The main legislation regulating the procurement of a government contract is Law 73(I)/2016 on the regulation of public procurement procedures and related matters, which is based on Directive 2014/24/EU. Additionally, the following regulation and legislation apply:

• Regulation (EC) No 1370/2007 on public passenger transport services by rail and by road;
• Law 173(I)/2011 on the co-ordination of procedures for the award of certain works contracts, supply contracts and service contracts by awarding authorities or entities in the fields of defence and security-related matters, which is based on Directive 2009/81/EU;
• Law 140(I)/2016 on the regulation of procurement by entities operating in the water, energy, transport and postal services sectors and related matters (Law 140/2016), which is based on Directive 2014/25/EU; and
• Law 11(I)/2017 on the regulation of the procedures for concession contracts and related matters, which is based on Directive 2014/23/EU.

In relation to the limited number of government contracts which do not fall within the scope of application of the above legislation, the general rules and principles of administrative law in Cyprus apply.

A wide range of entities in the public and wider public sector is covered by the procurement regulation, including ministries, central government authorities, public authorities, regional and local authorities, public universities and semi-governmental organisations.

The relevant procurement legislation covers almost all types of public contracts, including work contracts, supply contracts, contracts for the provision of services, framework agreements and contracts intended to be awarded by entities in the water, energy, transport and postal services sectors and concession contracts.

Pursuant to Cypriot legislation on public procurement, there are different financial thresholds for each award procedure, depending on the nature of the procurement. The thresholds are reviewed and revised by the European Commission every two years, according to its regulations, and the new thresholds are communicated to the authorities/entities by the Relevant Authority of Public Contracts, according to the relevant harmonising public procurement legislation.

Financial Thresholds

The financial thresholds according to the relevant regulations of the European Commission dated 15 November 2023, for the period 1 January 2024 to 31 December 2025, are as follows (excluding VAT).

Law 173(I)/2011

Law 173(I)/2011 on the co-ordination of procedures for the award of certain works contracts, supply contracts and service contracts by awarding authorities or entities in the fields of defence and security-related matters:

Awarding authorities and entities entering into contracts in the fields of defence and security –       

• supplies: E443,000;       
• services: E443,000; and       
• works: E5.538 million.

Law 73(I)/2016

Law 73(I)/2016 on the regulation of public procurement procedures and related matters:

• Public sector (central government authorities, ministries, independent offices and services) –       
1. supplies: E143,000;        
2. services: E143,000; and        
3. works: E5.538 million.
• Wider public sector (non-central government authorities, organisations of the public domain and local authorities) –       
1. supplies: E221,000;
2. services: E221,000; and
3. works: E5.538 million.

Law 140(I)/2016

Law 140(I)/2016 on the regulation of procurement by entities operating in the water, energy, transport and postal services sectors and related matters:

Awarding authorities and entities of the public and wider public sector, operating in the utility fields –       

• supplies: E443,000;       
• services: E443,000; and       
• works: E5.538 million.

Law 11(I)/2017

Law 11(I)/2017 on the regulation of the procedures of concession award contracts and related matters:

Awarding authorities and entities entering into concession contracts of works and services – E5.538 million.

Pursuant to the principle of non-discrimination, the awarding authorities must ensure that public procurement procedures are open to interested parties from both inside and outside the jurisdiction. However, awarding authorities are allowed to exclude interested parties from contract award procedures if these parties are established in states which are not members of the EU or of the European Economic Area (EEA), unless such states have signed and ratified the International Government Procurement Agreement (GPA) or any bilateral agreement with the EU or with the Republic of Cyprus in connection with public procurement. Also, interested parties established outside Cyprus may be excluded if they are subject to EU sanctions which preclude their participation in contract award procedures.

Pursuant to the provisions of Law 73(I)/2016 the awarding authorities are obliged, among other things:

• to treat the economic operators equally and without discrimination;
• to act with transparency and in accordance with the principle of proportionality;
• to ensure that the design of the award procedure should not be made with the intention of excluding it from the scope of applicable legislation; and
• not to artificially narrow competition by favouring or disadvantaging certain economic operators.

