Public Procurement & Government Contracts 2023

Last Updated April 11, 2023

Romania

Law and Practice

Authors



Oglindă & Partners is a boutique Romanian law firm specialising in public procurement, international arbitration and construction law. Its lawyers co-ordinated the first emergency arbitrator procedure in Romania. In the last 20 years, they have been involved as lawyers or arbitrators in over 300 arbitration cases before Romanian and foreign arbitral institutions such as the ICC, VIAC, LCIA, SCC and SHAC. The public procurement team, based in Bucharest, is composed of four members and led by Eugen Sarbu. With seven years of experience in the field, this team of public procurement experts offers assistance to private and public entities throughout all stages of the award procedure, from drafting tenders to clarification and evaluation. The team has extensive experience and know-how in representing domestic and international bidders to challenge and defend procurement decisions before the Romanian Council and courts of law.

Overview of Procurement Legislation in Romania

In Romania, public procurement is governed by a three-tiered regulatory framework. When it comes to the primary legislation, the most significant laws are:

  • Law No 98/2016 on Public Procurement;
  • Law No 99/2016 on Sector Procurement; and
  • Law No 101/2016 on Remedies for the Award of Public Procurement Contracts, Sector Contracts, Work Concessions, and Service Concession Contracts, as well as the Organisation and Functioning of the National Council for the Settlement of Complaints.

Additionally, other legal provisions must be considered due to the specific nature of the Romanian legal system. For example, public contracts typically involve public funding, so foreign participants in Romanian public procurement procedures must also comply with Romanian Budgetary Law No 500/2002 regarding public finances and Budgetary Law for Local Authorities No 273/2006 regarding local public finances. Concerning Law No 101/2016, its provisions should be supplemented by those of the Law on Administrative Litigation No 554/2004, the Law on the Civil Procedure Code No 134/2010, and the Law on the Civil Code No 287/2009, insofar as the provisions of the latter are not inconsistent.

Secondary legislation governs the implementation of laws and includes government decisions designed to develop and guide the specific steps required to apply the rules established in the laws:

  • G.D. No 394/2016 for the approval of methodological norms for the application of the provisions regarding the award of sectoral contracts/framework agreements of Law No 99/2016 on Sector Procurement; and
  • G.D. No 395/2016 for the approval of methodological norms for the application of the provisions regarding the award of public procurement contracts/framework agreements of Law No 98/2016 on Public Procurement.

Tertiary legislation consists of instructions issued by public authorities and institutions authorised to publish guidance on recurring issues, such as the required documents to demonstrate similar experience or subsidiary methodology for price adjustment in public contracts (if the contract does not contain an adjustment formula).

The Role of Jurisprudence in the Romanian Legal System

The role of jurisprudence in the Romanian legal system is also noteworthy. Although it is not generally considered a source of law, certain types of decisions are mandatory for national courts and administrative jurisdictions:

  • decisions of the Court of Justice of the European Union, which establish obligatory directions in the field of public procurement;
  • decisions of the High Court of Cassation and Justice of Romania made in appeals in the interest of the law and preliminary rulings on questions of law. These decisions provide interpretation and guidance on the applicable legal framework, and their effects are binding; and
  • decisions of the Constitutional Court of Romania, which examine the compatibility of legal provisions with the country’s constitution; compliance with these decisions is also mandatory.

In conclusion, In Romania, the legislation regulating public procurement can be divided into three layers:

  • primary legislation, which mainly includes the three laws issued by the parliament (Law No 98/2016 on Public Procurement, Law No 99/2016 on Sector Procurement, and Law No 101/2016 on Remedies), as well as mandatory case law;
  • secondary legislation, consisting of governmental decisions that provide guidance on the applicability of public procurement procedure laws (G.D. No 395/2016 and G.D. No 394/2016); and
  • tertiary legislation, which includes guidelines issued by the National Agency for Public Procurement in Romania (ANAP), which are mandatory for contracting authorities.

The entities subject to procurement regulation in Romania are:

  • contracting authorities, as defined in Article 4 of Law No 98/2016;
  • legal entities that are not contracting authorities but are treated as such when they enter into contracts falling under the definition provided by Article 6 of Law No 98/2016; and
  • economic operators.

Contracting Authorities

Under Law No 98/2016, a contracting authority is defined as:

  • central or local authorities and public institutions, as well as their subordinate structures that have been granted competencies in the field of public procurement;
  • other bodies governed by public law that are established to meet non-commercial or non-industrial needs of general interest, have legal personality, and are mostly funded by public funds; for a body governed by public law to be considered a contracting authority, it must not operate under normal market conditions, seek to obtain a profit or bear the losses resulting from its activity; and
  • associations comprising at least one of the entities mentioned above.

Non-contracting Authorities

A non-contracting authority must apply public procurement regulation when awarding contracts for works and services if the following conditions are met cumulatively:

  • over 50% of the value of the contract comes from public funds;
  • the estimated value of the contract, excluding VAT, is equal to or greater than the threshold for works contracts (RON26,093,012), or for services contracts (RON1,042,363); and
  • the contract relates to one of the following activities: civil engineering works or construction works for hospitals, facilities for sports, recreational activities, buildings of primary and secondary educational institutions, university buildings, and administrative buildings.

Economic Operators

Finally, an economic operator is any natural or legal person, public or private, or group or association of such persons that lawfully offer the execution of works and/or construction, supply of products, or provision of services, including any temporary association formed between two or more of these entities.

In Romania, the following types of contracts are subject to procurement regulation:

  • procurements related to national defence and security, which are subject to a more sophisticated legal framework. This framework includes Law No 195/2012 on the Award of Certain Public Procurement Contracts in the Fields of Defence and Security, as well as various governmental decisions and ministerial orders;
  • sector/utility procurements regulated by Law No 99/2016. This includes products, services, or works in fields such as electrical energy, water, transportation, ports and airports, and postal services; and
  • classic procurements and organising competitions that exceed the legal thresholds, where the value of each exceeds the legal thresholds.

