more sensitive areas of procurement.Additionally, the Public Procurement Act requires that the

references must concern the goods supplied or works/

services performed in the last three years. It is not clear,

though, whether the three-year period is to be calculated

from the day of the announcing the tender, or the date of

submitting the bids, or some other date.

In general, ambiguities such as those described above can

be resolved by requesting clarication from the contracting

authority. The problem is that even if the bidder asks its

questions swiftly after the contract notice is issued, thecontracting authority may wait with its answers until six

days before the deadline for submitting the bids (as it often

does). This may not leave sucient room for the bidders

to obtain the required documents if the explanation given

by the contracting authority shows that some additional

unexpected documents are required.

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In Poland, the EC directives regarding public

procurement have already been fully implemented and

there is no longer any discrepancy between Polish and

European procurement law. Polish Public Procurement

Law means the Public Procurement Law dated 29 January

2004, as amended (consolidated text, J. L. 2010, No. 113,

item 759) (PPPL) has been amended to implement EC

directives and incorporate related amendments intended

to improve public procurement procedures, and in order

to reect the challenges connected with the current

economic situation.

Thanks to the implementation of EC Directives and the

amendments incorporated into the PPPL, Polish public

procurement law is quite friendly towards non-Polish

bidders. If some documents required in the tender

procedure are not issued in the bidders country of

residence, foreign bidders are entitled to submit equivalent

documents relating to the bid, provided these are issued by

proper public or private bodies in the bidders country.

These documents must be issued no earlier than six

months prior to the deadline for ling a request toparticipate in a bid, and no earlier than three months prior

to the deadline for ling an oer. As with other CEE

countries, ensuring equivalence may be problematic due to

the dierences in national legal systems, and in the event

of any uncertainty it is very important to contact the

contracting authority in advance and ask it to clarify what

is required in order to adequately satisfy the formalities.

In addition, under Polish law there is a very important

general rule stating that if the bidder's country does not

issue a certain type of document at all, it is sucient for

the bidder to make a declaration instead (in conrmation

of the information otherwise required to be proved by the

relevant document(s)) provided this is authorised by a

notary or made in a court or other administrative unit in

the bidder's country of residence. This rule plays a very

important role in practice, as its application resolves

many problems regarding documentation which occur in

other CEE countries.

The Public Procurement Act also contains very tight

deadlines for issuing a request for clarication of the

tender rules or documents being led during the tender

procedure. If the bidder wants to obtain clarication from

the contracting authority, it must submit the request by the

end of the day on which the mid-point of the term for

issuing the tender oer falls, i.e. halfway towards the

deadline. For equal to- or above-threshold orders, however,

the wording of the Public Procurement Act is ambiguous.

It is not clear how to establish the term for seekingclarication, as under the Act the deadline starts running

from the submission by the contracting authority of the

contract notice for ocial publication. In practice the

contract notice is published only approximately ve days

after its submission. Further, the unocial publication of

the material conditions of the contract prior to the ocial

publication of the contract notice in the ocial EU

journals is prohibited (for example on the contracting

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authoritys website or in the contracting authoritys seat).

The relevant deadline therefore only runs for about ve

days, leaving the bidders with very little chance to get

acquainted with the tender rules. This is not in accordance

with the goal of the Public Procurement Act and puts the

bidders in a dicult position.

On the other hand, while the material conditions of the

contract can be published only after the ocial publication

of the contract notice (in practice after the above-

mentioned ve days from the submission for publication),the contract notice itself can be unocially presented by

the contracting authority on the contracting authority's

website or in the contracting authoritys seat before

publishing the material conditions of the contract.

The contract notice involves most (although not all) of

the information regarding the bid. This unocial

publication of a contract notice may take place several

days earlier than the ocial publication of the material

conditions of the contract.

The result is that in practice this puts domestic bidders in

a more favourable position as they normally have access to

the contracting authoritys website (which is usually in the

Polish language) or they can easily visit the contracting

authoritys premises. Foreign bidders are in a worse

position as they usually derive their knowledge about a

tender only from ocial publications. Hence, domestic

bidders have several more days to prepare themselves for

the bid, which can be crucial in procedures where time is

of the essence.

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HungaryThe Hungarian Public Procurement Act has been drafted

to ease the burden on foreign bidders, and help them to

provide the necessary documentation to full the bidding

criteria by allowing them to provide documents usually

issued for the same purpose in their home country.

In many cases, an adavit or a declaration under oath is

required or, if these are not recognised under local law, a

certicate issued by the competent court, authority or

professional association will suce, or even a declaration

notarised by a public notary. Certain certicates issued in

the jurisdiction of the bidder by the relevant authority,

such as a certicate of incorporation of the bidder or a

certicate issued by the tax authority that the bidder has

paid all taxes due, must be accepted by the contracting

authority. Similarly, a bid may not be refused on the

grounds that the proposal does not meet the technical

description and standards set out in the tender, provided

the bidder can prove that the proposal is equally t for

purpose. However, care must be taken to ensure the

equivalence of documents obtained abroad and the

documents required under the Hungarian PublicProcurement Act, as a failure to comply with the correct

criteria can still lead to the disqualication of the bidder.

In order to reduce this risk, it is advisable to make a

reference in the certicate or notarised declaration to the

relevant section of the Hungarian Public Procurement Act,

indicating that the document has been issued for the

purposes of complying with the relevant section of the act

and the ways in which it achieves compliance.

As with other CEE countries, ensuring equivalence may be

problematic due to the dierences in national legal

systems. Local lawyers may be able to advise on what may

be accepted by the contracting authority, and as elsewhere

one should contact the contracting authority in advance

and ask it to clarify what is required in order to adequately

satisfy the formalities.

