The procurement of government contracts in Cyprus is regulated by the following legislation:

• Law 73(I)/2016, which regulates public procurement procedures;
• Law 104(I)/2010, which regulates procedures before the Tenders Review Authority (TRA);
• Law 140(I)/2016, which regulates the procurement procedures of institutions acting in the sectors of water, energy, transport and postal services, and on related issues;
• Law 11(I)/2017 on the regulation of the concession award procedures and related issues;
• Law 173(I)/2011 for the co-ordination of the procedures for concluding contracts of projects, procurements and provision of services concluded by contracting authorities (CA) in the fields of defence and security, and related issues; and
• EU Regulation No 1370/2007 on public passenger transport services by rail and by road.

All CAs are subject to the public procurement legislation, ie, the state, any regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law. The definition of the law is rather broad, and it captures the majority of public bodies, apart from telecommunications, as well as private companies that, due to a concession agreement, enjoy exclusive rights that are usually reserved for the state or a public body.

The public procurement legislation applies to contracts for the provision of supplies, goods, services, the execution of works and for concession awards (providing exclusivity rights or special rights, otherwise reserved to public bodies).

Public procurement legislation provides different thresholds depending on the nature of procurement and the sector. The current thresholds are as follows:

• under Law 73(I)/2016 for the central public sector, the threshold for supplies, goods and services is EUR140,000;
• under Law 73(I)/2016 for non-central public sector, the threshold for supplies, goods and services is EUR215,000;
• under Law 140(I)/2016 and Law 173(I)/2011, the threshold for supplies, goods and services is EUR431,000;
• under Law 11(I)/2017, the threshold for services is EUR5,382,000;
• under all the applicable law, the threshold for works is EUR5,382,000; and
• for social and other special services under Law 73(I)/2016, the threshold is EUR750,000, and, under Law 140(I)/2016, it is EUR1 million.

In some tenders, there might be eligibility criteria for bidders from countries participating in WTO’s Government Procurement Agreement (GPA), or that have signed and ratified association agreements or bilateral agreements with the EU, for the field of public procurement.

The public procurement legislation sets a few principles for all CAs to apply in any public procurement procedure, namely:

• to treat all economic operators equally and without discrimination;
• to act in a transparent and proportionate manner; and
• not to intentionally design any procedure to avoid the enforcement of the public procurement legislation, for example by splitting supplies in various tenders below the threshold, or by artificially narrowing the competition.

The above apply throughout the tender procedure, even through the market research phase (before even drafting the tender documents/requirements) and after the signing of a public contract.

Depending on the type of the procedure (ie, open or close tender procedure, competitive process with negotiations or competitive dialogue), a CA will usually have to:

• publish in the Official Journal of the EU and the e-procurement website (national forum of public tenders) the notice describing the tender’s requirements and inviting tenderers to bid;
• review tenders and evaluate if the tenderers have the necessary legal and financial standing and fulfil all the requirements specified in the tender documents to perform the contract;
• notify the contract award decision to all tenderers;
• hold for a minimum of 15 calendar days from any action, providing the opportunity to tenderers to submit a recourse before the TRA;
• conclude the contract, after the above standstill period, provided that no recourse was filed and no interim measures were issued; and
• publish the signing of the contract in the official Journal of the EU.

Where there is a closed tender procedure or competitive process with negotiations or competitive dialogue, the CA, after evaluating their legal and financial standing, and, depending on the tender requirements, their technical or professional abilities, invite the shortlisted and qualified tenderers to submit tenders or carry out negotiations.

Any contract regulated by the public procurement legislation needs to be published in e-procurement’s website. The notice describing the tender’s requirements and the award of the contract is also published in the Official Journal of the EU.

Where the CA does not follow the above obligation regarding advertisement, the law provides interested parties with an extended period to challenge any decision or award of contract before the TRA, sometimes even for a period of six months.

The notice in the EU’s Official Journal includes:

• information about the CA;
• details on how to access the tender documentation/requirements;
• description of the procurement and the main requirements, such as the quantity of the supplies or the nature of the works, and the duration of the contract;
• the award criteria;
• briefly, any conditions of participation; and
• the type of procedure and the relevant timeframe.

There is a standard form that it is usually completed by the CA.

The public procurement legislation permits CAs to carry out preliminary market consultations before launching the tender, in order to get information about the market, the requirements of the products or the value of the requested products, provided that the general principles of the legislation apply (see 2.1 Prior Advertisement).