These thresholds are different for works and services contracts. For works contracts, the following apply:

  • over 50% of the value of the contract must be financed or subsidised directly or indirectly by a public authority;
  • the estimated value of the contract (excluding VAT) is equal to or greater than RON26,093,012 (equivalent to EUR5,308,000).
  • the contract relates to civil engineering works, construction work for hospitals, facilities intended for sports, recreation and leisure, schools, and university works or buildings used for administrative purposes.

For services contracts, the following apply:

  • over 50% of the value of the contract must be financed or subsidised directly or indirectly by a public authority;
  • the estimated value of the contract (excluding VAT) is equal to or greater than RON1,042,363 (equivalent to EUR212,100); and
  • the contract is linked to a works contract.

According to Romanian legal provisions, entities can participate in public procurement contracts if they are established in:

  • Member States of the European Union;
  • Member States of the European Economic Area (EEA);
  • third countries that have joined the World Trade Organisation (WTO);
  • third countries that are in the process of accession to the European Union; or
  • third countries that have not joined the WTO, but have signed other international agreements requiring the European Union to grant free access to their market in the field of public procurement.

When the estimated value of a contract is equal to or greater than the legal thresholds, contracting authorities are required to publish a notice in the Official Journal of the European Union.

The general principles presented in Article 2 of Law No 98/2016 establish key obligations for both contracting authorities and economic operators, aimed at promoting non-discrimination, equal treatment, mutual recognition, transparency, proportionality, and assuming responsibilities. These obligations are crucial for ensuring integrity, effectiveness of public funds, society’s access to high-quality public services, and competitiveness in the private market.

For contracting authorities, a key obligation is to allocate the necessary funds for the procurement process and contract execution before starting the auction. They are also required to publish a contract notice, act with transparency, and allow all interested operators to engage in the bidding process. Another important obligation is to draft qualification and awarding criteria in a transparent and equitable manner that satisfies public interest while avoiding unlawful advantages or arbitrary evaluation. To ensure compliance with these obligations, avoiding conflicts of interest is also a key requirement.

For economic operators, a key obligation is to prove their credibility based on past records that demonstrate their capacity to perform similar works in accordance with the required quality standards. Another important obligation is to ensure free competition and avoid artificially influencing the price or access to tender. Breach of this obligation is considered a criminal offence under Romanian law.

To ensure compliance with fundamental principles, Law No 98/2016 requires contracting authorities to fulfil publication and transparency obligations throughout all phases of the procurement process. This includes publishing the Prior Information Notice and the Award Documentation.

All notices must be published in the Electronic System for Public Procurements (Sistemul Electronic de Achiziții Publice or SEAP), a public electronic system where participants can access information on public procurement procedures. Contracting authorities must also publish a notice in the Official Journal of the European Union when the estimated value of the contract is equal to or greater than the legal thresholds.

The Prior Information Notice includes information such as the type of procedure (eg, simplified procedure, open procedure or solution contest), type of contract (eg, works or services), procedure status (eg, in progress or cancelled), a draft contract (eg, public procurement contract or framework agreement), Common Procurement Vocabulary (CPV) code, contracting authority, and time limit for submitting tenders. This notice is accompanied by the Award Documentation.

The Award Documentation serves as a guidebook for every economic operator interested in participating in a public procurement procedure in Romania. It is published in SEAP so that all economic operators have equal access to it and can prepare their tenders accordingly. It establishes the main technical and financial requirements of the contract.

The Award Documentation is typically divided into two parts: a technical part and a financial part. The technical part includes specifications, the technical project of execution, the time schedule based on activities, and lists of materials and equipment. The financial part includes the financial conditions that must be met by the tenders, which must be correlated with the technical specifications described in the technical tender.

The Award Documentation also includes procedural rules and relevant information, such as standard forms and templates of documents to be presented by tenderers.

When a contracting authority wishes to purchase products, services, or works with a high degree of technical complexity, whether financial or contractual, or in areas with rapid technological progress, it has the right to organise a market consultation before initiating the award procedure by publishing a Consultation Notice on SEAP.

The authority may invite independent experts, other public authorities, or economic operators to help prepare for the purchase by providing information about the object of the contract and informing economic operators about purchase plans and requirements. This includes:

  • potential technical, financial, or contractual solutions for meeting the needs of the contracting authority;
  • aspects related to the contracting strategy, including batch division; and
  • the possibility of requesting alternative offers.

The contracting authority may use or implement suggestions received during consultations, provided that doing so does not distort competition or violate principles of non-discrimination and transparency.

If a candidate related to the procurement procedure has provided suggestions to the contracting authority in relation to the preparation of the procedure, including during consultations, the authority must take necessary measures to ensure that the participation of the respective candidate does not distort competition.

Romanian law establishes the following types of procedures that can be used for public procurements:

  • open procedure;
  • restricted procedure;
  • competitive procedure with negotiation;
  • competitive dialogue;
  • innovation partnership;
  • negotiated procedure without prior publication;
  • solutions contest;
  • procedure applicable to social and other specific services; and
  • simplified procedure.

The contracting authority chooses the type of award procedure based on several factors:

  • the estimated value of the purchase;
  • the complexity of the contract/framework agreement to be awarded; and
  • the fulfilment of specific conditions provided by the law for each type of procedure.

If the estimated value of the purchase is equal to or greater than the legal thresholds, the contracting authority awards public procurement contracts by applying the open or restricted procedure.

The open procedure is generally suitable for less complex investments characterised by routine frequency, while the restricted procedure is suitable for more complex and non-routine purchases. The restricted procedure also involves an additional step during which the number of candidates is narrowed down based on clear selection criteria. The restricted procedure may be used when the contracting authority believes it will benefit from limiting the number of tenderers.