The general rule is that the contract award procedures are advertised on the electronic contracting platform of the Treasury of the Republic of Cyprus, except in cases where non-publication is permitted by the public procurement legislation. Subsequently, the electronic platform automatically communicates the contract award notice to the Official Journal of the European Union and/or the Official Journal of the Republic of Cyprus. The advertisement must include the following information: the name of the awarding authority, its identification number, address, phone number, fax, email and the website of the awarding authority, as well as the website on which free, direct, full and free-of-charge access to the documents of the award procedure is available.

Pursuant to the provisions of Law 73(I)/2016, preliminary market consultations before launching the contract award procedure, including advice from independent experts, authorities or market participants, are permitted, given that such advice does not result in distortion of the competition, or in violation of the non-discrimination principle and transparency principle.

Law 73(I)/2016 provides for the following tender procedures:

• Open procedure – Any interested economic operator may submit a tender.
• Restricted procedure – The first stage of the restricted tender procedure is the submission by any interested economic operator of a request to participate, providing information requested by the awarding authority for qualitative selection. At the second stage, upon evaluation of the information provided by the economic operators who submitted an application form, the awarding authority invites certain economic operators to participate in the tender. The third stage is the submission of tenders by the economic operators who have been invited by the awarding authority to participate in the procedure.
• Competitive processes with negotiation – The first three stages in the competitive process with negotiation are the same as the closed tender procedure. After the submission of initial tenders by the economic operators, the awarding authority negotiates tenders with the economic operators in order to improve their content (but without negotiating the minimum standards and the award criteria). When the awarding authority intends to conclude the negotiation, it informs the economic operators accordingly and sets a common date for the submission of any new or final tenders, after which, the awarding authority evaluates the final tenders.
• Competitive dialogues – The first two stages in a competitive dialogue procedure are the same as the closed tender procedure. Upon selection of the participants, the awarding authority engages in a dialogue with them to investigate and define the best way to satisfy its needs. The awarding authority then declares the end of the dialogue, informs the remaining participants accordingly and calls them to submit their final tenders based on the solution determined during the dialogue stage. The awarding authority evaluates the tenders on the basis of the award criteria as defined in the tender announcement.
• Innovative partnerships – The first four stages in the innovative partnership procedure are the same as the competitive process with negotiation. Then, the awarding authority chooses candidates, mainly based on their ability in the field of research and development, as well as on their ability to develop and materialise innovative solutions. Subsequently, only the economic operators that have been invited by the awarding authority can submit their projects.
• Negotiation without prior publication of a tender.

During the negotiations, the awarding authority ensures equal treatment of all the economic operators, and refrains from providing information that could favour certain economic operators over others.

With the exception of the procedure of negotiation without prior publication of a tender, for which specific conditions need to be satisfied, an awarding authority is free to choose any of the procedures referred to in the bullet points in 2.3 Tender Procedure for the Award of a Contract.

Direct contract awards are permitted but only in very limited circumstances. Pursuant to Section 29 of Law 73(I)/2016, an awarding authority may only proceed with a negotiated procedure without prior publication in the following circumstances:

• where no tenders or suitable tenders have been submitted in response to an open procedure or restricted procedure;
• where the work, supplies or services can only be supplied by a particular economic operator, for any of the reasons specified in the relevant legislation;
• where for reasons of extreme urgency, brought about by events that could not be foreseen by the awarding authority, the time limits for the open or restricted procedures or competitive procedures with negotiation cannot be complied with;
• where the relevant products are manufactured solely for the purposes of research, experimentation, study or development;
• for additional deliveries by the original supplier which are intended either as a partial replacement or as the extension of existing supplies or installations, where a change of supplier would oblige the awarding authority to acquire supplies with different technical characteristics which would result in incompatibility or disproportionate technical difficulties in operations or maintenance;
• for supplies quoted and purchased on a commodity market; or
• for the purchase of supplies or services on particularly advantageous terms.

