Romania amends public procurement law to accelerate contract execution and absorption of EU funds

The Romanian government recently enacted a Government Emergency Ordinance, which amends the public procurement legal framework in order to facilitate faster implementation of major investments, in particular those funded under the Romanian National Recovery and Resilience Plan, which is awaiting approval at the EU level.

The new measures limit protracted litigation, as well as the number of complaints brought against the decisions of contracting authorities. The most important change is that contracting authorities will be legally obliged to conclude a public procurement contract with a successful bidder if the National Council for Solving Complaints (CNSC) or the first judicial court vested with solving a complaint issues a favourable decision. In this case, the contracting authority cannot wait for the decision of the court of appeal.

Previously, the law gave contracting authorities the right, but not the obligation, to proceed to the execution of contracts based on the decision of the first instance court solving the complaint. Contracting authorities must observe standstill periods before concluding the contracts, which remained unchanged.

Claimants whose appeals are successful will only have the right to damages for the loss incurred, which are capped at the value of the expenses incurred with claimants’ participation in the award procedure and preparation of the bid documentation (a significant limitation compared to the previous framework, which allowed full recovery of the loss incurred, including loss of profit).

Additional changes introduced by the new legislation include:

• a lower period imposed on contracting authorities to complete the award procedure (up to six months) based on smaller legal terms regulated for various procedural steps (e.g. lower terms for submission of the DUAE documentation by the bidders or for the contracting authority to prepare reports of the award procedure);

• increased thresholds for payment of the tax for challenging the result of an award procedure, which is 2% of the contract value, now up to a maximum of EUR 400,000 (RON 2 million) compared to previously EUR 176,000 (RON 880,000;

• personal liability of employees of the contracting authority responsible for gross negligence in their professional conduct if the contracting authority is sanctioned for breach of public procurement legislation and/or obliged by a court of law to pay damages to claimants;

• simplification of the tax related documentation required from bidders, which are now allowed to submit a simple declaration instead of tax documents regarding their secondary offices, to prevent an unnecessary administrative burden for participation in the award procedure.

Romania has been known to encounter difficulties in absorption of EU funds, with the effect that many of the required investments have been postponed or cancelled and the funds ultimately lost. Protracted litigation is only one of them. As a matter of practice, before the enacted changes, many contracting authorities used their legal right to conclude the contract after a first favourable decision of the courts and, at least statistically, the appeals courts also confirmed the vast majority of decisions taken by the first courts. Consequently, the impact of the legislative changes may be lower than anticipated by the Romanian government.

Subject to the Plan awaiting approval by the EU, approximately EUR 29 billion will becomeavailable to finance major investment projects in a variety of sectors, most importantly transport (both road and rail), health, energy and education and the clock will be ticking for Romania to use these funds at an unprecedented accelerated pace. These particular sectors should also see an increase in the number and value of the projects to be awarded. Interested companies are advised to keep an eye out for notices to be published on the national (SEAP (e-licitatie.ro)) and EU platform (TED home - TED Tenders Electronic Daily (europa.eu)).

For more information on Romanian public procurement, contact your CMS client partner or local CMS experts: Cristina Popescu and Laura Capata.