Law No 98/2016 establishes a general rule for publication and transparency in all phases of public procurement procedures. Contracting authorities are required to publish the following notices in SEAP, where they can be accessed by all participants:

  • prior intention notices (before starting the procedure) within 30 days of the end of each trimester;
  • contract notices (to invite economic operators to participate in the procedure) 35 days before the deadline for submission of tenders; and
  • contract award notices (regarding the results of the procurement procedure) within three days of the awarding decision to each candidate, while the final report is to be published within three days in SEAP.

Contracting authorities must also publish a notice in the Official Journal of the European Union if the estimated value of the contract/framework agreement is equal to or greater than the thresholds of RON26,093,012 (equivalent to EUR5,310,000) for works contracts and RON 1,042,363 (equivalent to EUR21,200) for services contracts.

During the procedure, certain documents are published in SEAP to ensure transparency, including:

  • the Award Documentation which is published for all economic operators to consult and prepare their tenders under conditions of equality;
  • clarifications and answers thereto, which can include changes to the tendering conditions or explanations;
  • errata notices, containing corrections of any mistakes that may have slipped into the documentation; and
  • the Final Report of the Procedure, which announces the winner of the procedure. Its publication marks the beginning of the seven or ten-day term for parties to file a complaint against the result of the procedure;

Any decisions rendered by jurisdictional bodies regarding complaints against the result of the procedure are also published, with the names of the parties anonymised.

Open Procedure

Following the publication of the contract notice, tenderers have 35 days to submit their tenders. If the tenders are submitted electronically, the time limit can be reduced to 30 days, or 15 days in emergency situations.

Restricted Procedure

In the case of a restricted procedure, which involves two stages, the time limits are as follows:

First stage

  • 30 days to submit a request for participation from the publication of the contract notice; or
  • ten days from the date of the contract notice if a prior information notice was published between 35 days and 12 months before the contract notice.

Second stage

Where only the selected candidates are going to participate and submit their tender:

  • the tender must be submitted within 30 days from the invitation to participate; or
  • 25 days if the tender is submitted electronically.

Emergency situations

In emergency situations, the time limits are 15 days from the contract notice for the first stage, and 10 days from the invitation to participate for the second stage.

Simplified Procedure

The minimum period between the date of submission of the notice of participation and the time limit for submission of tenders is as follows:

  • ten days for contracts for services or products;
  • six days for contracts for low-complexity products; and
  • 15 days for works contracts.

Emergency situations

In emergency situations, the time limit can be reduced to six days for services or products, and nine days for works.

Competitive Procedure With Negotiation

First stage

  • 30 days to submit a request for participation from the publication of the contract notice in the Official Journal of the European Union; or
  • 10 days from the date of the contract notice if a prior information notice was published between 35 days and 12 months before the contract notice.

Second stage

The selected participants have 30 days from the date of submission of the invitation to participate, which can be reduced to 25 days if the tender is submitted electronically.

Emergency situations

In emergency situations, the time limit can be reduced to 15 days for the submission of requests to participate, while for the submission of initial tenders, it can be reduced to a period of 10 days from the date of transmission of the invitation to participate in the second stage of the procedure.

Competitive Dialogue and Innovation Partnership

The time limit is 30 days from the date of submission of the notice of participation in the Official Journal of the European Union.

The qualification process arises in any award procedure, while the selection process only takes place when it is necessary to limit the number of qualified candidates. Therefore, the selection process is only necessary in the case of multi-stage award procedures; ie, restricted procedures, competitive negotiation, competitive dialogue and innovation partnership.

The qualification criteria verify if the tenderers have the concrete ability to perform the contract.

Selection criteria are designed to sort the qualified economic operators and select those with the best economic and financial, technical, and/or professional capacity. The selection, qualification, and award criteria must be linked to the requirements of the Award Documentation and must reflect the nature and complexity of the public procurement contract.

Contracting authorities often look at similar experience as a criterion for qualification or selection, as it allows them to assess whether economic operators have successfully completed tasks similar to those required by the contract. However, it is essential to differentiate between similar and identical experience. Requiring tenderers to have experience in exactly the same type of contract would be excessively restrictive and violate the principle of proportionality in public procurement procedures.

The grounds for restriction in the procurement process relate to the reputation or bona fide of the tenderers. These grounds include criminal records, tax records, infringements of competition rules, conflicts of interest, false declarations and bankruptcy (with some concessions for special cases concerning restructuring). The grounds for exclusion are explicitly stated in the law and serve as the first filter that tenderers must pass. Tenderers who do not fall under the grounds for exclusion move on to the next phases. If any ground for exclusion arises at any time during the procedure, the contracting authority must exclude that tenderer immediately.

The evaluation phase of a procurement process involves the qualification and selection processes, where the fulfilment of criteria previously established criteria by the contracting authority is evaluated.

The grounds for exclusion, qualification criteria, selection criteria, and award criteria all play important roles in this phase. The grounds for exclusion serve to establish who should be excluded from the award procedure. The qualification criteria serve to establish who has the capacity to execute the contract. The selection criteria work in conjunction with the qualification criteria to identify those who have the necessary capacity and should submit offers in the next phase. Finally, the award criteria serve to answer the crucial question of which economic operator will fulfil the procurement objectives in the most efficient way.

The evaluation factors established by the Award Documentation must include objective award criteria that ensure proportionality on two levels:

  • firstly, in relation to the advantage conferred on the contracting authority by awarding the contract to a particular bidder; and
  • secondly, satisfying the interest of the successful tenderer by providing a framework to enable the efficient execution of the public procurement contract and the operator to collect the economic benefits that motivated it to bid for that contract.