Law 73(I)/2016 provides that in cases of restricted procedures and competitive procedures with negotiation where the awarding authorities use a prior information notice as a call for competition, such notice must be sent for publication between 35 days and 12 months prior to the date on which the invitation to submit the tender is sent.

Law 73(I)/2016 provides for the minimum period for submitting a tender from the date of the tender notice. The minimum timescales are as follows:

• for an open tender procedure (Section 24 of Law 73(I)/2016), the minimum period is 35 days from the date of the tender notice;
• for a restricted procedure (Section 25 of Law 73(I)/2016), the minimum period for submitting an application form is 30 days from the date the tender notice was sent, and the minimum period for submitting a tender is 30 days from the date of the invitation;
• for competitive processes with negotiation (Section 26 of Law 73(I)/2016), the minimum period for submitting an application form is 30 days from the date of the tender notice;
• for competitive dialogues (Section 27 of Law 73(I)/2016), the minimum period for submitting an application form is 30 days from the date of the tender notice; and
• for innovative partnerships (Section 28 of Law 73(I)/2016), the minimum period for submitting an application form is 30 days from the date of the tender notice.

Pursuant to Section 58 of Law 73(I)/2016, the awarding authorities may impose selection criteria for participation in a procurement process which relate to:

• suitability to pursue the professional activity;
• economic and financial standing; and
• technical and professional ability.

In open procedures, awarding authorities are not required to include a pre-qualification stage in the award process. In cases where the restricted procedure with negotiation or the competitive procedure with negotiation or the competitive dialogue procedure are used, awarding authorities may pre-select candidates on the basis of specific criteria which must be set out in the contract notice. The is no minimum number of qualified suppliers that must be invited to participate in a contract award procedure.

The award criterion which is most commonly used in contract award procedures in Cyprus is the criterion of the most economically advantageous tender. In identifying the most economically advantageous tender, the awarding authorities must take into account the price and quality of each tender. They are also free to take into account other factors set out in Section 67 of Law 73(I)/2016, including social, environmental and innovative characteristics.

Pursuant to Section 57 of Law 73(I)/2016, the awarding authorities must exclude an economic operator for the following reasons:

• the economic operator or any member of its administrative, management or supervisory body has been convicted by a final decision for participating in a criminal organisation, corruption, fraud, terrorist offences, money laundering or terrorist financing, child labour or human trafficking; and/or
• the economic operator is, pursuant to a judicial or administrative final decision, in breach of its obligations relating to payment of taxes or social security contributions.

Moreover, the awarding authorities may exclude an economic operator for the following reasons:

• non-compliance of the economic operator with the obligations imposed by environmental, social and employment law;
• the economic operator is bankrupt or is subject to insolvency or winding-up proceedings;
• the economic operator is guilty of grave professional misconduct which calls its integrity into question;
• the awarding authority has plausible indications that the economic operator has entered into agreements for the purpose of distorting competition;
• a conflict of interest;
• the economic operator has shown significant or persistent deficiencies in the performance of a prior public contract leading to the termination of that contract;
• the economic operator is guilty of serious misrepresentation in the information provided during the process of verification of the absence of grounds for exclusion; and/or
• the economic operator is trying to influence the decision-making process of the awarding authority.

Section 4 of Law 73(I)/2016 imposes a general duty on awarding authorities to act with transparency in the criteria or other elements of the evaluation methodology on the basis of which:

• bidders are selected; and
• evaluated tenders must be clearly stated in the tender documents themselves so that they can be taken into account by bidders in preparing their tenders.