Where a private company assists in the drafting of the tender specifications, extra measures need to be taken to ensure that the participation of the company does not distort the competition and all tenderers/economic operators are treated equally.

According to the public procurement legislation, there are the following types of public procurement contracts.

• Open tender procedure – the CA invites the public to tender.
• Restricted tender procedure – where there is an open invitation to apply for participation, but only the shortlisted economic operators shall be allowed to submit a tender.
• Competitive process with negotiations – the CA invites a specific number of candidates to enter the negotiations for the contract, provided that they fulfil the minimum criteria set in the relevant notice. There might be a number of negotiation rounds; however, the final tender cannot be negotiated.
• Competitive dialogue – economic operators submit application to participate. The shortlist is selected according to the qualification criteria included in the relevant notice. There might be various rounds and stages; however, there will be no discussions after the submission of the final tender. The purpose of this method is usually to allow the CA to identify the potential solution or solutions suitable for their needs. The law allows for limited negotiation with the successful bidder in order to confirm financial commitments or other terms of the contract.
• Innovation partnership – it is usually used for the development of an innovative product or works. Any economic operator might submit an application to participate, provided that it fulfils the qualification requirements of the notice. The CA might decide to set up a partnership between one or more tenderers for the development of the product. The CA might negotiate with the tenderers but not after the final bid has been submitted.
• Negotiated procedure without prior publication – used only under specific circumstances, usually after an open or restricted tender procedure where no tenders or suitable tenders were submitted, or if the services/works/supplies can only be provided by one particular economic operator.

The legislation permits the conduct of an open or restricted procedure at the discretion of the CA. The use of the rest of the procedures outlined in 2.3 Tender Procedure for the Award of a Contract are only available if specific requirements set out in the legislation apply. Namely, the competitive procedure with negotiation or competitive dialogue is only allowed if one of the following applies:

• the needs of the CA cannot be satisfied without adapting the solutions readily available;
• the tender includes design or innovative solutions;
• the contract cannot be awarded without prior negotiation, due to specific circumstances relating to, or the legal or financial nature, complexity or the risks associated with them;
• the technical specifications cannot be defined with sufficient precision by the CA by reference to a standard, European Technical Assessment, Common Technical Specification or Technical Reference Framework within the meaning of Annex VII to the law; or
• following an open or restricted procedure, when only irregular or unacceptable tenders were submitted.

Furthermore, the CA can use the competitive procedure without prior publication, where one of the following applies:

• where no (suitable) tenders have been submitted in response to an open procedure or a restricted procedure;
• where the works, supplies or services can be supplied only by a particular economic operator for any of the following reasons:
1. the aim of the procurement is the creation or acquisition of a unique work of art or artistic performance,
2. competition is absent for technical reasons, or
3. the protection of exclusive rights, including intellectual property rights;
• in case of extreme urgency brought about by events unforeseeable by the CA;
• where the products involved are manufactured purely for the purpose of research, experimentation, study or development;
• for additional deliveries by the original supplier (restrictions apply);
• for supplies quoted and purchased on a commodity market;
• for the purchase of supplies or services on particularly advantageous terms, such as a supplier which is definitively winding up its business activities, or the liquidator in an insolvency procedure, an arrangement with creditors;
• for public service contracts, where the contract concerned follows a design contest organised in accordance with the law and is to be awarded, under the rules provided for in the design contest, to the winner or one of the winners of the design contest; in the latter case, all winners must be invited to participate in the negotiations; or
• for new works or services consisting in the repetition of similar works or services entrusted to the economic operator to which the same contracting authorities awarded an original contract, provided that such works or services are in conformity with a basic project for which the original contract was awarded.

The public procurement legislation permits direct contract awards under certain circumstances. For example, the negotiated procedure without prior publication might be selected in the following circumstances:

• there were no tenders or suitable tenders to a previous open tender procedure;
• the works/supplies/services can be provided only by one economic operator due to technical reasons, protection of exclusive rights or the purpose being to create or buy a unique work of art/artistic performance;
• in case of extreme urgency that could not been foreseen and the CA cannot comply with the time limits of the public procurement legislation;
• where products are manufactured only for research purposes or experimentation, in which case the contract must not include any provisions for quantity production;
• where the CA needs additional deliveries from the original tenderer, which shall replace or extend provision of the existing supplies, provided that changing the acquired supplies would result in disproportionate technical difficulties in operation and maintenance;
• in case of particularly advantageous terms of purchase or acquisition, for example from a liquidator; and
• in case of supplies quoted and purchased on a commodity market.