The latter is often overlooked by contracting authorities, who justify their decisions only based on the satisfaction of the public interest. This argument is, in principle, correct – the public interest plays an important role in any public procurement procedure and its satisfaction is the mediated purpose of any procedure. However, it is equally true that the relationship established by the public procurement contract must be a balanced one, based on the principle of contractual cooperation and promoting the effective and successful execution of the contract. Frequently, the need for control is prioritised, at the expense of equity, potentially resulting in excessive burdens placed on the contractor during the negotiation of the contract model.

The award criteria listed in Article 187 of Law No 98/2016 include:

  • best price-quality ratio;
  • best cost-quality ratio;
  • lowest cost; and
  • lowest price.

The general nature of these terms provides contracting authorities with a wide range of options when defining the award criteria. For example, when using the best ratio of quality to price as the award criterion, the meaning of “quality” can vary depending on the specific contract. It could refer to the duration of the project, the use of specific materials, or the relevant experience of the tenderer, among other factors.

Law No 98/2016 lays down general provisions for publication and transparency regarding the evaluation methodology, which cannot be modified after publication in SEAP.

The evaluation methodology allows the contracting authority to request clarifications from tenderers during the evaluation process.

These clarifications may concern small omissions, arithmetical errors, unclear formulations, or other related matters. However, it is important to note that the purpose of the clarification procedure is only to provide details on elements already present in the tenders, and does not permit modification or addition to the tenders.

The contracting authority must inform both the selected and the rejected bidders of the outcome of the selection process. The Authority must communicate the results to each candidate within three days of the issuing of the decision.

In the communication, the contracting authority must inform each rejected candidate about the concrete reasons for the rejection.

Following the general rule on communication, the written notice of rejection must be transmitted electronically or, in exceptional cases, by other means.

The contracting authority must send to the successful tenderer, within 3 days from the issuing of the decision, a communication on the acceptance of its tender, stating its agreement to conclude the public procurement contract/framework agreement.

The authority shall issue its decision through the Final Procedure Report. The report must be drafted within a period not exceeding:

  • 60 days from the time limit for submission of tenders, in the case of open procedure, restricted procedure, innovation partnership and solution contest;
  • 20 days from the time limit for submission of tenders, in the case of the simplified procedure and the negotiated procedure without prior publication; or
  • 100 days from the time limit for submission of tenders, in the case of competitive dialog and competitive procedure with negotiation.

Under Law No 101/2016, the legal waiting period for the conclusion of the contract should be at least:

  • 11 days from the day following the submission of the Contract Award Decision to the interested parties if the estimated value of the public procurement procedure is higher than the thresholds; and
  • eight days when the estimated value is less than legal thresholds.

The Law No 101/2016 regulates the remedies and the procedure for challenging an award in public procurement, in accordance with the European Directive 89/665/EEC.

The Romanian legislature provides two ways of access to justice:

  • the administrative-jurisdictional procedure before the National Council for Solving Complaints (Consiliul Național de Soluționare a Contestațiilor or CNSC); and
  • the judicial procedure before national courts of law.

The economic operator is free to choose the most suitable procedure from the two options. The main difference between the two relates to costs:

  • The CNSC is free of charge, but requires the establishment of a security.
  • The national courts do not require security, but there is a legal fee.

Remedies Which may be Granted by the Contracting Authority

Once the contracting authority has received the complaint, it may take any remedial action deemed necessary within three days (eg, cancelling and redoing an evaluation report in which a tenderer’s score was wrongly calculated, or revoking a rejection decision).

If an objector believes that the remedies adopted by the authority fully address their concerns, they should submit a request for waiver of the complaint. This will result in no further action being taken on the complaint, and the authority will no longer need to provide its viewpoint on the matter.

However, if the remedies only partially address the issues raised, the objector may submit a request to the CNSC and the authority to express their views on a partial waiver of the complaint. This means that the CNSC will continue to examine and decide on the remaining aspects of the complaint.

Remedies Which may be Ordered by the CNSC

First of all, it is important to note that under the sanction of absolute nullity, the contracting authority is entitled to conclude the contract only after the communication of the solution by the CNSC.

The CNSC will first rule on the exceptions raised and then examine the complaint in terms of its legality and merits.

If the CNSC admits the complaint, it may order:

  • annulment of the contested act in whole or in part;
  • remedial measures to restore legality, in which case the CNSC will clearly indicate the limits of the remedial measures to be taken by the authority and the time limit within which the authority is to comply with the CNSC’s decision; or
  • annulment of the award procedure when it is not possible to remedy it.

There are two statutory exceptions:

  • when the objector requests the adoption of remedies, and the CNSC considers that they are not sufficient to restore legality and orders the annulment of the award procedure; and
  • when the CNSC observes that, in addition to the acts challenged by the objector, there were other acts that violate the public procurement regulation and acts that were not referred to in the complaint, it will refer the matter to the National Agency for Public Procurement (ANAP) and the Court of Auditors under Article 26(4) of Law No 101/2016.

If, after the CNSC’s decision on remedies, the authority finds that it cannot comply with the CNSC’s decision without affecting the principles laid down in the public procurement regulation, it is legally obliged to cancel the award procedure.

In the event of a dispute, the CNSC has the power to suspend the award procedure. To do so, three conditions must be met:

  • there must be a well-founded case;
  • the suspension must be aimed at preventing damage; and
  • the damage must be imminent.

If the CNSC grants the request for suspension, the award procedure is provisionally suspended, and no further steps can be taken until the complaint is resolved.

It is important to note that the CNSC can only suspend the award procedure at the request of an interested party. The contracting authority is required to provide its viewpoint on the request and may also order the suspension of the award procedure upon its own motion.

The CNSC must make its decision within three days of the suspension request, and the decision can be appealed within five days of the decision before the Court of Appeal.

Anyone who believes that their rights or legitimate interests have been affected by a contracting authority’s act may file a complaint. According to Law No 101/2016(3)(1)(f), a person may be considered injured if they are an economic operator with an interest in an award procedure and have suffered or risk suffering prejudice due to an act of the contracting authority that can produce legal effects or the failure to resolve a request concerning an award procedure within the legal timeframe.

