Infrastructure and PPP

Latest news in the field of public procurement and transport infrastructure – New amendments to the Public Procurement and Transport Infrastructure Legislation

30.03.2022 – The public procurement and transport infrastructure legislation has been recently amended following the entry into force of two normative acts at Government level, approved in the Government meeting of March 18, 2022

The new regulations have been introduced by:

• Government Emergency Ordinance no. 26/2022 amending and supplementing certain normative acts in the public investment field, published in the Official Gazette no. 272 of March 21, 2022 (“GEO 26/2022”) – it shall be applicable in accordance with certain transitory provisions specific for each normative act amended by GEO 26/2022; in principle, the provisions concerning the amendment of the public procurement legislation shall apply to award procedures initiated after its entry into force, to the public procurement and sectoral contracts concluded as of the date of entry into force and to the legal situations arising as of the date of entry into force of GEO 26/2022, as well as to the challenges, proceedings and complaints filed after the entry into force of GEO 26/2022.

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• Government Decision no. 375/2022 on amending and supplementing Government Decision no. 394/2016 approving the Methodological Norms for the application of the provisions concerning the award of the sectoral contract/framework agreement of Law no. 99/2016 on sectoral procurement, of Government Decision 395/2016 approving the Methodological Norms for the application of the provisions concerning the award of the public procurement contract/framework agreement of Law no. 98/2016 on public procurement, as well as of annexes 1 and 2 to GD no. 1/2018 approving the general and special conditions for certain categories of procurement contracts related to the investment objectives funded from public funds, published in the Official Gazette no. 277 of March 22, 2022 (“GD no. 375/2022”) – it shall be applicable only to the award procedures initiated after the entry into force thereof and to the public procurement contracts/sectoral contracts/framework agreements concluded after the entry into force thereof.

The main reason for adopting the new normative acts, as it derives from the preamble of GEO 26/2022, is the necessity to ensure a faster and easier implementation of the infrastructure projects of national interest, the completion date of which was set for 2026, since the failure to meet the assumed deadlines may cause the blocking of the funding for all projects in the transport component of the NRRP (the National Recovery and Resilience Plan).

We will present below the main amendments to the legislative package on public procurement, as well as those concerning the methodological norms for the application of the main legislation and the amendments to the related legislation.

1. AMENDMENTS TO LAW 98/2016 AND LAW 99/2016

• Amendment of the case of application of the negotiation procedure without prior publication, provided by art. 104 of Law 98/2016 and art. 117 of Law 99/2016 applies –extreme emergency situations

The amendment is intended to reduce the time necessary for the conclusion of a new public procurement/sectoral contract in situations that cannot be attributed to the contracting authority/entity. The notion of unpredictable event is now also covering the termination of the contract for the breach of the contractor, termination which is not attributable in any way to the action or inaction of the contracting authority/entity.

Moreover, the new legal provision establishes an exception with respect to the transport infrastructure projects, where the term of the contract may be longer than that necessary to handle the unpredictable situation that determined the application of the negotiation procedure without prior publication.

The amendment is intended to reduce the time necessary for the conclusion of a new public procurement/sectoral contract in situations that cannot be attributed to the contracting authority/entity. The notion of unpredictable event is now also covering the termination of the contract for the breach of the contractor, termination which is not attributable in any way to the action or inaction of the contracting authority/entity.

Moreover, the new legal provision establishes an exception with respect to the transport infrastructure projects, where the term of the contract may be longer than that necessary to handle the unpredictable situation that determined the application of the negotiation procedure without prior publication.

• Submission of explanatory documents to prove the information contained in ESPD (European Single Procurement Document)

As a novelty, GEO 26/2022 establishes a term of one working day from the moment the successful bidder is established, or from the date of issuance of the conformity notice (if the documentation is subject to the ex-ante control), in which the contracting authority/entity may request the presentation of the explanatory documents that prove the qualification and selection criteria.

For the cases where the award procedure is carried out in several stages, the candidate will benefit from a 7-day term to fulfill the contracting authority’s request, subject to the sanction of rejecting the bid as inacceptable. The 7-day term may be extended only upon the candidate’s justified request, for maximum 3 working days.

• Subcontracting

While, until now, it was only possible to make payments to the subcontractors specified in the bid, GEO 26/2022 also introduces the possibility to make these payments directly to the suppliers, subcontractors of the subcontractors or to other economic operators, which execute certain parts of the contract, if they express an option in this respect and provided that this possibility was set forth in the procurement documents.