Cyprus law requires CAs to publish the tender documentation in the e-procurement platform with unrestricted access. Where a CA does not comply with the publication requirements, there are remedies under the TRA legislation, allowing extension of the deadline for challenging the CA’s decision (for the award of the tender), on some occasions for up to six months.

As a general rule, the public procurement legislation suggests a time limit of 35 days for the receipt of expression of interest in a tender procedure or for submitting a tender for the open tender, 30 days for the other types. In case of emergency and under certain conditions, the deadline can be minimised to 15 days for the open tender and ten days for the restricted tender procedure.

According to the public procurement legislation, some of the criteria set by the CA that may be requested for the submission of a tender are as follows:

• legally required qualifications for the exercise of the professional activity;
• economic and financial status of the tenderer; and
• technical and professional competence to perform the contract.

The CA needs to ensure that the criteria are proportionate to the matter of the tender and do not restrict competition.

Under the public procurement legislation, the CA shall exclude any bidder from participating if one of the following apply:

• there is a final conviction against the economic operator for participation in a criminal organisation, corruption, fraud, terrorist offences or crimes related to terrorism, money laundering, child labour or other forms of human trafficking; or
• the economic operator has defaulted on its payment of taxes or social security contributions.

Under clause 65 of the Law, the CA might restrict the number of qualified suppliers that may be invited to participate in the contract award procedures, which for the restricted tender procedure must not be less than five candidates and for the rest of the procedures less than three. In any event, CAs are obliged to invite a number of candidates to ensure genuine competition.

The CA generally awards the public tenders to the tenderer with the best price-quality ratio or to the most economically advantageous bid, provided that all the criteria specified in the said tender are met to the satisfaction of the CA. Their decision-making includes a cost-effectiveness approach, which is assessed based on various criteria, including but not limited to, quality of works or services, environmental and social aspects relating to the subject of the specific public tender and other aspects such as:

• quality, technical value, aesthetic and functional features, accessibility, user-friendly, social, environmental and innovative features;
• the scheduling, qualifications and experience of the personnel performing the contract; and
• after-sales delivery and technical support, terms of delivery, process and period of delivery, or completion timeframe.

Public tenders may have a fixed price or cost. In that case, tenderers will compete solely based on quality criteria.

The CA specifies in the tender document the significance it assigns to each condition in order to conclude on the most cost-efficient offer, unless it is specified within that it is determined solely based on price.

Under the legislation, the CA must exclude tenderers from the contract award procedure in case of certain offences such as:

• participation in a criminal organisation;
• corruption;
• fraud;
• terrorist offences or offences linked to terrorist activities;
• money laundering or terrorist financing; and
• child labour and other forms of human trafficking.

The Law also includes some discretionary exclusions, such as non-adequate performance of a previous public tender contract, which are almost always included in Cyprus tender documentation by the CA. For example:

• where the CA can demonstrate by any appropriate means a violation of applicable obligations in the fields of environmental, social and labour law established by union law, national law, collective agreements or by the international environmental, social and labour law provisions;
• where the economic operator is bankrupt or is the subject of insolvency or winding-up proceedings, where its assets are being administered by a liquidator or by the court, where it is in an arrangement with creditors, where its business activities are suspended or it is in any analogous situation arising from a similar procedure under national laws and regulations;
• where the CA can demonstrate by appropriate means that the economic operator is guilty of grave professional misconduct, which renders its integrity questionable;
• where the CA has sufficiently plausible indications to conclude that the economic operator has entered into agreements with other economic operators aimed at distorting competition;
• where a conflict of interest cannot be effectively remedied by other less intrusive measures;
• where a distortion of competition from the prior involvement of the economic operators in the preparation of the procurement procedure cannot be remedied by other, less intrusive measures;
• where the economic operator has shown significant or persistent deficiencies in the performance of a substantive requirement under a prior public contract, a prior contract with a CA or a prior concession contract which led to early termination of that prior contract, damages or other comparable sanctions;
• where the economic operator has been guilty of serious misrepresentation in supplying the information required for the verification of the absence of grounds for exclusion or the fulfilment of the selection criteria, has withheld such information or is not able to submit the supporting documents; or
• where the economic operator has undertaken to unduly influence the decision-making process of the CA, to obtain confidential information that may confer upon it undue advantages in the procurement procedure or to negligently provide misleading information that may have a material influence on decisions concerning exclusion, selection or award.

