Authors: Adéla Havlová, Josef Hlavička
One of these days, an indirect amendment to Act No. 134/2016 Sb., on Public Procurement (the “PPA”), will be promulgated in the Collection of Laws. It is incorporated in the act amending certain acts in relation to the adoption of the Act on Wastes and Act on End-of-Life Products (the waste package). This surprising amendment to the PPA effective as of 1 January 2021 places the principles of socially and environmentally responsible procurement and innovation among the basic public procurement principles pursuant to Section 6 of the PPA.
A new paragraph 4 was added to Section 6 of the PPA in the following wording: “the contracting authority is obliged, when proceeding pursuant to this Act and drafting procurement requirements, evaluating the bids and selecting the supplier, to comply with the principles of socially responsible procurement, environmentally responsible procurement and innovations within the meaning of this act, where possible given the nature and the purpose of the contract. The contracting authority is obliged to duly justify its steps.”
At the same time, Section 28 of the PPA lays down the definitions of terms. Comprehensively, this approach is standardly titled responsible public procurement (RPP) and as a significant element of public contracts it is also anchored in Directive EU 2014/24 (contracting authorities) and 2014/25 (sector-specific contracts).
The newly introduced principle of the PPA has attracted major attention across the public sector, particularly because it resulted from an initiative of the Chamber of Deputies, i.e. without broader comment procedure, and is also being introduced without (express) transitional provisions.
Just like any other principles, this new one applies to small-scale public contracts too; contrary to others, however, it must be substantiated, though the form and extent of the substantiation is not expressly laid down; the amendment leaves it up to interpretation and decision-making practice.
Hence, as of 1 January 2021, when drafting procurement requirements of newly opened procurement proceedings but also when assessing the eligibility and extremely low costs of already launched contracts, contracting authorities should apply this new principle and substantiate their steps at least in internal supporting materials of the procurement documentation. At the same time, we believe that this principle should at all times be applied in the context of other principles, including the 3E and adequacy.
In response to the amendment, the ministries concerned are drafting supporting documents and materials for the contracting authorities. The Ministry of Labour and Social Affairs (MLSA) has been intensely elaborating on this topic since 2014 and has been offering the contracting authorities a whole range of practical methodologies and training sessions under the Responsible Public Procurement Institute; it also offers the possibility to participate in the Responsible Public Procurement Platform. For more information, we recommend visiting the institut.sovz.cz website.
In response to the amendment, the ministry has published a Checklist on its website, a tool to assist the contracting authorities to go through the responsible public procurement topics in practical issues (for the Checklist, go here). Furthermore, the MLSA issued the publication Responsible Public Procurement in Brief, informing on the application of the new principles in practice and on the Checklist, a handbook of responsible public procurement in relation to the amendment to the PPA as of 1 January 2021 (here). On 15 December 2020, the MLSA also held a seminar, the legal part of which was organised by Adéla Havlová, a partner in our law firm. A recording of the seminar is available here upon simple registration.
The Ministry for Regional Development has been involved in discussions on more detailed interpretation of the new principle from the legal perspective in its Expert Group, also comprising Adéla Havlová as a representative of the Association for Infrastructure Development, in cooperation with the Association for Public Contracts, and other ministries and representatives of the Czech anti-monopoly authority. The Ministry for Regional Development (MRD) intends to issue an opinion at the turn of the year, and publish it on the portal-vz.cz/uvod website. What will be most crucial will be the interpretation of the following wording “…provided it will be possible given the nature and the meaning of the contract” and its possible conflict with the other principles as well as the significance and the form of the reasoning.
We are closely following other legislative changes in the area of public procurement that are likely to be adopted next year; for the sake of completeness, we briefly cover them here.
The big draft amendment to the PPA submitted by the government and discussed this autumn by the Legislative Council after an ordinary comment procedure and detailed discussion in the MRD’s Expert Group was approved by the government on 16 November 2020 and will be discussed by the Chamber of Deputies in the spring of 2021.
This comprehensive amendment to the PPA is presented after more than three years from the date the act came into effect. Even though the preparation of the draft amendment was triggered by an objection lodged by the European Commission regarding the document and the ongoing procurement, gradually there were a number of other topics aimed at decreasing the administrative burden on the part of the contracting authorities and suppliers, the elimination of excessive strictness of certain rules, clarification of the interpretation of certain institutes and the correction of minor legislative and technical insufficiencies. The amendment is proposed to come into effect on 1 July 2021.
The MRD, in cooperation with the Ministry of Transport, also submitted a bill on the promotion of low-emission vehicles by means of procurement of public contracts and public services in passenger transport (the Act on the Promotion of Low-Emission Vehicles) with the aim to duly transpose Directive (EU) of the European Parliament and of the Council 2019/1161 of 20 June 2019 amending Directive 2009/33/EC on the promotion of clean and energy-efficient road transport vehicles.
The act lays down a duty on the contracting authorities to achieve a minimum proportion of low-emission and zero-emission vehicles when awarding public contracts, the subject of which is procurement, lease and rental of defined vehicles and transport services listed in the annex to the PPA in above-threshold contracts (with the exception of concessions, but including transport service provision).
In the most common category of passenger vehicles (M1, M2 and N1), for instance, this share will amount to 29.7% and the contracting authorities should achieve it by 31 December 2025; in the category of road lorries (N2 and N3), the share should amount to 9% as of 31 December 2025, and subsequently 11% by 31 December 2030. The Office for the Protection of Competition should supervise the compliance with this obligation. The act is proposed to come into effect on 2 August 2021.
Shortly, the MRD is also planning to issue an opinion on the application of Government Decree No. 173/2016 Sb., on the specification of binding procurement requirements for public contracts for the purchase of road vehicles, regarding the manner of specifying the vehicle consumption and the related documentation (application of a new methodology – WLTP as opposed to NEDC).
The Ministry of Justice has presented a bill on the protection of whistle-blowers as a draft transposition regulation of Directive (EU) of the European Parliament and of the Council 2019/1937 of 23 October 2019 on the protection of persons who report breaches of Union law.
The aim of the new regulation should be to ensure protection of persons working in the public and also in the private sectors, the protection of potential whistle-blowers, and also general prevention of unlawful conduct. The duty to introduce an internal whistleblowing system should be mandatory for public contracting authorities pursuant to the PPA among others, with the exception of municipalities with less than 10,000 inhabitants (apart from municipalities with extended state administration powers) and public contracting authorities with less than 50 employees. The proposed date of effect is 17 December 2021.
Last year, the government presented a lobbying bill. The bill defines lobbying, lobbyists and lobbied persons and introduces a transparency register. It was expected to come into effect on 1 January 2021 and has been scheduled for discussion at the 75th Chamber of Deputies session, i.e. from 10 December 2020.
The Senate is discussing a government bill on the registers of beneficial owners that will continue to regulate, in a consistent and comprehensive manner, the registers of beneficial owners, public access to the registers, measures to verify whether the records are true, and sanctions for a breach of the act (pursuant to the draft amendments submitted by the Chamber of Deputies the fines have been raised to CZK 500,000).
Apart from that, on 10 December 2020, the amendment to the Act on Certain Measures Against the Legalisation of the Proceeds of Crime (the AML Act), which will also affect the Public Procurement Act and the Budgetary Rules Act, was sent to the Collection of Laws. It lays down a new duty to be recorded in the beneficial owners register as a qualification for public contracts and subsidies. With the exception of certain provisions, the AML Act comes into effect on the fifteenth day of its promulgation.
We hope that this overview of news will be useful for you and that it will help you become well prepared for the new year in 2021.