To be considered an injured party, two conditions must be met: interest and prejudice. As a result, third-party supporters, subcontractors, or suppliers cannot challenge the authority’s decisions instead of the tenderer because they do not have a direct interest in the case’s resolution.

If the tenderer is an association, any member of the association may challenge the awarding authority’s decision.

The time limits for challenging an illegal act of the authority are set by Article 8 of Law No 101/2016:

  • If the estimated value of the procurement procedure is equal to or greater than the thresholds requiring contract notices to be published in the Official Journal of the European Union per the public procurement regulation, the time limit is ten days.
  • If the estimated value is below these thresholds, the time limit is seven days.

According to the ANAP Activity Report, in 2021 the average length of proceedings relating to a procurement claim was 29 days before the CNSC and 34 days before national courts.

According to the CNSC Annual Report, in 2021, 3,430 claims were brought before the CNSC.

The Cost of Challenging Decisions Submitted Before the CNSC (Administrative Jurisdiction)

No legal fee is required. The cost is based on a security to be deposited in a Romanian bank account. The amount of the security varies based on the estimated value of the contract:

  • 2% of the estimated value of the contract, when the value is lower than the thresholds, but no more than RON35,000 (equivalent to EUR7,100) for complaints submitted up to the deadline for submission of tenders, and no more than RON88,000 (equivalent to EUR 17,900) for complaints submitted after the deadline for submission of tenders; or
  • 2% of the estimated value of the contract, when the value is equal to or greater than the thresholds, but no more than RON220,000 (equivalent of EUR44,700) for complaints submitted up to the deadline for submission of tenders, and RON880,000 (equivalent to EUR179,050) for complaints submitted after the deadline for submission of tenders.

The Cost of a Complaint Submitted Before a Court of Law (State Jurisdiction)

To file a complaint before a court of law you must pay a non-refundable legal fee in the amount of:

  • 2% of the estimated value of the contract, but no more than RON100.000 (equivalent to EUR20,300);
  • if the procedure involves lots, the legal fee shall be calculated according to each lot’s value; or
  • if the procedure concerns a framework agreement, the legal fee shall be calculated according to the contract with the highest value of the contracts to be concluded under the agreement.

The law allows for amendments to a public procurement contract without the need for a new procurement procedure in any of the following situations:

  • if there is a revision clause in the initial Award Documentation, which can also include price adjustments;
  • if new services or works not included in the initial Award Documentation became necessary in the context of the project, provided that they do not exceed 50% of the initial value of the contract;
  • if the amendment was unforeseeable by a diligent contracting authority, provided that it does not change the general character of the contract and does not exceed 50% of the initial value of the contract;
  • if the original contractor can be replaced with another contractor, as provided for in the revision clause in the Award Documentation, or with one of its subcontractors (the original contractor is automatically substituted by its legal successor); also, the original contractor can be substituted by one of its subcontractors, who assumes the contractor’s rights and obligations under the public procurement contract; and
  • if the amendment is needed, but it is not substantial; an amendment is considered to be not substantial if it meets the following conditions:
    1. the amendment does not affect the fulfilment of the qualification or selection criteria regarding the application of the award criteria;
    2. the amendment does not modify the price of the public procurement contract;
    3. the amendment is absolutely necessary for the finalisation of the project; and
    4. the amendment does not modify the purpose of the public procurement contract.

When any of these situations arises, the contracting authority and the contractor can agree on an amendment of the contract through, for example, an addendum that establishes the modifications in detail.

Under the law, the contracting authority has the right to directly purchase products or services if the estimated value of the purchase, excluding VAT, is less than RON270,120 (equivalent to EUR55,000), and to to directly purchase works, if the estimated value of the purchase, excluding VAT, is less than RON900,400 (equivalent to EUR183,300).

Even though this procedure does not fall under the European directives, the national legislature must ensure that the principles of non-discrimination, equal treatment and transparency are applied.

In the case of direct purchases, the contracting authority has the following obligations:

  • to use the electronic catalogue provided by SEAP or to publish an advertisement on its website or on SEAP, accompanied by a description of the products, services or works to be purchased, for purchases whose estimated value is more than RON200,000 (equivalent to EUR40,700), excluding VAT, for products and services, and RON560,000 (equivalent to EUR 114,000), excluding VAT, for works; and
  • to consult at least three economic operators for purchases whose estimated value is more than RON140,000 (equivalent to EUR 28,500), excluding VAT, for products and services, and RON300,000 (equivalent to EUR61,060), excluding VAT, for works, but less than or equal to the values mentioned above.

Besides obligations, the contracting authority has the following rights:

  • to purchase on the basis of a single tender if the estimated value of the purchase is less than or equal to RON140,000 (equivalent to EUR 28,500), excluding VAT, for products and services, and RON 300,000 (equivalent to EUR 61,060), excluding VAT, for works; and
  • to pay directly, on the basis of the legal commitment, without prior acceptance of a tender, if the estimated value of the purchase is less than RON9,000 (equivalent to EUR1,800), excluding VAT.

An important recent decision ruled that imposing selection or qualification criteria that have a restrictive effect, such as requiring members of the team of specialists or project managers to have three years of professional experience in the public sector, is illegal. This is because it may unfairly benefit certain candidates and limit competition in the procurement process (in the case examined, two of the three tenders submitted were rejected as unacceptable).

Another decision by the Romanian High Court of Cassation and Justice established through a mandatory decision that when reevaluation is required, the contracting authority should only consider the criteria that led to disqualification and not any additional criteria, as long as the evidence submitted shows that they have already been considered.

Another important recent decision has established that it is not legal for a contracting authority to request clarifications in order to bring changes to the selection or qualification criteria, or to artificially create additional conditions.