As an example, on one occasion, a foreign investment

bank was unable to provide some bank account

information which was requested by the contractingauthority to certify its nancial good standing, due to

internal policies of the bank and applicable law.

Nevertheless, on this particular occasion, the contracting

authority was persuaded to accept an alternative means of

certication. The arguments presented to the contracting

authority were based on the general principle that bidders

must be treated on equal terms regardless of their

nationality, and that this principle must override such

technicalities. Therefore, if a bidder is simply not able to

comply with a formal requirement because it would lead to

an infringement of its domestic laws or regulations, analternative form of satisfaction must be accepted and the

requirement for equivalence in such cases must be

approached with a degree of exibility.

equivalence in these cases must beapproached with a degree of exibility




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Under the Czech Public Procurement Act, the situation is very

similar to Slovakia vis--vis non Czech bidders. With certain

exceptions, consideration is given to the legal regulations in the

country of the bidders incorporation. In other words, when

assessing the documents which are required by the Czech

Public Procurement Act, the foreign bidder may provide the

equivalent documents that are available in the bidders country.

However, unfortunately and all too often, it is dicult to assess

whether or not foreign documents evidencing certain facts

required by the Czech Public Procurement Act will be

satisfactory. It is obviously possible to raise this as an additional

question to the contracting authority and thus try to establish

whether a particular document will be considered as a suitable

equivalent, but, from our experience, the contracting authority

tends not to comment on the interpretation of applicable law

and such additional questions will likely remain unanswered.

For example, in a tender relating to the introduction of e-tolls

in the Czech Republic one of the bid requirements was that

the bidders team had to include a person authorised as a

construction engineer (in Czech: autorizovan inenr pro

pozemn stavby). It was likely that some bidders would nothave a suitable person authorised under Czech law, and in

that case, it would be necessary to establish what would be

the equivalent requirement in the bidders country of

incorporation. Whilst this appears to be a simple question at

rst sight, in fact it is a very dicult question to answer when

the applicable foreign countrys legislation is completely

dierent from Czech legislation (as it often is).

The contracting authority may to a certain extent request an

explanation of, or supplements to, any documents which are

to be submitted, but it is not obliged to do so. The contracting

authority is, however, required to disqualify a bidder that hasnot complied with the tender rules. Obviously, as in the other

CEE countries, there is constant tension between a

contracting authoritys desire to be transparent, but also to be

exible to a practical extent. A contracting authority may wish

to use its discretion to disregard insignicant technical errors,

but this can be a challenge when set against a backdrop of

legislation which obliges it to disqualify non-compliant bids.

No public ocial will want to be the person who exercises

discretion if it could later be argued that the letter of the law

obliged them to disqualify the bid.

An amendment has recently been made to the Czech Public

Procurement Act which came into eect in January 2010

and implements further EC principles, especially in relation

to the review of the public procurement process. In

particular, this amendment provides that any bidders who

submit information or a document that is misleading may

have to pay an administrative ne of up to CZK 10 million

and will be prohibited from participating in the public

procurement process for a period of three years. The

practical implications of this alteration remain to be seen

but it could prove to be draconian.

From a foreign bidders perspective, a brief mention should

also be made of the specic rules that apply to the defencesector. The eect of the Czech Act on Foreign Trade with

Military Material is that where public contracts for military

materials are concerned, only a company with its registered

seat in the Czech Republic could be eligible for the contract.

In practice, however, foreign companies usually establish a

Czech subsidiary to circumvent this provision. In the famous

Czech Pandur case, for example, a public contract on the

supply of armoured carriers was concluded between the

Czech Ministry of Defence and the Czech company Defendia

CZ, s.r.o., which is in fact indirectly owned by Austrian

companies General Dynamics European Land SystemsGmbH and Steyr-Daimler-Puch Spezialfahrzeug GmbH.

Czech Republic

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Romanian public procurement law is reasonably exible

vis--vis non-Romanian bidders, who are permitted to

provide equivalent documents when participating in public

procurement procedures. Romanian contracting authorities

must consider equivalent documents from other

jurisdictions which prove the status of the bidders.

Nevertheless, it is always a good idea to check with the

contracting authority in advance if possible whether the

documents to be provided are sucient.

If there is uncertainty with respect to the status of the

bidders, the Romanian contracting authorities have the

right to request information directly from the authorities

that originally issued the documents submitted by the

bidders. If these documents are not usually issued in the

bidders country, the Romanian contracting authority must

accept a declaration on oath (adavit) instead. If a country

has no provision for declarations to be given on oath then

a declaration (declaratie autentica in Romanian) made by

the respective bidder before a public notary, competent

judicial or administrative authority or a competent

professional or trade body must be accepted.

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PolandConcepts introduced in Poland, such as the framework

agreement and electronic auctions, are in general identical

to those in Slovakia.

In 2006 a new procedure of competitive dialogue was

introduced to the PPPL which is specically designed for

PPP projects. Although this should be considered positive,

there are legal concerns regarding the appropriateness

of the method of implementing this procedure into

Polish law which may have a negative impact on PPP

tendering procedures.Firstly, Polish law sets stricter rules than European law

in terms of the obligatory number of participants that the

contracting authority is obliged to invite to the dialogue

phase. Under the PPPL, if the value of the contract is

equal to or above-threshold, the contracting authority

needs to invite at least ve participants to the dialogue,

whereas the European requirement is at least three.

This solution may lead to greater costs for the contracting

authority. On the other hand, for the bidders the cost to

prepare a nal bid in a PPP project is also considerable.In this respect the method of implementing competitive

dialogue in Poland signicantly reduces the chance for each

bidder to be awarded the contract in comparison to if there

were only three bidders. Consequently, this may deter

enterprises from taking part in the procurement process.

