The public procurement sector is awaiting the amendments entering into force on 1st of November. National thresholds will be abolished, simple procurement procedure thresholds will increase, and contracting authorities will have broader discretion than before. But will greater freedom also mean simpler public procurement?
NJORD partner and Head of Public Procurement Marko Mehilane and associate Rahel Klaas examined the impact of the amendments.
Estonia’s procurement culture is ready for greater freedom
The most striking change to the procurement landscape is the abolition of national thresholds. Going forward, the public sector will make the vast majority of its purchases through low-value procurements or simple procedures, conducted largely under their own rules.
At the annual public procurement conference titled “Less Bureaucracy or More Risks?”, Marko Mehilane discussed whether changing the thresholds would be a cure-all for simplifying public procurement. Marko commended the legislators and expressed the view that Estonia’s procurement culture is ready for greater freedom. He also predicted that simplifying the procedures will bring significant resource savings for all parties, noting that the combined costs incurred by the contracting authority and tenderers in procedures exceeding the national threshold amount to approximately €30,000, according to EU statistics.
What will happen to contestation proceedings?
Several risks lie ahead for contestation proceedings. Marko urged legislators to ensure that the drive for simplification does not sideline the protection of tenderers’ rights. He highlighted a significant concern that may deter tenderers: the disproportionately high state fee for filing a contestation notice relative to the value of low-value procurements and simple procedures.
Procurements previously subject to stricter national procedures will become subject to the simple procedure and, among other things, its time limits. Although the time limits for filing contestation notices in simple procedures will be extended compared to those currently applicable, they will remain shorter than the time limits in more strictly regulated types of procedures. Tenderers must therefore be prepared to decide whether to challenge a decision more quickly than before.
It remains uncertain how the fully reversed procedure will reshape procurement landscape. This innovation gives all parties of the procedure the right to challenge the contracting authority’s decisions. In many simple procedures, however, participants may now have to decide whether to bring a challenge without even knowing the prices of all the submitted tenders.
The need to update procurement rules
Procurement rules are the key to whether the amendments will prove to be a cure-all for simplifying procedures. Now is the ideal time for contracting authorities to update their procurement rules, as low-value procurements and simple procedures will account for most of their procurement activity from next month already. Having drafted or revised numerous sets of procurement rules over the years, Rahel Klaas points out that this is, on the one hand, an opportunity to reduce bureaucracy to maximise resource savings. On the other hand, it is a chance for contracting authorities to protect themselves in circumstances where ensuring that their funds reach reliable contractual partners depends on their own choices to an unprecedentedly high extent. Anyone unsure how to structure their procurement rules is welcome to seek assistance from our public procurement team.
Key amendments to the Public Procurement Act entering into force on 1st of November:
- National thresholds will be abolished and simple procedure thresholds will increase
National public procurement thresholds will become a thing of the past. Low-value procurements and simple procedures will remain applicable at national level, with the following increases in simple procedure thresholds for public-sector contracting authorities:
- simple procedure for supplies or services: €30 000 -> €50 000;
- simple procedure for public works: €60 000 -> €100 000.
- Time limits for submitting tenders in simple procedures will be extended
The time limit for submitting tenders in a simple procedure for supplies or services will increase from 10 to 15 days. For public works procured under the same procedure, the time limit will increase from 15 to 25 days.
- Standstill periods and time limits for filing contestation notices in simple procedures will be extended
The standstill period before awarding a contract in a simple procedure will increase from 5 to 7 working days, while the time limit for challenging the contracting authority’s decisions will increase from 3 to 5 working days.
- The fully reversed procedure offers a new opportunity to save contracting authorities’ time
Contracting authorities, who have so far been required to check the substantive conformity of all tenders, will now be able to first identify the successful tender during the procedure and then verify only that tender’s conformity, the absence of grounds for exclusion of the successful tenderer, and the tenderer’s compliance with the selection criteria. This will also allow contracting authorities to consolidate all decisions made during the procedure into a single document.
- Special requirements for simple procedures for works exceeding €500,000
Contracting authorities have not previously been required to check for abnormally low tenders or to verify subcontractors in simple procedures for public works. With the value of works procured under simple procedures now set to increase significantly, these checks will become mandatory where the estimated value is €500,000 or more.
- The use of discretionary grounds for exclusion will become optional
Until now, contracting authorities have had discretion to decide whether to exclude a tenderer on a discretionary ground for exclusion. Going forward, when preparing the procurement documents, they will have to decide which discretionary grounds for exclusion they will check for in the first place.
- Limits on opportunities to settle tax debts
A contracting authority that discovers a tenderer’s tax debt will, going forward, be required to give the tenderer only one opportunity to settle that debt. If they subsequently discover that a tax debt has arisen again, they may exclude the tenderer immediately.
