Slovakia & COVID-19 & Impact on Public Procurement

By Katarína Ondrovičová

05-2020

The COVID-19 pandemic’s impact on Public Procurement in Slovakia

The COVID-19 crisis has disrupted a number of business sectors worldwide and undoubtedly also impacted public procurement procedures. The need to procure certain goods and services quickly or immediately, the inability to deliver certain goods or provide certain services, as well as the disruption of the supply chain, are just some of the numerous challenges caused by the sudden, widespread COVID-19 health crisis, which have raised several questions among public contracting authorities, suppliers and providers.  In this article I will focus on contracting authorities[1]’ options to procure quickly, to change contracts, as well as the actual modifications in public procurement procedures invoked by the COVID-19 pandemic. 

On 1 April 2020, the European Commission issued its Guidance on using the public procurement framework in the emergency situation related to the COVID-19 crisis (2020/C 108 I/01, the “EC Guidance”). This document explains which options are available under the EU public procurement framework for purchasing supplies, services, and works needed to address the crisis. The options for contracting authorities are as follows:

• Substantial reductions of the deadlines to accelerate open or restricted procedures;

Use of the negotiated procedure without publication or the direct award of the contract to selected economic operators (if the reduced deadlines are not sufficient to satisfy the public buyer’s immediate needs);

Use of alternative and innovative solutions, such as digital tools or hackathons to create new concepts etc. 

Further, the EC Guidance sets out the requirements and conditions under which the options are available. Under the EC Guidance, in case of urgency, when applicable time limits under normal circumstances cannot be practically used, contracting authorities are recommended to shorten the deadlines.  

In cases of duly justified urgency, the deadline for the submission of tenders in open procedures may be reduced to 15 days.  When applying the restricted procedure, the deadline to submit a request for participation may be reduced to 15 days, and the deadline to submit an offer to 10 days. This allows for a speedy award of the contract. It is worth noting that a similar reduction of the deadlines is also available under the Slovak Public Procurement Act No. 343/2015 Coll. (the “PPA”), and the Slovak contracting authorities should use it whenever needed.  

Only in cases of extreme urgency, when the reduction of deadlines is not sufficient to satisfy the contracting authority’s needs, can the negotiated procedure without publication be applied. The contracting authority has to evaluate and justify, whether it was impossible to observe even the shortened deadlines, and whether all the criteria to use this method were fulfilled. 

Such criteria include: 

Events unforeseeable by the contracting authority in question - which the COVID-19 pandemic undoubtedly is; 
Extreme urgency making compliance with general (even reduced) deadlines impossible;
A causal link between the unforeseen event and the extreme urgency.
 

The criteria to apply direct negotiation procedures provided under the PPA are generally in compliance with EU legislation and with the EC Guidance.  To provide local specific guidance for Slovak contracting authorities, the Slovak Public Procurement Office (the “SPPO”) has published its own guidance, in which it states that the direct negotiation procedure (in Slovak: “Priame rokovacie konanie”) can only be applied if the need of goods, services or works was caused by the emergency situation which cannot be foreseen; goods, services or works are necessary to satisfy such need, and due to immediate need, the standard (even shortened) procedures cannot be used. The direct negotiated procedure without publication cannot be applied, if the award of contracts takes longer than it would have taken if a transparent, open or restricted, procedure had been used.

The SPPO’s guidance includes local specific instructions for contracting authorities. These generally comply with the EC Guidance and also provide several case studies and practical recommendation, e.g. how to procure protective mouth masks or material needed to produce them, how to ensure transport/distribution of food, medicine or other commodities for citizens who depend on it etc. 

The COVID-19 crisis has also invoked changes in the procurement process - how ongoing procurement procedures are conducted. 

For example, public opening of envelopes containing proposals is currently not recommended. The SPPO rather recommends opening envelopes through "online" disclosure to tenderers using some functionality of the electronic system used for that procurement, provided that such electronic system meets criteria under the PPA and ensures integrity of the proposals. Moreover, the contracting authority is entitled to change the originally planned method of opening tenders (personal participation of tenderers) to "on-line" access. If electronic/remote opening of proposals is not feasible, the public contracting authority can change (postpone) the opening date of tenders and inform the tenderers, publish the information on the profile, or where appropriate, issue a corrigendum. A similar approach applies to other stages of the procurement procedure, where personal meeting/attendance of tenderers is normally anticipated. 

An important modification to public procurement procedures has been introduced by Act No. 62/2020 Coll. on certain emergency measures in relation to the spread of the dangerous contagious human disease COVID-19 and in the judiciary, so-called “Lex Corona” (the “Amendment”), which came into effect on 27 March 2020.  

In general, the PPA requires that a supplier (meeting specified financial thresholds) who is going to be awarded with a contract by the public contracting authority, must be registered in the Public Sector Partner Registry (the “Registry”). This is a mandatory requirement also for subcontractors of such supplier, if such subcontractor meets the financial threshold, and is aware that the end user will be a public contracting authority. As the process of registration in the Registry is quite time-consuming and in the given situation of urgency, such requirement is practically not feasible to meet. To address this situation the Amendment introduces an exception to the registration requirement and allows the contracting authority to enter into a contract with a supplier who (or whose subcontractor) is not registered in the Registry.  However, the exception is applicable only if several conditions are met, i.e. direct negotiation procedure without publication due to an urgent situation has been used to select the supplier (provided that the conditions for using this method have been fulfilled), and the contract is executed for the purpose of ensuring protection of health and life during the declared state of emergency or extraordinary situation. Another exception to this registration requirement can be applied for low value contracts, which are also exempted from the requirement for suppliers to be registered in the Registry. This exception applies without the necessity to fulfil any other additional conditions. 

The COVID-19 crisis has also affected existing contracts, which are currently ongoing and were awarded through public procurement procedures previously. Due to the crisis, some suppliers are not able to deliver goods, services or works on time, certain goods or services are not available, and may be required to be replaced. In order to avoid litigation risks on both sides, an amendment to the contract may be signed. Such contracts are also within the scope of the PPA regulations, especially with respect to their modification and amendments. 

To respond to questions raised in relation to the need to modify such contracts, the European Commission has issued a statement on Modification of ongoing public procurement contracts in the context of the COVID-19 crisis. In general, any amendment to a contract awarded in public procurement can be executed only if the statutory conditions for such amendment are fulfilled.  Such requirements applicable in Slovakia are included in section 18 of the PPA. 

Due to the situation invoked by the COVID-19 crisis, the following provisions can apply and these requirements must be met cumulatively: 

  • The need for the modifications resulted from circumstances which a diligent contracting authority could not foresee (the COVID-19 crisis may be considered as such circumstance, beyond any doubt);
  • The modifications do not change the overall nature of the contract: meeting this criteria will be evaluated on a case-by-case basis, however change of project timelines and payment schedules, exemptions from penalties and delays could be considered as appropriate; however when changing or replacing goods, services and works (e.g. which are currently not available) the contracting authorities should carefully consider if such replacement does not change the overall nature of the contract;
  • Any increase in price is not higher than 50% of the value of the original contract.

[1] The term “contracting authority” in this Article is used for both - public contracting authority under the sec. 7 PPA and contracting authority under the section 9 PPA