Secondly, doubts remain whether under Polish law a

contracting authority is legally allowed to conduct a

competitive dialogue in stages.

Under EU law one of the key features of the competitive

dialogue procedure is that the contracting authority can

develop a competitive dialogue process that meets its

individual requirements. For example, a contracting

authority may wish to divide the dialogue phase into

two or more stages, reducing the number of solutions

and bidders involved at each stage on the basis of theaward criteria specied in the contract notice or a

descriptive document.

Polish regulations are silent in this respect and therefore

the contracting authorities may refrain from structuring

the dialogue phase in stages to the detriment of the

eectiveness of the tendering procedure.




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The common concepts of abnormally low price or

impossible undertaking have been adopted by the

Hungarian Public Procurement Act, but their practical

meaning is dicult to discern. If these concepts are

established, they may lead to the disqualication of

bidders. The same applies to the requirement of

extreme urgency in the case of setting aside the

publication of a tender notice. The problem with these

concepts under Hungarian law is that the Public

Procurement Arbitration Committee (which acts as the

supervisory authority for public procurement proceedings)

adopts a case-by-case approach. While the purpose of this

approach is to ensure that all the relevant circumstances of

each individual case are considered, the drawback is that it

is very dicult to predict the outcome of an individual

case. We note nevertheless that as of September 2010 a

threshold has been applied when determining abnormally

low price. Under the new rule, if the price of a bid is at

least 15% lower than (i) the average price of all other bids,

(ii) the average price of all bids without considering the

highest and the lowest bid if more than three bids, and(iii) the estimated benchmark price if there is one bid,

then the price indicated in the bid shall be deemed as

abnormally low.

The Hungarian Public Procurement Act has also

introduced some technical improvements such as

electronic procedures, electronic auctions and a dynamic

procurement system. As a general rule, actions taken under

the procurement procedure may be performed using

electronic means (subject to certain conditions contained

in separate legislation). Notices must also be sent

electronically via the Public Procurement Advisory

Committee (the Advisory Committee) to the Oce for

the Ocial Publications of the European Communities.

The Hungarian Public Procurement Act also recognises

the concept of a framework agreement. As in Slovakia,

a framework agreement is made between one or more

contracting authorities and one or more (if more than one,

then at least three) bidders and sets out the key terms and

conditions (especially the prices and the quantity) of

the contracts to be awarded during a given period.

A framework agreement may endure for a maximum

period of four years. The terms of the contracts concluded

under the framework agreement may not exceed the terms

of the framework agreement.

Hungary




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New concepts introduced in Romania are in general

identical to those introduced in Slovakia, Hungary and

the Czech Republic, including the concepts of a framework

agreement, dynamic procurement system and an

electronic auction.

Romanian public procurement law provides that the

framework agreement may endure for a maximum period

of four years, and longer periods may be established only

in exceptional cases. Romanian public procurement law

does not provide any detailed description about what forma framework agreement should take, although it does set

out certain mandatory provisions that must be included.

Unless the subject matter of the framework agreement is

such that there is a limited number of eligible bidders

capable of entering into it, the contracting authority should

address the tender to at least three bidders.

In 2008 the Romanian government passed a decision

requiring Romanian contracting authorities to use

electronic systems for at least 20% of the total value of

tenders carried out by them. This decision failed to specifyany sanctions for non-compliance and was therefore

largely ineective. However, in 2009 a further decision

established that nes for non-compliance would be

incurred and we have seen a corresponding rise in the

number of procurements conducted by electronic means.

By November 2009 this number increased to 13%.

In 2010 the Romanian government passed another

decision requiring Romanian contracting authorities to

use electronic means for at least 40% of the total value

of tenders carried out by them.

Romania

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Formal requirements, in particular with respect to a bid

submission, are often extremely detailed in CEE countries.

It should be noted that this can be misused to facilitate the

disqualication of unwanted bidders, since it is more or

less always questionable whether all formal requirements

have been precisely met by each bidder. Therefore, instead

of the legal framework providing a more transparent

process, the lack of clarity (or incorrect over-specication)

of tender requirements can lead to the opposite

eect a contracting authority disqualifying bidders for

minor administrative or technical failures to comply withthe bidding process. This may not always arise as a result

of an improper abuse by a contracting authority of the

formalistic requirements to engineer a pre-desired result

(as is inevitably feared by losing bidders), but is just as

likely to arise because the contracting authority fears that

to ignore formal non-compliance by a bidder would lead to

charges that the bidder in question had been favoured.

Contracting authorities may therefore nd themselves

trapped between the Scylla of feeling obliged to disqualify

formally non-compliant bids on a technicality, and the

Charybdis of appearing to engineer a win for a particular

bidder by disqualifying the other bidders on minor

grounds. Any system of public procurement rules which

can be developed to resolve this quandary will, therefore,

be most welcome to both bidders and contracting

authorities. While it is true that the contracting authority

may request the bidders to explain their oers, which

may include a request to correct minor formal errors or

supply missing documents, it is not clear when a

contracting authority is supposed to use this right and

which errors may be remedied in this way. It would be

useful to introduce a mandatory short cure period for

minor non-compliance, but inevitably there will be

diculties in dening what are minor or technical breaches

only, as well as objections from compliant bidders that they

see no reason why a non-compliant bid should be given a

second chance when their own bid has been compliant.

By way of example, in the Czech Republic and the Slovak

Republic, bids are, in most cases, to be delivered in a closed

envelope and bound in a specic way. The tender rules

often used to include extremely detailed requirements on

how to bind the bid documents together, such as which

laces are to be used, where and how to stamp/execute the

bound documents and the type of envelope to use, etc and

even minor non-compliance resulted in a bidder being

excluded from the tender process without the content of

its bid even being considered. Although the situationimproved recently and exclusion of bidders for purely

formal deciencies is much less frequent, a very careful,

even pedantic approach to preparation of the bid,

including compliance with the formal requirements set out

in the tender documents, is still strongly recommended.

