By Dimitar Stoimenov
Overview
As a result of the global economic crisis and a lack of opportunities, many enterprises are trying to participate in public tenders in Bulgaria in order to develop business activities financed by public resources including those provided by the structural funds of the European Union.
Since the market is becoming more open to foreign companies there has been an increase of the number of European and American companies participating in public tender procedures.
Given the dynamic development of the statutory framework in the past three years, partially under the implementation of the European procurement rules adopted in February 2014 during the last procurement EU reform, there are new rules for participating in public tenders in the Bulgarian Public Procurement Act (PPA, available in its current version, in Bulgarian, at - Public Procurement Act).
In this respect, any potential participant independent of its origin should gain some basic information about the legal framework regarding procurement in Bulgaria. For bidders, most important appear to be issues related to the formal requirements, the minimum financial and technical conditions set up in the tender documentation, as well as how the bidders could ensure the introduction of fair, transparent and non-discriminatory conditions of the tender and the lawful awarding of the public contract.
Formal Requirements
According to the newest legislative changes of PPA which will enter into force on 1st of July 2014 any potential foreign or local participant should declare that it has no due tax obligations towards the Bulgarian state. If such declaration is not presented, the participant should be excluded from the tender procedure.
A further obstacle for being awarded a public contract is a previous conviction of the managers of the participants for tax or other fraud or being a member of an organized criminal group.
If a tender is won and a public contract awarded, the successful bidder has to present documents proving the lack of tax obligations or conviction for the above mentioned crimes.
Moreover, a company could be hindered in it participation if bankruptcy proceedings have been opened against it or if it has not diligently fulfilled public contracts in the past and as result has been successfully sued by the tendering authority for contractual breach.
If a foreign company has interest in bidding within the public tendering procedures in Bulgaria, such company should also present a certificate of good standing from the country of origin as well as to prove its registration in a foreign professional register, e.g., bar association membership, construction and engineering tenders, etc.
Foreign companies with many registered general commercial proxies could have problems. In this case, either each of them has to provide a declaration on the lack of the above mentioned circumstances or the participant would have to prove that there is enough evidence showing that only one of them is responsible for the tendering procedures organized by Bulgarian public bodies and utilities companies.
Following the recent changes, the participants would not be obliged to purchase a hard copy of the tender documentation. This should be published in an electronic form on the webpage of the contracting authority under the section "Purchaser's Profile".
Financial and Technical Capacity
In order to open up the public procurement market and to avoid discriminatory conditions in regards to tender documentation by the tendering authorities, the new provisions of the PPA prohibit the introduction of discriminatory financial conditions for participation. In this way, it should be ensured that the financial capacity of the participant would correspond to the expected value of the tender and small- and medium-sized companies would not have an obstacle for submitting a bid within the tender.
As of 1st July, contracting authorities cannot restrict companies from public tenders if they could prove that they have financial resources exceeding the expected value of the tender by 50%. Each interested company may prove its financial capacity by providing bank certificates, annual financial statements and any other document which is considered by the contracting authority as adequate.
If the subject of the procurement is the delivery of goods or services, the participant could be obliged by the tendering authority to present proof of the existence of technical and other capacity by submitting to the authority a list with the deliveries of the same or similar goods done during the last three years.
If the tender includes construction work, every participant should be able to prove its experience in construction realized during five years prior to the submission of the offer as well as to provide additional documentation and references related to the realization of such projects.
Avoiding the Introduction of Discriminatory Conditions
As of the announcement of the start of the public tendering procedure every participant may appeal the conditions published by the tendering authorities before the Bulgarian Commission for Protection of Competition (CPC) which is the first review body for tendering complaints in Bulgaria. Further details may be obtained on the webpage of CPC.
The CPC may stop the tendering procedure upon application of the participant and declare the conditions of the tender as discriminatory and hence, void. As a result, the contracting authority would have the obligation to redraft the conditions for participation and re-announce the procedure with the corrected conditions. Merely in this way the participant could be sure that a discriminatory condition would not apply in the concrete tender. If there is no appeal against such condition the tender documentation would be considered as stable and legally binding for all participants even if they are excluded from the procedure afterwards based on such discriminatory condition.
If the claimant is not satisfied with the decision of the CPC, it may appeal against the decision before the Supreme Administrative Court. The decision of its three-member chamber will be final and binding for all parties in the case.
Challenging the Awarding Decision
Every bidder may challenge the legality of any decision or activity of the procurement authority in the course of the tendering procedure. In practice, bidders appeal very often against the decision of the contracting authorities for awarding the public contract.
The appeal against the decision would suspend the effect of the awarding decision. Thus, the contracting entity may not conclude the public contract until the judicial proceedings are finished. However, if there is a high public interest for concluding the public contract, the authority may request permission from the CPC to allow that the appeal will have no suspension effect.
Conclusion
Bulgaria provides good opportunities for local and foreign companies to bid within public tender procedures.
Before participating, every potential bidder has to be aware of some of the formal requirements that have to be respected. Especially, every participant has to have no public obligations towards the Bulgarian state at the moment of submission of the offer to the contracting authority.
Furthermore, the PPA provides a stricter framework aimed at the avoidance of bad practices by announcing the financial and technical tendering conditions. As of July 2014, contracting authorities in Bulgaria would not be able to require from the participants the existence of financial resources exceeding 50% of the expected value of the public contract. This is expected to have a great, positive effect on opening the public procurement market to small- and medium-sized companies.
If there are any discriminatory conditions within the tender documentation (which has to be available from July 2014 fully electronically) the participant may submit a complaint to the Commission for Protection of Competition. Only through such an active approach can the potential bidder ensure that fair and competitive conditions for bidding will be created.
Any bidder may challenge the decision of the contracting authority for awarding the public contract to one of the other bidders. In this case, the claim would have the effect that the contracting authority would not be allowed to conclude the public contract until there is a final decision in the dispute.
Additional Resources
- Public Contracts in Bulgaria, European Commission (2010)
- Public Procurement in Bulgaria according to the Invest Bulgaria Agency
- The public procurement system in Bulgaria, Roumen Trifonov and Marieta Popova (2010)
- Older version of the Public Procurement Act in English Comparative Study of the Procurement Systems, "Bulgaria", Italian Authority for Supervision of Public Contracts, (2010)
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