A draft law is currently being considered in respect of public procurement of works, that would make it mandatory for contracting authorities to establish through the Award Documentation a green investment component, such as photovoltaic lighting and simulation systems for highways, and setting up forest curtains to combat noise pollution for road and rail infrastructure. The explanatory statement shows that the purpose of the legislative amendment is to attract non-reimbursable European funds and contribute to a transition towards a sustainable economy at the EU level.

Public procurement regulation undergoes frequent amendments, with the most common changes relating to adjustments of the value thresholds to account for factors such as inflation and exchange rates.  Additionally, time limits and costs associated with appeals are also subject to frequent legislative changes.

Recent amendments to the public procurement regulation include:

  • increasing the value thresholds for direct purchases from RON135,060 (equivalent to EUR27,500) to RON270,120 (equivalent to EUR55,000) for products and services, and from RON450,200 (equivalent to EUR92,000) to RON900,400 (equivalent to EUR183,000) for works; the amendments aim to facilitate access to European funds and counteract the effects of inflation and exchange rate fluctuations; and
  • if a contracting authority requests supplementary documents or clarification of a tender, the candidate or tenderer must respond within the deadline imposed by the authority of a maximum of 15 days, according to the complexity of the request.
Oglindă & Partners

17th Mantuleasa Street
2nd District
Bucharest
Romania

+4 037 147 09 03

+4 037 160 30 23

office@oglindalawyers.ro www.oglindalawyers.ro
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Trends and Developments


Authors



Popovici Nițu Stoica & Asociații is a leading independent Romanian law firm. Established in 1995, as one of the first incorporated partnerships, the firm brings together strong local talent, with exceptional credentials, outstanding track records and distinguished careers in law, business and academia. The Bucharest office is staffed by a team of 70 skilled lawyers and tax advisors. Traditionally focused on the private sector and foreign investment projects, Popovici Nițu Stoica & Asociații is widely recognised by both industry observers and peers as a leading transactional law firm among market leaders. The firm has consistently participated in the majority of M&A transactions in Romania across a diverse range of industries, including energy, healthcare, retail, IT, financial services, telecoms and real estate.

Overview

2022 marked the most active legislative period in public procurement since Romania's accession to the EU in 2006 and the subsequent implementation of EU public procurement legislation. This period saw at least five major amendments of primary public procurement legislation, numerous updates to secondary legislation, the introduction of new tertiary legislation, and complementary regulations.

These legislative changes were primarily driven by the need to adapt the public procurement system for the implementation of Romania's National Recovery and Resilience Plan (NRRP). The amendments aimed to increase flexibility for contracting authorities when selecting and applying specific procedures, accelerate the process of finalising public contracts, establish stricter rules for monitoring contract implementation, and address associated challenges.

Starting from March 2022, these amendments were rolled out almost every month, placing significant pressure on all stakeholders involved in the public procurement system, including contracting authorities, bidders, and courts. In March 2023, following the intense legislative activity of 2022, the National Agency for Public Procurement initiated a public consultation on the National Public Procurement Strategy for 2023-2027 (the “Strategy”), which promises legislative stability as a strategic goal by 2027. However, this stability will likely be achieved after additional legislative amendments, which have been identified as necessary for the Strategy's implementation.

In summary, the past year has seen substantial legislative changes, with the new Strategy indicating further revisions to come. Despite the evolving legal landscape, certain trends and developments originating from the 2022 amendments and the proposed Strategy have emerged and are discussed below.

Main Legal Amendments of 2022 and their Impact

The urgency to implement the NRRP primarily drove the 2022 legislative changes in public procurement. Public consultations were conducted swiftly and were largely formal, resulting in several measures being adopted without proper consideration of existing provisions or developments, creating potential conflicts that may need resolution in the future.

Legal Amendments Facilitating the Choice of Certain Types of Procedures

Direct award procedures

One of the most contested amendments concerned the increase in thresholds permitting contracting authorities to directly award a contract. This change essentially doubled the threshold, leading to concerns about potential abuses and diminished transparency in contract awards.

These concerns may have been warranted, as initial controls uncovered instances of certain authorities illegally adapting to the increased thresholds, primarily by adjusting the award process to conform to the new direct award threshold. While these irregularities could be rectified over time, the new Strategy already contemplates a reevaluation of this amendment.

The use of negotiated procedures without prior publication of an award notice

Throughout 2022, various amendments were adopted, most notably Law No 208/2022, which came into force in September 2022. These amendments expanded the instances in which a negotiated procedure without prior publication of an award notice could be used for certain types of contracts, incorporating additional circumstances arising during contract execution. These supplementary circumstances have been categorised under extreme emergency cases.

For contracts related to trans-European transport infrastructure projects situated on the Central (Core) and Comprehensive (TEN-T) transport networks (as defined in Article 9(1) and Article 1.38 of Regulation (EU) No 1.315/2013), as well as connecting roads and urban bypasses, termination, unilateral denunciation, or early termination due to the contractor's fault were treated as situations of extreme urgency. This entitled contracting authorities to initiate negotiations without prior publication of a contract notice.

The presumed intent of regulating this circumstance was to allow contracting authorities to initiate negotiations without prior publication of a contract notice when a contract in an advanced stage of execution is terminated, and starting a new competitive procedure would result in project delays.

Likewise, in the realm of utilities procurement, new amendments granted contracting entities the right to employ negotiations without prior publication of a contract notice for utilities contracts related to the development of electricity generation capacities, provided the contract's scope represents less than 40% of the physical stage corresponding to the investment objective.

Both amendments pertain to sectors deemed critical in the context of the urgent need for action to secure energy independence and address the delayed implementation of key infrastructure projects in Romania.

These amendments also raised concerns regarding potential overinterpretation beyond the envisaged scope and adherence to the principles of public procurement. So far, no significant abuses have been reported. However, considering the novelty of these amendments and their application to ongoing or soon-to-be-launched projects, we can expect that 2023 and subsequent years of NRRP implementation will present the first tests concerning the application of these rules.