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The Hungarian Public Procurement Act specically

describes the formalities a bid must comply with,

although the contracting authority may now set less strict

requirements in a tender and certain formal imperfections

may be also cured under specic circumstances. As of

1 April 2009 the contracting authorities must allow bidders

to le certain additional documents. This right is extended

to all bidders in a tender in accordance with the basic

principle of non-discrimination. Please note that the right

only relates to certain documents, including certicates

relating to the disqualication rules and formalcompliance. It is not extended to documents which form

part of the technical description of the bid or the basis of

its evaluation. In Poland, restrictive rules concerning

formal tender requirements have been loosened recently.

In eect, during the process of evaluating oers the

contracting authority may require that bidders explain their

oer. Furthermore, in the bidders oer the contracting

authority may correct: (i) obvious misprints; (ii) obvious

computational errors; or (iii) other errors which result in

inconsistencies with the tender terms and conditions, but

which do not cause essential modications to the bid.

By making such amendments, the contracting authority

cannot reject a bidders oer due to such minor

inconsistencies, unless it does not match the essential

terms of the contract.

In Romania there are also restrictive rules concerning

formal tender requirements such as those related to the ink

to be used for printing or writing the bids, the signing and

stamping of the documents, or to the submission of bids.

Romanian contracting authorities do not have the

discretion to waive breaches of these rules. Usually the

tender rules prepared by the contracting authorities

contain detailed formal requirements concerning the form

and submission of the tenders. It is also recommended that

the bid is presented together with a cover letter in a

specic form.

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Complexity of applicable regulationsHungarian law is particularly dicult in the area of

public procurement since, in addition to the main

legislative source (the Hungarian Public Procurement Act),

there are a number of other regulations containing special

rules which apply to certain types of public procurement

procedure. For example, special rules apply to the

procurement of pharmaceutical products, procedures

involving state or professional secrets, and the

procurement of products for military, or police-related

purposes. Furthermore, special rules apply to certain

aspects of public works contracts and electronic

procurement. These rules are issued in the form of

government decrees and they must be taken into account

when a foreign bidder submits a bid in Hungary.

As of 1 January 2012, a new law on public procurement

will enter into eect (the New Law). While the New Law

will contain the same basic principles and procedures, the

aim was to ease procedural burden, improve transparency

and strengthen the competitiveness of small and

medium businesses.

In Romania there are also special rules governing certain

types of public procurement procedures, such as the award

of media advertising contracts. In addition, certain

categories of contracts, such as those included in the

category of state secrets according to the legislation on

classied information protection, or contracts which, if

performed, must be accompanied by special security

measures for protecting essential national interests, are

not carried out under the normal public procurement

procedures covered by the general law, but are instead

subject to special proceedings under special laws.




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4.1 Managing time and roles in preparing a bid

Preparation of a bid up to the point of its submission is a lengthy and complex processand therefore it requires good planning and management. Apart from substantive matters,attention must be paid to the formal aspects of the bid.

Knowing the tender rulesAlthough this may sound like an obvious rst step,

perhaps the most important task is to get acquainted with

the tender rules. Usually the tender rules are large

documents containing large amounts of information and

many requirements that must be carefully considered. It is

often the case that the tender rules are not well organised.

One subject may be discussed under several dierent

headings or information provided or requested may be

contradictory. Therefore attentive reading of the tender

rules is essential.

Having a good knowledge of the tender rules enables a

bidder to manage timing and to allocate responsibilities

accordingly. This will enable the bidder to ask for

information in respect of any rules and requirements

which may need further clarication. It also minimises the

risk of not fullling the formal and substantive criteria and

of missing deadlines.

Tip: It is recommended that the tender rules are discussed

between the members of the bidding team and legal

counsel. The bidding entity may be more aware of the

technical implications of the tender rules than legal counsel

are, whereas legal counsel may provide guidance on and

focus the bidders attention towards any legal or practical

issues. Joint examination of the tender rules by all

members of the team should enable the team to get

acquainted with the requirements and highlight potential

legal or technical risks which may require further attention.

It can also help to identify the equivalent documentation inthe home country of the bidder, where only local

specications are stated in the tender rules.

It is, in addition, important to continuously monitor and

evaluate the requirements throughout the tender process.

Whilst careful and critical evaluation of the tender rules

at an early stage is essential, it is useful to review the rules

regularly to ensure that they continue to be applied

practically in the light of subsequent knowledge

and practice acquired during the process of putting

together the bid.

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Some of the key elements of the tender rules are the

requirements in relation to the bidding entity. The tender

rules may directly or indirectly contain requirements that

not all bidders may be able to satisfy. They contain legal,

nancial and technical requirements and may directly

require that the bidder has a certain licence or satises

specic turnover criteria. The tender rules may also set out

further indirect criteria, for example, by referring to a law

that contains other requirements such as obliging the

bidder to have a registered oce in the country of the

contracting authority. The contracting authority may also

require the bidder to establish a business association (a

special purpose vehicle), if it is reasonable to do so, for

the purpose of performing the contract.

Tip: The bidder should ensure that it is itself qualied to

submit a bid. If it is not, it will be necessary to immediately

start seeking alternative solutions, such as using a sub-

contractors credentials, entering into a consortium or

bidding through another entity.

The bid usually consists of a general part which relates to

documents concerning the legal, nancial and technical

standing of the bidder, and a specic part which includes

the proposal for the delivery of goods or the provision

of services that form the subject matter of the tender.

