The Award of Administrative Contracts – New Benchmarks for Review Procedures
Author: Radu Damaschin
After a sustained legislative marketing activity that started since January, on June 4, 2018, Government Emergency Ordinance 45/2018 amending and supplementing certain regulatory acts with impact on public procurement was published in the Official Gazette no. 459. More specifically, the regulatory acts in question are Law 98/2016 on public procurement, Law 99/2016 on sectorial procurement, Law 100/2016 on concessions of works and services, Law 101/2016 on remedies and review procedures in relation to the award of public procurement contracts, sectorial contracts and of contracts for the concession of works and services, and for the organization and functioning of the National Council for Solving Complaints, Government Emergency Ordinance 13/2015 on the creation, organization and functioning of the National Public Procurement Agency and Government Emergency Ordinance 98/2017 on the ex-ante control function.
Since procedural rules require immediate application and, as such, they may have to be applied in the review procedures related to pending procurement procedures, in this short article we will focus exclusively on the main changes made to the challenge mechanisms regulated by Law 101/2016.
As may be seen from the Preamble of the Ordinance and also from the Substantiation Note, published in an unsigned form on the website of the Government, the changes were justified, as always, by the need to reduce the term for the resolution of complaints for the purpose of unblocking major investment projects and of increasing the spending level for the funds allocated to the respective projects.
For clarity purposes and for simplifying the presentation, we will outline the main changes that were introduced, following the steps of a typical complaint procedure.
Thus, a first change we can identify consists in the elimination of the mandatory procedure regarding the preliminary notification of the contracting authority. The solution is surely justified by the fact, as constantly proven in practice, only in an insignificant number of cases this form of administrative appeal filed with the issuing authority could lead to the adoption of effective remedy measures.
Furthermore, the lawmaker decided that the resolution of the complaint, in fact its admissibility, would be conditional upon the payment of a deposit of 2% of the estimated or established value of the contract, but, depending on the value thresholds provided in Art. 7 para. 1 of Law 98/2016, Art. 12 para. 1 of Law 99/2016 and Art. 11 para. 1 of Law 100/2016, without exceeding a determined fixed amount. According to the Government, this obligation was intended to protect contracting authorities from the risk of a possible inappropriate behavior of complainants. The deposit amount is owed irrespective of whether the procedure is challenged before the National Council for Solving Complaints or in court, and regardless of whether a motion for the suspension of the procedure is filed, as part of the complaint procedure. The deposit will be returned upon request as soon as a final decision is rendered on the complaint, provided that the authority does not invoke any potential damage.
In all cases, the complaint is communicated to the contracting authority within the legal term for filing. The authority must, in its turn, publish the complaint in SEAP in one working day, save for the information qualified by the economic operator as confidential, classified or proprietary information. The obligations of communicating and publishing the complaint are intended to ensure full and immediate transparency as regards the content of the challenge document, and to allow the authority to remedy directly, within three days, any possible irregularities of which it was made aware in the form indicated above.
The term of 5 working days (from the transmission of the complaint) during which the contracting authority must issue to the Council its opinion on the complaint was replaced by a term of 5 calendar days. Furthermore, the same term of 5 working days during which the authority must reply to the Council’s requests was reduced to 3 days. With regard to the calculation of the time period during which the motion to intervene is to be filed, what is relevant from now on is only the moment when the actual content of the complaint is published in SEAP, and not just the fact that the complaint was filed.
In the case of a complaint filed with the court, the defendant must submit its answer within 5 calendar days from the communication of the complaint by the court. Within the same time period calculated as of the communication of the complaint by the complainant, the contracting authority must send the procedure file to the court.
Finally, the time periods during which the Council is to solve the complaint were likewise shortened, namely from 10 working days to 5 calendar days, in the case of an objection that does not require an analysis of the substance of the complaint, and from 20 working days to 15 calendar days, if the decision requires an analysis of the substance of the complaint. In the case of the judicial complaint, the maximum time period for its resolution continues to be limited to 45 days.
The Council’s decision may be challenged by means of a court action that may be filed by any interested party, not only by the parties to the initial complaint, which means that, pursuant to GEO 45/2018, the framework for the resolution of the court action can be larger/more extensive than the one for the resolution of the complaint. In this case, the claimant must pay a deposit, which is reduced to half its initial value. In the case of the judicial complaint, the decision of the court of first level is subject to appeal, but the procedural rules on this matter do not allow for the appeal to be filed by someone who was not party to the complaint.
Despite the exuberant public statements made at the adoption of GEO 45/2018, the changes briefly described above are, in reality, just variations on established remedies. With regard to the award of public procurement contracts, the Community benchmark for administrative/judicial complaint procedures remains Directive 89/665, and therefore the solutions advanced by the Romanian law had to remain in line with the Community legislation and jurisprudence.
As pointed out in several other situations as well, the modification, more specifically the shortening of certain procedural terms may seem the easiest way to end, as fast as possible, the state of legal uncertainty. It often happens that measures of this kind alone are insufficient. Terms are objective reference points, the interpretation and application of which is nevertheless always contextualized by the conduct of the parties involved in the procedure. In this context, the contracting authorities, in their capacity of arbitrators of public interest, through enhanced strictness, transparency and sometimes even objectivity, may acquire an essential role in redefining the framework/terms for the award of contracts and resolution of the related disputes.
However, GEO45/2018 contains a provision that may trigger significant economic and legal consequences, but which is, as far as we are concerned, extremely confusing.
Here, we refer to article 58 index 2, according to which “if the contracting authority has concluded the framework-agreement/procurement contract with the observance of the decision of the Council or of the decision rendered by the first level court in the resolution of the complaint, the potential compensation established by the court, in accordance with the provisions of this section, resting with the contracting authority, will be incurred from the budget thereof.” If we also take into consideration the public statements made before the adoption of the ordinance, the text seems to refer to the case in which the contracting authority would take the risk of concluding the contract pursuant to a non-final decision with respect to the complaint, the decision would subsequently be annulled, and the court, as alternative for the annulment of the contract, would thus force the contracting authority to pay compensation.
The confusion is created by a comment of the Substantiation Note, which, after reiterating only a part of article 58 index 2, specifies that “considering the mandatory nature of a decision issued by NCSC that was declared final, in this case, it is necessary to also take into consideration the scenario in which the court maintains the effects of the contract while ordering certain alternative remedy measures expressly and restrictively set forth in the new article.” First of all, we consider that the wording of article 58 index 2 excludes the alternative in which the contract is annulled. Furthermore, if the decision rendered with respect to the complaint is declared final, then it is difficult to imagine any aspects for which the authority may be criticized, in such a way that this is ordered to pay compensation. If this provision actually means that compensation will be granted if the contract was concluded in breach of the law – cases of breach other than those raised in the complaint, we no longer understand the relevance of concluding the contract before the complaint is resolved in full.
For a provision that is supposed to establish, on the one hand, the fate of a contract concluded in breach of the law, and, on the other hand, the patrimonial liability of a public authority, we consider this to be unjustifiably defective. In any case, at this point, the financial/fiscal mechanism for the payment of the compensation practically does not exist and the Government itself admits that “it is necessary to adopt a government decision” in this respect.
We will have to see what clarifications the secondary legislation will bring.