Legal Amendments Regarding Publicity of Contractor’s Conduct Under Public Contracts

Romanian Public Procurement, Sectorial Procurement, and Concession laws implement the exclusion grounds stipulated by the EU Directive, making them mandatory for contracting authorities and entities. Concerning the exclusion ground specified in Article 57(4)(g) of Directives 2014/24 and 2014/25 (“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 contracting entity or a prior concession contract which led to early termination of that prior contract, damages or other comparable sanctions”), Romanian secondary legislation – specifically, the implementation norms of the Public Procurement Law and Sectorial Procurement Law – prescribes an “certifying document” (document constatator). This document is issued by a contracting authority at the end of a public contract, detailing the contractor's conduct.

These certifying documents are published on the electronic public procurement portal and can be used by contracting authorities when evaluating the incidence of the aforementioned exclusion ground, in comparison to the statements made by the tenderer in the ESPD. Government Decision No 75/2022 introduced a new right for contracting authorities: the ability to issue certifying documents during contract implementation at intervals of at least 90 days.

This new type of certifying document is, in practice, applicable to complex contracts with longer durations and multiple activities, primarily concerning infrastructure contracts in both public and sectorial procurement. As a result, significant pressure has been placed on large contractors, as the periodic issuance of certifying documents has created a new source of information for evaluating the exclusion ground related to prior conduct within a public contract, potentially affecting their participation in other public contract award procedures.

As these amendments are still new, their full impact has not yet become apparent. However, an increase in challenges brought against certifying documents is underway, leading to a rise in challenges related to contract execution.

Specifically, although a general three-year statute of limitations applies to claims related to contract execution, the High Court of Cassation and Justice has deemed the certifying document an administrative act, which can be challenged under administrative law within 30 days of its issuance.

Consequently, the certifying document issued during contract implementation contains statements from contracting authorities about the contract's execution, which, if not challenged within 30 days, may impede a contractor's right to submit claims related to the contract's execution. This means that the deadlines for submitting claims related to contract execution  have been indirectly shortened, placing significant pressure on contractors.

Legal Amendments Related to the Remedy System

The Remedies Law has also been amended to ensure faster resolution of challenges concerning both the award procedure and contract execution.

Key amendments include:

  • The obligation of contracting authorities to conclude a contract after a first-tier decision confirms the result of the procedure.

To accelerate public contract implementation, the Remedies Law has been amended, mandating that contracting authorities conclude contracts immediately after the procedure's result is confirmed by a first-tier decision, even if that decision is not yet final.

In practice, contracting authorities often weigh the risk of damages if the first-tier decision is overturned against the risk of administrative sanctions for delaying contract conclusion, and are usually inclined to wait for a final decision to be passed. As appellate courts judging the second-tier challenge have been restructured in the recent years through the introduction of specialised public procurement panels, the time between second-tier challenges and final decisions has significantly decreased, with an average of around 31 days. Consequently, contracting authorities can better estimate the schedule of their projects, as the duration of solving the challenges may be better anticipated. The effectiveness of this amendment therefore remains to be seen.

  • An extremely short deadline for requesting contract termination.

Similar to the indirect deadline changes resulting from new regulations concerning the certifying document that may be issued during contract implementation, a new 30-day deadline has been established for claims arising from termination, unilateral termination, or early termination of public procurement contracts. Previously, the deadline was three years. This new deadline significantly accelerates decision-making and substantiation of claims related to public contract termination, posing challenges for preparing such claims, particularly for complex infrastructure projects.

  • The change of court authority for disputes related to the execution of the public contract.

Since the implementation of new European public procurement legislation, there have been numerous debates about the authority responsible for resolving disputes related to public contract execution, specifically whether this authority should be a civil or administrative court. In 2018, civil courts were granted authority to resolve such disputes. However, Law No 208/2022 has shifted the competence back to administrative courts after both courts and claimants had already adapted to the initial system.

The change of competence has been met with strong criticism, and its finality is uncertain. The Bucharest Court of Appeal has submitted a request to the Romanian Constitutional Court to review the constitutionality of Article IV of Law No 208/2022, which introduces these new amendments. While the case is pending at the Constitutional Court, the matter of which authority has competence to resolve public contract execution remains unresolved.

Strategies and Envisioned Directions

Following a turbulent 2022, the National Agency for Public Procurement (ANAP) has submitted a Strategy for 2023-2027 for public consultation. The Strategy aims to enhance the public procurement system to support Romania's sustainable development and efficient use of public funds. The main priority areas of the Strategy are examined below.

Increasing the use of sustainable, inclusive and innovative procurement

This priority area addresses numerous tools provided by national and European public procurement legislation that have been underutilised or overlooked by contracting authorities. ANAP plans to implement measures for widespread adoption of green and innovative procurement and the awarding of social contracts, with the goal of integrating them into strategic procurement planning.

These measures involve reviewing legislation related to green and innovative procurement and reserved (social) contracts, as well as adopting national plans for implementing these procurement types. The Strategy also aims to promote the participation of SMEs in public procurement in Romania.

To date, little progress has been made in green procurement, and almost none in social and innovative procurement. As the Strategy anticipates, ANAP must first raise awareness of social, environmental and innovation benefits among contracting authorities, and also encourage dialogue among economic operators in this area. This requires at least a medium-term effort to establish the necessary conditions for these procurement processes and assess their impact.

Within the context of the NRRP, and considering that this area aligns with the pillars of the Recovery and Resilience Facility, green, social and innovative procurement may emerge as a recurring trend in public procurement procedures financed under the NRRP.

Initiatives in this area have already surfaced, even alongside the Strategy. For instance, a legislative project has been registered with the Deputy Chamber to amend public procurement legislation, which seeks to mandate contracting authorities with an annual public procurement programme exceeding RON30,000,000 (approximately EUR6 million) to reserve a minimum of 0.5% of that amount for social inclusion enterprises.