The documents must satisfy certain content requirements

as well as requirements in relation to form. It is therefore

necessary to clearly assign the tasks and responsibilities

to ensure that the documents contain what is required.

Get acquainted with the tender rulesThe team should clearly allocate responsibility to its

members for each task to be satised in order to obtain

the required documentation. Sometimes obtaining

documentation is purely a matter for legal counsel.

This will be the case when a document needs to be

drafted by legal counsel and then simply signed by a

representative of the bidder, or if the document is issued

by another body and its content needs to be reviewed or

discussed with legal counsel. The technical team may, on

the other hand, be more heavily involved in obtaining

references from business partners and technical

certicates, etc. The in-house legal counsels of the bidder

are important as they will have a deep understanding of

the business of the bidder, and the way in which the

bidder customarily conducts itself during tenders. They

may have to monitor or implement internal guidelines as

to the form and content of documents, the level of

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acceptable risk, the appropriate level of decision-making

(for example, they will decide when a decision requires

approval at a more senior level or requires approval from

the board), ensure formal compliance with internal

guidelines when giving undertakings, representations,

adavits, bid bonds and internal compliance generally.

Last but not least, the in-house legal counsel may have to

co-ordinate the execution of the relevant documents on

behalf of the bidder and ensure that signatories will be

available when needed.

Timing is also crucial and obtaining certain documents

may be a time-consuming process. Formal requirements

will also place an extra burden on the bidder, for instance

documents may require notarisation or an apostille, or may

need to be translated and certied. Final compilation of

the bid also needs time as bidders understandably wish to

present the bid in an attractive format, and the physical

process of binding and sealing the bid tends to take more

time than expected.

Tip: The preparation of a bid is a process involving a large

team of people, including not only a technical and legal

team but also third parties such as state bodies and

business partners of the bidder, etc. In addition to

obtaining the required documents, which takes a

considerable amount of time, documents will also need to

be translated, veried by a notary and may have to satisfy

further requirements. It is therefore recommended that the

timetable for submitting a bid is prepared some time in

advance and, to the extent possible, followed scrupulously.

Additionally, consideration should be given to the practical

execution of the bid itself, such as: where will the bid be

compiled; who will be signing it; how will last minute

changes to the bid documents be implemented (and will

there be a person on standby authorised under a power of

attorney to sign changes); who will actually deliver the bid

(and is legal counsel actually going to be accepted as the

deliverer of the bid or does an authorised representative of

the bidder have to physically deliver the package); is there

enough time for printing, binding and delivery of the bid;

has the delivery address and the time for delivery

(even the trac situation) been double checked, etc.

Consideration should also be given to administrative

matters such as: are the envelopes and boxes big enough

to contain the bid; are the boxes properly labelled; are the

relevant parts of the bid in the proper envelopes if they

are required to be separated, etc. Responsibility for all

these elements should be clearly allocated.

It is crucial to allow sucient time for the preparation

of the bid. The drafting of the declarations and the

procurement of the necessary certicates is a time-consuming process. Care must be taken to draft the

necessary powers of attorney granted by foreign bidders to

the person representing them. It should be considered in

advance whether someone representing a foreign bidder

will need to be present in person to sign the necessary

declarations before a local notary.

It is crucial to allow sucient timefor the preparation of the bid

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A question often arises as to whether a bid must be

submitted in two languages, i.e. the language of the

home jurisdiction of the bidder, as well as the local

language. For foreign bidders, good corporate governance

would dictate that the bid must be available in the native

language of the directors/decision makers of the bidder so

that they can understand what they are submitting.

However, where there are t ime limitations, and, for

example, only the local language version has been properly

formatted and nally checked, it seems perfectly acceptable

to submit the bid in the local language only, with no ocialtranslation, unless the tender rules stipulate otherwise.

Unocial translations can be made available internally so

that the bidders directors can sign o on the submitted

bid, but this unocial version would not have to be

submitted, as long as the local language version is properly

submitted (again, unless the tender rules say otherwise).

In Slovakia, bids must be submitted in the ocial language,

i.e. Slovak. However, this means that for foreign bidders all

corporate, economic and technical standing documentation

will always be in its original language as well as in Slovak.The other part of the bid, i.e. the contract element, must

be in Slovak but it is not necessary to submit it in the

original language as well.

In general, the same is true in Poland. Under the PPPL all

the proceedings are to be held in Polish. However, it is left

to the discretion of the contracting authority whether or

not to allow certain documents to be submitted in one of

the languages of international trade or in the language of

the country in which the order will be granted. If there is

no such decision, all the documents must be submitted inboth the original bidders language and in a translation

which is certied by the bidder.

In Hungary, the language(s) of the public procurement

procedure may be chosen by the contracting authority, but

foreign bidders can expect that the language for the

procedure will be Hungarian. Even if the contracting

authority has chosen an alternative language, the tender

notice and the documentation must also be made available

in Hungarian and the bidders must always be given the

option to prepare their bids in Hungarian. If there is a

discrepancy between the Hungarian and foreign language

versions of a document, the Hungarian version will prevail.

These rules evidently favour national bidders.

In Romania, the language of the public procurement

procedure is left to the sole discretion of the contracting

authority, and must be specied in the contract notice.

Unsurprisingly, foreign bidders should expect that the

language selected by the contracting authority

will be Romanian.

In addition to the logistical requirement of translating bid

documents, some documents need to be translated

ocially, i.e. translated by an authorised translator, or also

presented in the original language and accompanied by a

translation, depending on the requirements specied in the

tender documentation.

The Slovak Public Procurement Act does not specify

whether a certied translation of the bid documents is

required. In our experience, however, contracting

authorities generally apply a more formalistic interpretation

of the law and therefore we would suggest using a certied

translator to minimise the risk of being disqualied.

