Infrastructure and PPP

Latest news in the field of public procurement

02.05.2022 – The public procurement legislation has been recently amended following the entry into force of two normative acts enacted at Government level

The new regulations have been introduced by:

• Government Emergency Ordinance 47/2022 with respect to the adjustment of the prices of public procurement contracts/ sectorial contracts/concession contracts/ framework contracts (“GEO 47/2022“), published in the Official Gazette no. 377 of April 15, 2022.

Answering, although only partially, to a necessity of a market affected more and more by the global crisis in this field, the main objective for adopting GEO 47/2022 is to ensure the extension of possible price increases of public investments contracts to other cost elements, besides the increase in the price of construction materials and salary components. The new causes which have led to price increases include, among others: the increase in the price of electricity and natural gas, of fuel, of merchandise transport services, as well as the outbreak of the military conflict on the territory of Ukraine, and the blockade imposed on Russia at global level.

The measures adopted by GEO 47/2022 supplement, firstly, the Government Emergency Ordinance 15/2021 regulating certain fiscal and budgetary measures to adjust the prices of public procurement contracts, approved in an amended and supplemented form by Law 281/2021 on public procurement contracts/ sectorial contracts/concession contracts/ framework work contracts (“GO 15/2021“).

The new legal amendments do not entail substantial contract changes, and therefore they may come into effect simply by concluding an addendum to the existing contract, the contracting authorities being, hence, released from the constraints of the legal analysis of the substantial or unsubstantial character of the change.

Additionally, and as a novelty, GEO 47/2022 creates a certain legal framework that allows even the modification of ongoing award procedures, trying accordingly to solve (even if, this time as well, only partially) the issue of procedures with an extended duration.

We will present below the main amendments related to the adjustment of contract prices inserted by GEO 47/2022:

• • THE SCOPE OF GEO 47/2022:

• • • Contracts/framework contracts related to investment objectives/investment projects/ maintenance and current repair works/ capital repairs funded, entirely or partially, from public funds[1] or from the own funds of contracting authorities/entities, which are in the process of being implemented on the entry into force of GEO 47/2022;
    • Work contracts/framework contracts, including contracts/framework contracts relating to facilities and/or machinery and technological and functional equipment necessary for performing and commissioning works and/or intended to be used for the appropriate equipping and fitting out of investment objectives/ investment projects/maintenance and current repair works/capital repairs, as provided in Annex 6 section 4 items 4.3-4.5 to Government Decision 907/2016, which are in the process of being implemented on the entry into force of GEO 47/2022 and which have been concluded:
      • before the entry into force of Law 98/2016, Law 99/2016 and Law 100/2016;
      • after the entry into force of Law 98/2016, Law 99/2016 and Law 100/2016, and which do not contain price revision clauses;