Despite the stated intention to pursue these objectives, the rapid implementation of these measures is unlikely, given Romania's other major NRRP priorities and the high degree of specialisation required for some of the proposed measures.

Expanding centralised procurement

At present, centralised procurement is limited to a few bodies and a narrow range of products. The Strategy aims to broaden the scope of centralised procurement, particularly in the health, education, transport and digitalidation sectors, in line with the directions envisaged for strategic procurements. As these sectors are also NRRP priorities, rapid development can be expected in 2023, particularly for supply contracts and certain types of service contracts.

Improving transparency of the public procurement system

The Strategy proposes an assessment of the current state of information and data publication on public procurement in relation to the Open Contracting Data Standard (OCDS). This assessment will be used to improve the functionality of the public procurement portal (SEAP) and determine the levels of data sharing to be implemented within the system.

These measures are long overdue as, even if SEAP provides transparency on the essential data of the procurement process, the data provided is  underutilised  and insufficiently correlated with data from other systems.  Moreover, the lack of correlation between SEAP and other systems, as well as the structure of the data contained therein, prevents a comprehensive assessment of the public procurement system.

This priority area in the Strategy aligns with the goals of the NRRP, particularly in enhancing administrative capacity through digitisation. As a result, 2023 may mark the start of a comprehensive review of electronic systems related to public procurement in Romania.

Strengthening the monitoring, supervision and control functions of the public procurement system

This priority area outlines essential steps for a more efficient monitoring function by ANAP, such as proposing clearer regulations for data collection from all institutions involved in public procurement processes, including reports from courts and other control bodies, and integrating this data.

In conjunction with the increased transparency goal, the aim is to achieve better integration and utilisation of data related to the procurement system. However, since this goal requires collaboration among various institutions, the process might be slower than planned, and there is a risk of only partial implementation.

Professionalise public procurement personnel

Professionalising public procurement personnel has been an objective in the previous National Public Procurement Strategy from 2015, with limited notable progress. The Strategy also acknowledges that recent tumultuous years, marked by increased pressure on public procurement personnel during the pandemic and the subsequent demands of the NRRP, have led to significant staff fluctuations, diminishing the impact of previous efforts.

Given the funds available from the NRRP, correlated actions under the public administration reform under the NRPP, and the European Commission's prioritisation of this area, a more noticeable impact might be reported compared to the previous strategy. However, while certain measures proposed within the Strategy might be implemented, it remains uncertain whether the proposed measures will directly lead to visible improvements in the quality of public procurement personnel.

Conclusions

Following a highly active legislative year in 2022 and anticipating a significant push to address delays in the implementation of the NRRP, we expect 2023 and the subsequent period to be even more dynamic.

First, the remaining primary projects to be implemented through the NRRP are expected to be at least initiated, if not already awarded, during this year. As a result, a substantial number of public procurement procedures related to key NRRP projects are expected to begin and conclude this year, also generating a considerable number of challenges related to the award process.

Additionally, given the latest legal amendments concerning certifying documents issued during contract implementation, an increase in disputes related to contract implementation is expected, in order for contractors to avoid exclusion from public procurement procedures, especially during this active procurement period. On the other hand, even if these amendments are debatable, they have already made contractors more vigilant in implementing procurement contracts. While data is insufficient to establish a direct link, there have been more significant infrastructure contracts concluded ahead of schedule since these amendments, and this trend appears to be continuing into 2023.

In parallel, per the priority areas set forth by the Strategy, amendments to the legal framework in underutilised areas of Romanian public procurement will be deployed, specifically in the fields of green, innovative, social and centralised procurement.

Lastly, as an essential milestone in the NRRP, the electronic system for public procurement will undergo a major review starting this year. This review aims to introduce structural changes that will improve visibility and use of public procurement data.

In conclusion, Romania's entire public procurement system is currently undergoing a comprehensive review process, aiming for a significant upgrade. While we anticipate that an upgrade will be implemented, with considerable improvements to the system, we remain cautious about the full implementation of the envisaged changes, based on the experience of previous similar efforts and the current administrative capacity of the Romanian state.

Popovici Nițu Stoica & Asociații

239 Calea Dorobanti
6th Floor
1st District
Postal Code 010567
Bucharest
Romania

+40 21 317 79 19

+40 21 317 85 00

office@pnsa.ro www.pnsa.ro
Author Business Card

Law and Practice

Authors



Oglindă & Partners is a boutique Romanian law firm specialising in public procurement, international arbitration and construction law. Its lawyers co-ordinated the first emergency arbitrator procedure in Romania. In the last 20 years, they have been involved as lawyers or arbitrators in over 300 arbitration cases before Romanian and foreign arbitral institutions such as the ICC, VIAC, LCIA, SCC and SHAC. The public procurement team, based in Bucharest, is composed of four members and led by Eugen Sarbu. With seven years of experience in the field, this team of public procurement experts offers assistance to private and public entities throughout all stages of the award procedure, from drafting tenders to clarification and evaluation. The team has extensive experience and know-how in representing domestic and international bidders to challenge and defend procurement decisions before the Romanian Council and courts of law.

Trends and Developments

Authors



Popovici Nițu Stoica & Asociații is a leading independent Romanian law firm. Established in 1995, as one of the first incorporated partnerships, the firm brings together strong local talent, with exceptional credentials, outstanding track records and distinguished careers in law, business and academia. The Bucharest office is staffed by a team of 70 skilled lawyers and tax advisors. Traditionally focused on the private sector and foreign investment projects, Popovici Nițu Stoica & Asociații is widely recognised by both industry observers and peers as a leading transactional law firm among market leaders. The firm has consistently participated in the majority of M&A transactions in Romania across a diverse range of industries, including energy, healthcare, retail, IT, financial services, telecoms and real estate.

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