Sometimes documents in Czech are permitted in Slovak

tenders. In Hungary translation requests may be submittedto the National Translating and Translation Certifying

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Oce (in Hungarian: Orszgos Fordt s Fordtshitelest

Iroda) if the bidder wants to ensure that it submits a

certied translation. In the Czech Republic the language of

the bid will be determined by the tender rules published by

the contracting authority. However, in practice it would be

fairly exceptional for languages other than Czech (and

Slovak) to be permitted. If the bid has to be led in Czech

(which means that the whole communication during the

tender process will be carried out in Czech, including

additional questions and answers to those questions), any

documents in a foreign language must be translated intoCzech by a certied Czech translator.

As the number of documents that need to be translated

will be considerable, and their content will often be very

technical and complex (and therefore require more time to

translate), obtaining translations can take a substantial

amount of time. In some countries, there are a limited

number of translators qualied in certain languages,

such as Dutch.

It may well be the case that, although the tender rules

require a translation, the whole document in question will

not need to be translated and instead an extract containing

the relevant information will be sucient. This is usually

the case with nancial standing requirements and with

documents such as nancial statements, where the

contracting authority has conrmed that only certain data

from the nancial statements needs to be translated.

Tip: It is recommended that once the nal form of the bid

documentations wording is approved, the documents are

sent immediately for translation. In the event of any doubt,

it is suggested that the bidder claries the language

requirements with the contracting authority. Allow an hour

per page for translation and be aware that if you submit a

last minute four-page document to be translated one

hour before the bid delivery deadline, you may not make it

in time. Also, while in urgent cases the ocial translation

may be produced within a very short period, the price paid

for these urgent translations is likely to be very high.Bidders may also nd that obtaining a fee quote from

the translator may be dicult because the translator will

require details of the document to be translated which may

not always be possible to provide, simply because when

the quote is requested, the local lawyer has not yet seen

the document. It is therefore advisable to request details

(especially the length or likely length) of the document

from the members of the team in order to be able to

obtain a reasonable estimation of translation costs.

Finally, when preparing drafts of documents, send

electronic scans of originals well in advance to the

translator as this takes less time than sending copies by

post. When doing this, take care to ensure that the nal

translations correspond to the nal version and not the

older drafts.

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4.3 Communicate with the contracting authorityto clarify the tender rules

Bidders should consider using opportunities to

communicate with the contracting authority, but

must be careful not to disclose their identity.

Bidders have the right to request clarication from the

contracting authority of the tender rules or any other

related documents and the contracting authority is under

a statutory obligation to notify all bidders (not only the

bidder who submitted the question) of any clarication it

provides. Moreover, in some countries, for example in

Poland, the contracting authority may also convene a

bidders meeting in order to clarify any doubts and

uncertainty arising from the tender rules and documents.

The clarication of tender rules gives the bidder the

opportunity to conrm or clarify requirements under the

tender rules so that they can successfully satisfy the

requirement in question. Be aware that attention should be

paid to the wording of each question as the answers are

disclosed to the other bidders and unless the question is

carefully drafted, it may give other bidders information

that a bidder may not wish to disclose (including enabling

the other bidders to deduce the identity of the bidderasking the question).

Tip: In addition to the suggestions above, a general

recommendation is to phrase each question clearly to avoid

any ambiguous interpretation of the question by the

contracting authority. Use closed rather than open

questions to ensure that the response you receive addresses

your question rather than straying into general territory

and not answering the question directly. Divide questions

up clearly and do not try to ask several questions at once

within a single question as this will make it more

dicult for the contracting authority to answer each

question specically.

The ability to submit questions is usually subject to tight

deadlines so care must be taken to submit them in time.

For example, in Hungary additional information may be

requested no later than ten calendar days prior to the

deadline for submitting the bids and the additional

information must be provided no later than six calendar

days prior to the deadline. The procurer may extend this

deadline if it is not able to give additional information in

time. Please note that sometimes the number of questions

which may be led is limited.




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4.4 Be very attentive not only to thesubstantive but also the formal requirements

Bidders should pay attention to formal requirements

such as the format of the documents submitted and the

structure of the bid, etc.

Not only the substance but also the form of the bid is

regulated by law and the tender rules, and therefore it is of

crucial importance to get the formal requirements right.

The rst set of formal requirements primarily concerns the

documents that form part of the bid, such as who will

issue and sign the document, whether the document needs

to be an original or a copy, whether the signature is to be

veried by a notary and whether the document is to beaccompanied by a certied translation, etc.

Once the documents have been prepared, the second set

of formal requirements usually addresses the form in

which the bid itself should be organised, such as whether

it should it be presented in binders, whether it should be

submitted with a cover letter and whether it needs to be

made available electronically as well as in hard copy, etc.

The bid is usually submitted in a sealed envelope

containing the required information. The question as

to whether a power of attorney is required for the

submission of the bid documents should also be

addressed. The formal requirements may, of course,

also arise further along in the bid process, for instance in

relation to the submission of requests for clarication of

the tender rules, the opening of envelopes containing the

bids and the submission of additional explanations of

the bids, etc.

Tip: As the formal requirements are equally as important asthe substantive ones, it is strongly recommended that due

attention is paid to these requirements so that the risk of

disqualication for non-compliance is minimised.

phrase each question clearlyuse closed rather than open questions

divide questions up clearly

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(a) Ensure that the entire team familiarises itself with

the tender rules.

(b) Have a team meeting and draft a bid timetable,

highlight time-consuming requirements and areas for

clarication, and delegate responsibility for each task

to an appropriate team member.

(c) Commence, as soon as practicable, any necessary

clarication procedures.

(d) Identify (or establish, if necessary) the appropriatebidding vehicle.