The CA has the obligation to disclose in each individual public contract publication, within the relevant tender documents, the criteria for participation, the grounds for exclusion and any other criteria for evaluation, together with their significance, unless it is specified within that it is determined solely based on price.

Each public contract varies on the requirements and criteria to be met based on the nature and purpose of each project, as mentioned above.

The CA must promptly notify each bidder of its choice to award a public contract, namely if their bid has been accepted or rejected, including the reasons for rejecting and who is the winning bidder. The CA shall promptly, and within 15 days after receiving a request from the interested bidders, give notice to:

• any rejected bidders, with explanations on why their tender was rejected; and
• any bidders who have submitted an approved tender, outlining the qualities and relevant advantages of the selected tender, in addition to information about the contractor or the tender agreement parties.

The disclosure of information is subject to confidentiality agreements and any corporate secrets; in such circumstances, the bidders will only receive an overview of the acceptable tender rather than the complete description.

The CA must promptly notify each bidder of their choice to award a public contract as soon as possible. The notification is usually sent electronically; however, other means are also permissible under the law. Further clarifications regarding the information and notification provided by the CA to the bidders are outlined in 3.2 Obligation to Notify Interested Parties Who Have Not Been Selected.

Although the public procurement legislation does not explicitly provide such a right, the Law regarding the general principles of administrative law (Law 158(I)/1999) requires a prior hearing under certain circumstances. According to case law, such right must be provided where the CA is considering the exclusion of a tenderer: in this situation, the CA must request that the tenderer provide evidence to the effect that measures taken by the tenderer are sufficient to demonstrate its reliability despite the existence of a relevant ground for exclusion.

The contract cannot be concluded by the CA before the standstill period, which begins when all the tenderers are notified of the contract award decision. The method of notification for the contract award decision will determine the duration of that period. The standstill period under Law 104(I)/2010 is usually 15 calendar days after the notification of the final decision for the award, or ten days for any decision regarding amendment of the tender documents and the criteria set.

Under national legislation, a bidder has the option to file a recourse against the CA’s decision before the Tenders Review Authority (TRA) or the Administrative Court of Cyprus. The TRA is an administrative body authorised to review procedures and its decisions can be appealed before the Administrative Court of Cyprus. Any decision of the Administrative Court can be appealed before the Court of Appeal.

Under  the public procurement legislation, any bidder or economic operator that believes that there is a breach of the procurement legislation can file for a recourse before the TRA or Administrative Court requesting an annulment of the CA’s decision or action and interim measures, including suspension of any further actions or signing of the contract. It is noted that such measures are usually issued under the TRA, but the same does not apply for the Administrative Court. Where the CA’s decision is set aside, the bidder/economic operator has the right to request damages by filing a claim/lawsuit before the District Courts of Cyprus.

Furthermore, there are provisions for setting aside a signed contract, if the minimum requirements for prior publication have not been met or there is a breach of the standstill period. In that scenario, the TRA can decide whether to render the contact ineffective retrospectively or not, or even to issue a fine to the CA for violating the public procurement legislation.

Since 2019, the General Accountant’s office (acting as the competent authority for public procurement) can refer to the TRA any decision or action of a CA, if it considers that the CA has violated public procurement legislation.

Interim measures are available when filing a recourse before the TRA, as explained above, to suspend the signing of a contract or any further actions until the final decision. It is also possible to request interim measures when filing a recourse before the Administrative Court; however, in that case, the applicant must demonstrate either irreparable damage or obvious illegality, which is not very easy to prove according to case law.

Any interested party who has or had an interest in receiving a specific contract, and who has suffered damage from a CA’s act or decision that is presumed to have violated any provision of the applicable law, has the right to appeal to the TRA or the Administrative Court, in accordance with the relevant legislation.

Under Law 104(I)/2010, a decision can be challenged before the TRA within 15 calendar days from receiving the CA’s decision or within ten days if the decision is regarding the notification of the procedure, or the tender documentation.

