Altering public contracts significantly simplified

Photo: SCANPIX

European Union’s new public procurement directives will include several updates; among vital changes, alteration of procurement contracts will become easier.

The existing directives remain silent regarding alterations to public contracts; now, via various decisions by European Court, European Commission has gotten the message: altering public contracts needs regulation.

As currently prescribed by Estonia’s own law, public contracts may be altered if alteration is needed due to objective circumstances unforeseeable for the procuring entity and failure to alter the contract would endanger performance thereof. As a result, altering public contracts is, at the moment, very complicated in Estonia; during the crisis, especially, it led to numerous disputes in the construction sector. 

Pursuant to the new directive, with value of alterations under the international threshold – in construction works, for instance, remaining under 15 per cent of initial cost of the contract – public contracts could be altered without additional restrictions. In the estimation of Evelin Karindi-Kask, adviser at public procurements and state aid department of Ministry of Finance, the amendment is of a very practical kind, sure to be widely used. 

The new directives will also bring changes regarding qualifying for contracts. The main change will be that, at the beginning, as they submit their offers, tenderers will no longer have to submit documents needed to verify qualification – confirmation under their own hand will do; in the end, only the winner will be required to submit the necessary documents and certificates.

«The aim of the amendment is to cut administrative load for participants, as with the larger procurements, the qualification requirements are currently very high and documents/certificates regarding qualification need to be acquired from very many places,» explained Ms Karindi-Kask.

Another basic change offered by the new directives is option for «self-improvement». Currently, a participant shall be removed from procurement, should a cause be discovered – tax arrears, for instance. The new directive allows for such participants to still be included on certain condition, should the arrears be paid.

«How this will work in practice, needs to be discussed with interest groups; basically, however, this means that tax arrears will not necessarily lead to final removal of participant from a procurement,» commented Ms Karindi-Kask.

Asked if the changes are rather positive or negative, Ms Karindi-Kask said there was no single answer. On the one hand, both sides will have it easier with options to alter public contracts. Even so, organisers will have a harder time having more space for consideration – meaning the participants have more opportunity to dispute.

According to public procurement lawyer Kadri Härginen, of Sorainen law office, the directives were aimed at making rules easier and more flexible; predicting by the drafts, she thinks the amendments arose from need to include judicial practise. «Regarding the rest, the future will reveal if the rules have indeed made matters simpler and more flexible, or it’s just a matter of new wordings,» commented the lawyer.

Even so, Mr Härginen also praised the public contract rules becoming more definite. The trouble spot, for her, is the new options for participants, once removed from process, allowed to re-enter procurements. 

«As a participant is removed from a procurement for having financed terrorism, the new rule prescribes that the said participant may submit evidence of having changed things so as to exclude committing crimes of that sort in the future,» said Ms Härginen, to bring an example.

This week, the issue undergoes discussions and voting in European Parliament.