(e) Ensure that the logistics of the bid submission are

arranged well in advance. This should include:

(i) Liaising with appropriate translators, and

forewarning them of the timing and length of

impending translations;

(ii) Liaising with and forewarning appropriate

public notaries;

(iii) Contacting courier services to establish how long

it will take to transport the nal bid documents;

(iv) Ordering the appropriate stationery such as laces,

labels, boxes, bindings, etc and discussing

printing and binding times with printers (if

appropriate); and

(v) Establishing the anticipated location and

availability of key personnel (i.e. directors/

signatories) at the time of the bid submission, and

if necessary obtain authorisations and powers of

attorney if others are to act on their behalf.

(f ) Continually monitor the progress of the bid in light of

the timetable and deadlines. Conduct regular all-party

conference calls to discuss new issues, the progress of

the document collation, and any communications

with the contracting authority.

(g) Observe and record the progress of the bid and the

actions of the parties involved in it, to ensure a

well-prepared appeal, should one become necessary.

(h) Check regularly that all substantive and formal

requirements of the bid will be satised. Do not panic

if things go wrong (always have a plan B), and, where

possible, try to be exible and creative.

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Dont panic if things go wrong

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Part 5What is Happening Behind Closed Doors

(Evaluation of bids)




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5.1 Independent expert evaluation

Under the dierent CEE legislation, the evaluation process

is part of the tender process in which the bidder is generally

not an active participant. The evaluation process is not

public (except for the envelope-opening session in which

the bidders representatives are allowed to participate). The

bids are evaluated by an evaluation committee on the basis

of criteria specied by law or in the tender rules. Once the

evaluation process has been nalised, the evaluation

committee will distribute the results of the tender.

In Slovakia, the evaluation committee must comprise at

least three experts. It will examine whether the bids are incompliance with the tender notice, the tender rules and the

Slovak Public Procurement Act. The bidder may be required

to clarify its bid if requested to do so by the evaluation

committee. The clarication request will usually concern

parts of the bid which are unclear, or which appear to be

inconsistent. The evaluation committee must also request

clarication of the price if it appears to be abnormally low

and the bidder must prepare the clarication within the time

period specied in the tender rules or in the request for

clarication. The clarication is not a means by which the

submitted bid can be amended, and serves only to explain

existing elements of the bid which are unclear. Any attempt

to make the bid more advantageous should be rejected by

the evaluation committee.

The award criteria may be either the lowest price or most

economically advantageous tender, the former being used

much more frequently than the latter. This is perhaps a

result of the higher transparency of awarding on the basis

of lowest price, or also because the use of the most

economically advantageous tender criterion requires more

eort and expertise on the part of the contracting authority.

Such an approach is in our view rather unfortunate as

especially in case of more complex contracts, the lowest

price often fails to bring the best value for money for the

contracting authority. Better education of the contracting

authorities as well as guidance from the Public Procurement

Oce on how to use the most economically advantageous

tender criterion to evaluate the bids could help to make its

use more wide-spread.

In Poland, an evaluation committee must be appointed if

the contract is equal to or above the limit for an above-

threshold order, having reference to the thresholds

specied in Article 7 of Directive 2004/18 and Article 16

of Directive 2004/17. Otherwise the appointment of an

evaluation committee is left to the sole discretion of the

contracting authority.The evaluation committee must comprise at least three

members. In some cases, when special knowledge is

required, the committee may appoint an external expert.

The committee examines whether the bids are in

compliance with the tender notice, the contracting

authoritys requirements and applicable law. In addition, the

committee prepares and conducts the tender, and

undertakes all actions relating to communicating with the

bidders and clarication procedures etc. Once the tender is

concluded, the evaluation committee must issue a tender

protocol, which sets out its decision and the considerationsthat were taken into account, similar in many respects to

minutes from a shareholders meeting. The evaluation

criteria will be either the lowest price or the most

economically advantageous bid. The nal decision regarding

the award of a contract is left to the contracting authority.

The evaluation committee plays an advisory role only.

In the Czech Republic, for most award procedures the

contracting authority must establish an expert committee in

which at least one third of its members are competent

professionals in relation to the subject of the tender.

The expert committee evaluates the bids to assess ifthey comply with the law and whether they meet the

requirements of the contracting authority.

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Generally speaking, the criteria used to evaluate the

bids will be either the most economically advantageous

tender or the lowest price. The committee will rank the bids

in order of preference and prepare a Bid Evaluation Report

which is available to the bidders on request up until the

point at which the contract is entered into.

In Hungary, as in Slovakia, the contracting authority in

certain cases must establish an evaluation committee

consisting of at least three experts. The committee will

prepare a written opinion and make a recommendation, on

behalf of the contracting authority, for the person or thebody making the nal decision in relation to the public

procurement procedure.

The contracting authority may decide to award the contract

to the bidder oering either the lowest price or the most

economically advantageous bid. If the contracting authority

chooses the latter option, it must determine the evaluation

factors on which to assess the tender. Each evaluation

factor must have a multiplier relating to the relative

importance of the category together with a minimum and

maximum amount of points which each category may be

awarded. The contracting authority has freedom in termsof the way in which the factors and the multipliers are

determined. However, this freedom is subject to certain

restrictions, for example all factors must be related to the

subject matter of the contract and the evaluation system

must not lead to the double counting of the same criteria.

The contracting authority must give each bidder the

opportunity to submit subsequent documents or certicates

under the same terms and conditions. Subsequent

disclosure may relate to any certicates in connection with

disqualication rules, qualication requirements and

documents prescribed in the tender notice, in addition todisclosure required to remedy any formal discrepancy.