• • • Contracts/framework contracts related to the performance of feasibility studies and/or technical projects in connection with the transport infrastructure of national interest which include geotechnical investigations, which are in the process of being implemented on the entry into force of GEO 47/2022 and have been concluded:
      • before the entry into force of Law 98/2016, Law 99/2016 and Law 100/2016;
      • after the entry into force of Law 98/2016, Law 99/2016 and Law 100/2016, and which do not contain price revision clauses;
    • Work contracts/framework contracts concluded by legal entities which do not have the capacity of contracting authority that must apply the public procurement legislation, which are in the process of being implemented on the entry into force of GEO 47/2022 and have been concluded:
      • before the entry into force of Law 98/2016, Law 99/2016 and Law 100/2016;
      • after the entry into force of Law 98/2016, Law 99/2016 and Law 100/2016, and which do not contain price revision clauses;
    • Contracts/framework contracts for the acquisition of products, funded from public funds, which are in the process of being implemented on the entry into force of GEO 47/2022, which do not contain price revision clauses and which refer to facilities/technological and functional equipment/machinery necessary for commissioning and/or for the appropriate equipping and fitting out of investment objectives/investment projects/ maintenance and current repair works/ capital repairs, in accordance with their expected use, or strictly necessary for performing works in connection with one of the activities set out in Annex 1 to Law 98/2016, Annex 1 to Law 99/2016, and Annex 1 to Law 100/2016.
    • Product procurement contracts/framework contracts referring to the acquisition of facilities and/or machinery and technological and functional equipment, and those referring to the acquisition of products used in performing works related to the maintenance/repair/ administration/ operation of roads of national, county or local interest classified in accordance with the provisions of Government Ordinance 43/1997 on the regime of roads, where the procurement is carried out through the award of a distinct contract.
    • Services contracts/framework contracts for the performance of feasibility studies and/or technical projects, which include a component related to the geotechnical investigation of foundation land by drilling/probing, for the national transport infrastructure, which are in the process of being implemented on the entry into force of the emergency ordinance covered hereby, and which do not contain revision clauses.
    • Services contracts/framework contracts in the process of being implemented on the entry into force of GEO 47/2022, which include a price adjustment clause in accordance with the provisions of Art. 2 para. (6) of GO 15/2021, and with the provisions of Art. III para. (1) and (2) of Law 281/2021 approving GO 15/2021, and contracts/framework contracts related to design works/products/services for the transport infrastructure of national interest, which set forth the application of a fixed price.
    • Public procurement contracts related to certain acquisitions in the defense and security fields, set forth in GO 114/2011, including contracts/framework contracts relating to facilities and/or machinery and technological and functional equipment necessary for performing and commissioning works and/or used for the appropriate equipping and fitting out of investment objectives/investment projects/maintenance and current repair works/capital repairs, as set forth in Annex 6 to Government Decision 907/2016;
    • Other types of contracts, expressly described in Art. 7 of GEO 47/2022, and for certain types of award procedures, subject to the limitations and conditions expressly defined in GEO 47/2022.
  • THE PROVISIONS OF GEO 47/2022 ARE NOT APPLICABLE TO:
    • Public procurement contracts/sectorial contracts/concession contracts/framework contracts for projects funded from external non-reimbursable funds;
    • Award procedures relating to projects funded from external non-reimbursable funds which are in the process of being implemented on the entry into force of GEO 47/2022;
    • Projects funded from the NATO Security Investment Program.

• • ADJUSTMENT PROCESS:
    • The adjustment of the contract price in accordance with the new provisions will operate exclusively in relation to the part of the contract which remains to be performed/provided on the date when the ordinance comes into force, namely April 15, 2022, until the performance of the object of the contract.
    • The adjustment will operate based on a justified request submitted by the contractor and applies to each payment request, throughout the term of the contract.
    • The value of the contract will be adjusted by applying the total construction cost index (CCI) using the calculation formula presented and detailed in GEO 47/2022.

• • TERMS AND CONDITIONS:
    • Contractors who fall within the scope of GEO 47/2022 have 45 days from the entry into force of the ordinance to submit a request to the contracting authority/entity with respect to the adjustment of the contract value for the part of the contract which remains to be performed.
    • When such requests have been submitted within the relevant period, the contracting authorities/entities have the legal obligation to initiate the necessary process for adjusting the contract price.
    • If contractors do not submit the request regarding the adjustment of the contract value in 45 days from the entry into force of the ordinance, they lose the right to benefit from the application of the provisions of GEO 47/2022.
• Government Emergency Ordinance 54/2022 supplementing Law 99/2016 on sectorial procurement (“GEO 54/2022”), published in the Official Gazette no. 393 of April 21, 2022

The main reason for adopting these additions to Law 99/2016 on sectorial procurement is related to the current geopolitical context and the unprecedented price increases seen on the energy market. Thus, the new measures are intended to ensure the completion of certain investment projects blocked for technical reasons, in the shortest possible time.

The additions that have been inserted mainly refer to the following:

1. For the part of the contract remaining to be performed in order to create and develop electricity production capacities, if the remaining part accounts for less than 40% of the status of the implementation of the investment project, the contracting entity has, as an exception to the provisions of Law 99/2016, the right to apply the negotiated procedure without prior publication of a notice for participation in a competitive bidding process for the award of the sectorial procurement contract;
2. If the award occurs in the exceptional situation mentioned above, the contracting entity will be allowed to decide not to exclude from the award procedure the economic operators which have committed a serious breach of, or have repeatedly breached, their main contractual obligations, where such breaches have led to an early termination of said contract, to the payment of damages or to the application of other comparable sanctions.

[1] Public funds are defined as provided in Art. 2 item 27 of the Public Finance Law 500/2002, and in art. 2 item 32 of Local Public Finance Law 273/2006.

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