In cases where there is a prequalification stage in the tender procedure, awarding authorities have an obligation to notify, in writing and “as soon as possible”, all interested parties who have not been selected for participation in the contract award stage. In the vast majority of cases, the reasons for the awarding authority’s decision are communicated at the same time as the decision itself. If this is not done, any interested party is entitled to request to be informed of the reasons, and awarding authorities have an obligation to respond within 15 days from the date that such a request is received.

Section 54 of Law 73(I)/2016 imposes an obligation on awarding authorities to notify all interested parties of the contract award decision in writing and “as soon as possible”. In accordance with the guidelines published by the competent authority for public procurement (which is the Treasury of the Republic of Cyprus) the relevant notification must include a brief description of the reasons for the selection of the successful bidder, the price of the successful bidder’s bid and, where the notification is addressed to an unsuccessful bidder, the reason for the rejection, exclusion or non-selection of the unsuccessful bidder’s bid. 

Generally, awarding authorities do not have an obligation to grant prior hearing to bidders before a decision is taken in the context of the contract award procedure. It is generally up to the awarding authorities to decide if and when they will give a bidder the opportunity to provide an explanation or clarification with respect to its bid or with respect to any information submitted in the context of such bid. Some court decisions support the view that an awarding authority may have an obligation to grant prior hearing to a bidder in cases where the awarding authority plans to exclude a bid on grounds relating to the bidder’s honesty or integrity, but the matter remains open.

Law 104(1)/2010 on Review Procedures Concerning the Award of Public Contracts, provides that an awarding authority may not proceed with the conclusion of a contract with the successful bidder until the expiry of the deadline for the filing of a recourse with the Tenders Review Authority (TRA) challenging the legality of the contract award decision (which is generally 15 calendar days from the day following the date of notification of the contract award decision). The same law provides that, if a recourse is filed with the TRA, the “standstill period” is extended until the TRA decides whether it will grant interim measures preventing the conclusion of a contract with the successful bidder until the relevant recourse before the TRA is determined. The TRA’s decision as to the granting of such interim measures must be issued within five business days from the date that the relevant recourse is notified to the awarding authority.

The body responsible for the review of the decisions of the awarding authorities is the TRA. This is considered to be an administrative authority (not a court) so its decisions are subject to judicial review by the Administrative Court of Cyprus. The decisions of the awarding authorities may also be challenged by filing a recourse directly with the administrative court.

The legality of the decisions of awarding authorities may be challenged by filing a recourse with the TRA or with the Administrative Court of Cyprus. If such recourse is successful, the relevant decision of the awarding authority will be annulled and the party filing the recourse can claim compensation for any damage caused to it as a result of the decision in question.

If a recourse challenging the legality of the decision of an awarding authority is filed with the TRA, the TRA has the power to grant interim measures suspending the execution of the relevant decision and preventing the conclusion of a contract with the successful bidder until the recourse is determined. The TRA exercises this power in practice unless there are special circumstances which justify not granting interim measures. If a recourse is filed with the administrative court, the court also has the power to grant an interim order suspending the execution of the relevant decision and preventing the conclusion of a contract with the successful bidder until the recourse is determined. However, this power is exercised only in exceptional cases where it can be shown that the decision in question is “flagrantly illegal” or that the applicant is likely to suffer irreparable damage if an interim order is not granted.

All unsuccessful bidders have standing to challenge the awarding authority’s decisions, subject to the qualification that a bidder whose bid has been rejected or excluded by the awarding authority for non-compliance with the requirements of the tender documents, generally only has standing to challenge the legality of the decision to exclude it and cannot challenge the decision to award the contract to the successful bidder.

A recourse before the TRA must be filed within 15 calendar days from the day following the date on which the decision of the awarding authority is sent to the interested economic operators. If such decision is not sent via fax or other electronic means, the limitation period is 15 calendar days from the day following the date on which the decision of the awarding authority is sent or within ten days of receipt of the relevant decision by the interested economic operator (whichever period is longer). A recourse before the administrative court must be filed within 75 days from the date on which the unsuccessful bidder was notified about the decision of the awarding authority.