Those parts of the bid not aected by subsequent

disclosure must remain unaltered. The bidder may also be

asked to clarify unclear statements contained in declarations

or certicates which relate to disqualication rules,

qualication requirements or documents prescribed in the

tender notice. Such clarication must not result in the bid

being amended. The bidder may also be requested to clarify

whether the price appears to be abnormally low or high, or

whether an element of the bid may be impossible. The

contracting authority must reject the bid if it nds the

explanation given by the bidder unacceptable or

economically unfeasible and each bidder must be

simultaneously informed of requests made for subsequent

disclosure or clarication by the contracting authority.

The tender shall be declared unsuccessful if (i) no bid is

submitted, (ii) all bids submitted are invalid, (iii) the bidder

became unable to perform or (iv) one of the bidders

corrupted the procurement procedure.

In Romania, it is the contracting authoritys responsibility

to establish an evaluation committee which will award the

contract. The evaluation committee will examine whether

the bids comply with the requirements set out in the tenderrules. The contracting authority may propose that some

internal and/or external experts are appointed as members

of the evaluation committee. Again, the award criteria can

be either the lowest price or the most economically

advantageous bid. If the price oered seems to be

unjustiably low, the evaluation committee must request

additional details and explanations from the relevant bidder

before rejecting its bid. Once the evaluation process is

completed, the evaluation committee must prepare the

Bids Evaluation Report (Raportul Procedurii de Atribuire

in Romanian).




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5.2 Problems with challenging the evaluation process

Relevant legislation may set out rules for the appointment

of evaluation committee members, the procedure to be

followed when submitting requests for clarication of bids,

as well as the fact that the evaluation process is not public.

Apart from these rules, the actual evaluation of the bids is

left to the evaluation committee members. In practice, the

lack of legal rules governing how the evaluation process

should be performed has proven problematic for bidders

who want to challenge the results of the tender.

For example, a bidder may wish to challenge the result of a

tender on the basis that it has doubts about the adequate

examination of its bid by the evaluation committee. Such

doubts may arise, for example, if numerous bids are

submitted to the contracting authority, the subject matter

of the tender relates to a complex system or the

preparation of the bids requires several months of work,

and yet the evaluation committee arrives at a decision

within a very short period of time. The rapid delivery of

results may raise doubts that the evaluation committee has

had sucient time even to read all of the bids. Although

this may be raised as one of the grounds to challenge the

results, it may be surprising to learn that this objection

does not necessarily have the benet of being based on any

concrete provision of law.

The evaluation rules may, however, also stem from the

tender rules. It is therefore necessary to observe the

evaluation process in light of the tender requirements and

to consider basing any challenge to the tender results on

these requirements.

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Part 6Veni, Vidi but not Vici

Despite putting a large amount of time and eort into the preparation ofthe bid, ultimately tender results depend on the evaluation by the contractingauthority, and so a bidder may nd that events do not play out as anticipated(i.e. it does not win). Bidders as well as contracting authorities can makemistakes, and there are plenty of opportunities to make them.

a bidder may nd that events do not play out as anticipatedIn cases where a bidder may have a genuine complaint, the

law does allow for certain complaints to be made against

the decision given in respect of a tender. Below is a brief

summary of remedies available to the bidder. We have also

included aspects that should be borne in mind when

making a complaint.

A general comment relevant in all CEE countries is that

the deadlines for submission of all complaints are quite

tight. The situation has been improved somewhat by the

implementation of the Remedies Directives (Directives

89/665 and 92/13), which provides for a 10 day

standstill period after selection of the successful bidder,

during which the contracting authority may not proceed to

conclude the contract with that bidder, in order to allow

for the possibility of challenges to the decision. Even so,

however, the timeframe during which complaints must be

submitted by unsuccessful bidders varies between member

states, and may be as little as ve days in some cases (e.g. in

Poland for certain types of bids), despite the fact that the

standstill period lasts for 10 days. This is a very short

timeframe within which to collect all the necessaryinformation and documentation and to construct an

argument for the sought after remedy. The reaction of

the bidder must therefore be very prompt.

Without being unduly pessimistic about the tender results

during the bidding process, it is helpful for a bidder to

continue to be very attentive to the actions of the

contracting authority and to observe any potential non-

compliance of the contracting authority with respect to

the law and the tender rules, as it may be more dicult to

examine retrospectively whether there was any aspect of

the contracting authoritys conduct that could form the

basis of an appeal.

It is also essential, especially in cases where the bidder is a

multinational company, to ensure that the originals of the

relevant authorisations are delivered to the bidders

lawyers in due time. It may be that the appropriate power

of attorney is not delivered on time owing to a directors

travels, meetings and more important duties, etc,

and the remedy is rejected by the contracting authority

on the grounds of the formal defect, namely the power

to represent the bidder in the remedy proceedings

being questioned.

(How to challenge the bid results)




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Appeal to the contracting authority

(request for remedy)

The rst step when challenging the tender result is to turn

to the contracting authority itself. Within ten days of the

result being delivered, the unsuccessful bidder must le a

request for a remedy to the contracting authority if it

wishes to make a complaint. The contracting authority

then has seven days to decide whether or not it will allow

the claim of the bidder. In our experience, contracting

authorities are generally not willing to allow the bidder'sclaim, and so the usefulness of this remedy appears

questionable. However, making this request for a remedy

is a prerequisite to the other available remedies.

Second instance appeal to the Public Procurement

Ofce (objection)

If the contracting authority rejects the request for a

remedy or if it does not decide whether to conrm or

deny the claim in time, the bidder has a right to object

by making a second instance appeal to the Public

Procurement Oce. On the basis of an objection thePublic Procurement Oce may, for example, order a

re-evaluation of the bids or, depending on the materiality

of the alleged breach by the contracting authority, even

cancel the tender. The objection has a sus

a guide to public procurement in cee

Documents