In case of requests for rendering a contract invalid, Law 104(I)/2010 provides that:

• recourse can be filed within 30 days from the notification of the awarding of the contract without prior publication; or
• recourse can be filed within six months from the date that the contract was signed, if it was illegally signed, ie, without prior notification, or during the standstill period, or without or prior to notifying the other candidates/economic operators.

A recourse before the Administrative Court must be filed within 75 days of the decision date or the date that the interested party was informed about the decision.

The typical length of proceedings relating to a procurement claim before the TRA is usually a few months. It can vary from a month up to almost a year, depending on the needs and urgency of the CA.

The typical length of proceedings before the Administrative Court of Cyprus is usually two to three years, although there are procedures to expedite this. Claims for compensation before District Courts take longer to be examined: between three and six years.

The yearly procurement claims to the TRA are estimated to be around forty to fifty cases.

The costs for challenging a CA’s decision before the TRA are determined based on the awarded bid’s amount, namely:

• EUR1 to EUR1,000,000 – EUR4,000 fee;
• EUR1,000,001 to EUR3,000,000 – EUR6,000 fee;
• EUR3,000,001 to EUR6,000,000 – EUR8,000 fee;
• EUR6,000,001 to EUR10,000,000 – EUR10,000 fee;
• EUR10,000,001 to EUR50,000,000 – EUR15,000 fee;
• EUR50,000,001 to EUR100,000,000 – EUR17,500 fee;
• EUR100,000,001 to EUR200,000,000 – EUR19,000 fee; and
• EUR200,000,001 and above – EUR20,000 fee.       

If the recourse relates to an action or decision (i) made prior to the submission of the offer, (ii) to cancel a tender, (iii) that does not result in the awarding of a tender, or (iv) in any other situation, results in an award with an unspecified monetary consideration, then the fees are set at EUR5,000.

The fees for filing a recourse before the Administrative Court of Cyprus are set at EUR138.42.

In the following situations, amendments to the contracts may be made without initiating a new procurement process.

• The original contract documents expressly permit revisions.
• Additional works, services or supplies from the tenderer, which were not originally included in the initial tender documents but were deemed necessary after the contract was awarded, have been made and changing the tenderer (i) is not possible due to financial or technical constraints, and (ii) would cause a significant disruption or substantial cost duplication for the CA. It is established that any cost increase will not be greater than 50% of the original contract’s value.
• The subsequent cumulative requirements are satisfied:
1. the necessity for amendments is as a result of circumstances that a diligent CA could not have foreseen;
2. the alterations do not affect the contract’s fundamental terms; and
3. no price increase may be greater than 50% of the original contract’s amount.
• The original tenderer to whom the contract was granted is replaced by a new tenderer as a result of the following:
1. it is permitted by the initial contract;
2. a partial or total succession of the original tenderer, provided that the quality selection criteria originally established are met; and
3. the CA itself assumes the obligations of the contractor.

The CA may, at least in the following circumstances and under the conditions laid down in the Contracts Law, provide in the procurement documents for the possibility of terminating a public contract during its performance. It must be established that:

• the contract has been substantially modified without requiring a new procurement procedure in accordance with the relevant articles of 73(I)/2016 and 140(Ι)/2016;
• the contractor, at the time the contract was awarded, was in one of the situations that should have excluded it from the procurement procedure; or
• the contract should not have been awarded to the contractor due to a serious breach of the obligations deriving from the Treaties and from the applicable laws, according to a decision of the Court of Justice of the European Union in a procedure based on Article 258 TFEU.

The legislation does not establish special prerogatives in favour of the awarding authority.

Decision 274/2022

The applicant challenged the decision of the TRA to render the contract invalid, by accepting the interested parties’ recourse. The applicant claimed before the Administrative Court, among others, that the TRA should have allowed the applicant to appear before the TRA and support the decision before invalidating the contract. The TRA alleged that, at the hearings held before it, only the applicant before the TRA (ie, interested party) and the CA were entitled to be summoned and that the successful tenderer cannot be a party to the procedure. In support of its request, the applicant referred to general principles under EU law, including the right to be heard.

The court held that the applicant had the right to be heard as by signing the contract it had claimed certain rights, which were affected by the contested decision. It also stated that the right to be heard, even if not expressly provided for in the Law, can be acquired on the basis of Article 43 of Law 158(I)/99 (General Principles of Administrative Law of 1999), as it extends to any person affected by the adoption of an act or administrative measure having the character of a sanction or other adverse effect.

There are currently no legislative amendments under consideration.