Recourses filed with the TRA are normally determined within three to six months. The timescale for the determination of recourses filed with the administrative court is considerably longer, and in some cases may take up to three years.

On average, around 45 recourses are considered by the TRA per year.

The typical costs of a recourse filed with the TRA are between EUR15,000 and EUR25,000 (including filing fees).       

Section 72 of Law 73(I)/2016 permits the modification of contracts after the award in the following circumstances:

• When the amendments, regardless of their monetary value, are explicitly provided for in the original contract documents.
• When additional works, services or supplies, not included in the original contract from the initial tenderer, are deemed necessary when the change of tenderer – i) cannot be made for financial or technical reasons; and ii) would cause significant disruption or substantial duplication of costs for the awarding authority. It is understood that any price increase shall not exceed 50% of the value of the original contract. When successive amendments are made, this limitation applies to the value of each amendment.
• When the following cumulative conditions are met:
1. the need for modification arose due to circumstances which could not have been foreseen by a diligent awarding authority;
2. the modification does not alter the overall nature of the contract; and
3. any price increase does not exceed 50% of the value of the original contract or framework agreement; where successive amendments are made, this limitation applies to the value of each amendment.
• Where a new tenderer replaces the initial tenderer, as a result of i) an express review or option clause as per the first sub-paragraph above; or ii) partial or total succession of the initial tenderer, following a corporate restructuring by another economic operator who meets the qualitative selection criteria initially set out, provided that the succession does not entail other substantial modifications to the contract; or iii) where the awarding authority itself assumes the obligations of the tenderer to whose subcontractors the public contract has been awarded, pursuant to Section 71 of Law 73(I)/2016.

The procedures for handling amendments and variations are set out in Regulatory Administrative Act No 138/2016 as amended, which, among other things, established the Central Committee on Changes and Claims (CCCC), which operates under the supervision of the Treasury of the Republic of Cyprus and is the competent body for supervising and approving post-award contract amendments and variations.

Pursuant to Section 73 of Law 73(I)/2016, the awarding authorities may incorporate in the tender documents a clause permitting the termination of the contract, during its term, if it is proved that:

• the contract has been subject to substantial modification, which would have required a new tender procedure;
• the economic operator, at the time of the contract award, was in one of the situations imposing its exclusion from the tender procedure; and/or
• the contract should not have been awarded to the economic operator due to a serious infringement of the obligations under the Treaties and Law 79(I)/2016 (and the corresponding Directive 2004/18/EC), which has been declared by the Court of Justice of the European Union in a procedure pursuant to Article 258 of the Treaty on the Functioning of the European Union.

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

A recent decision of the Court of Appeal (issued on 18 July 2024 in Appeals Nos 13/2024 and 14/2014) addresses the difficult question of whether, and under what circumstances, an economic operator whose bid has been excluded for non-compliance with the requirements of the tender documents, has standing to challenge the decision to award the contract to the successful bidder. After referring to the relevant case law of the CJEU, including C-771/19 NAMA and C-493/22 Armaprocure, the Court of Appeal concluded that an excluded bidder’s standing to challenge the legality of the decision to award the contract to the successful bidder is dependent on showing that the exclusion of that bidder was unlawful.

The only relevant proposal which is currently under discussion in Cyprus is a proposal to amend the Regulatory Administrative Act No 138/2016, which governs the approval of post-signature changes and amendments and the exclusion of economic operators. The most significant of the proposed changes are:

• the extension of the powers of the CCCC so that the CCCC can negotiate directly with contractors and approve changes which differ from the recommendations of the awarding authorities;
• the introduction of provisions regarding the notification of other awarding authorities in the event that a public contract with a contractor is terminated by a public authority due to serious deficiencies in the performance of the contract; and
• the introduction of provisions aimed at encouraging awarding authorities to at least examine the possibility of excluding bidders on the ground that past contracts between those bidders and other authorities were terminated due to serious deficiencies in performance.