• Amendment of the public procurement / sectoral contract/framework agreement in case of increase of the contract price

In case of a non-substantial amendment – threshold (art. 221 para. (1) lett. f) of Law 98/2016 and art. 241 of Law 99/2016), the new legislative amendment is intended to clarify the fact that, for successive amendments, the value of the amendments will be determined based on the net cumulated value of the successive amendments, without taking into consideration also the amendments that do not lead to the increase of the contract price and without prejudice to the general nature of the contract/framework agreement.

2. AMENDMENTS WITH RESPECT TO LAW 101/2016

• Resolution of disputes before the courts of law

Compared to the previous regulation, GEO 26/2022 provides, as derogation, a new term for the submission of the claims arising from the performance of the administrative contracts and those arising from the termination or rescission for breach, unilateral termination for convenience or early termination of the public procurement contracts for reasons independent from the contracting authority, i.e. 15 days from the communication of the complaint to the defendant; in this case, the maximum duration of the entire judicial proceeding will be extended accordingly, and this cannot exceed 55 days from the date when the court is notified.

With respect to the jurisdiction to resolve the disputes, it is clarified the fact that the civil section of the tribunal within the jurisdiction where the contracting authority’s headquarters is located or where the plaintiff’s headquarters/domicile is located has the competence to resolve in the first instance also the disputes and claims arising from the termination or rescission for breach, unilateral termination for convenience or early termination of the public procurement contracts for reasons independent from the contracting authority.

As an element of novelty, the injunction procedure is not anymore admissible in connection with the suspension of the termination or rescission for breach, unilateral termination for convenience or early termination of the public procurement contracts for reasons independent from the contracting authority – in addition to Decision 27/2020 issued by the High Court of Cassation and Justice establishing that the injunction procedure in relation to the suspension of a performance bond related to a public procurement contract is not admissible.

A new term is introduced for filing the claims arising from the termination or rescission for breach, unilateral termination for convenience or early termination of public procurement contracts, i.e. 30 days as of the date when the right has arisen, unless the special laws stipulate other statute of limitations periods for the material right of action in relation to the breached legal or contractual obligations.

• Contracting authority’s obligation to take actions with a view to retaining the guarantee submitted, if the contracting authority obtains a favorable final decision in relation to the challenge submitted within the public procurement procedure

The contracting authority will be required to take actions for retaining the bail established before the National Council for Solving Complaints submitted by the bidder that files the challenge, when the challenge is resolved in favor of the authority by final decision. Thus, the regulation is intended to cover the damage caused to the contracting authority by the delays within the award procedure.

3. AMENDMENTS TO THE METHODOLOGICAL NORMS FOR THE APPLICATION OF THE PROVISIONS CONCERNING THE AWARD OF PUBLIC PROCUREMENT AND SECTORIAL CONTRACTS

GD 375/2022 further details the methods for establishing the tender guarantee and the performance bond under the form of the guarantee instrument, as follows: (i) letter of guarantee issued by a credit institution from Romania or from another state or (ii) guarantee insurance issued either by an insurance company holding an operating authorization issued in Romania or in another Member State of the European Union and/or which is registered in the registries published on the website of the Financial Supervisory Authority, or by an insurance company from a third State through a branch authorized in Romania by the Financial Supervisory Authority.

GD 375/2022 stipulates that the 5 day term for the establishment of the performance bond may be extended at the contractor’s request for justified reasons. However, such may not exceed a 15-day term from the signing date of the contract.

The termination or rescission for breach, unilateral termination for convenience or early termination of public procurement contracts related to the transport infrastructure projects can justify the exceptional situation for the application of the negotiation procedure without prior publication, if the termination of the contract does not occur due to the contracting authority’s fault. However, in order to ensure a real competition, the contracting authority will have the obligation to invite to the negotiation the bidders admissible in the initial procedure, and their number may not be lower than 3. Moreover, the procedure without publication may be initiated even if another award procedure provided by the law is conducted in parallel.

In accordance with the new amendments, any bid, the price of which, without VAT, is less than 80% of the estimated value of such contract, will be considered as unusually low financial proposal.

With respect to the adjustment/revision of the price, the contracting authority will be entitled to include such clauses for services or supply contracts performed over a period exceeding 6 months and for works contracts performed over a period of 6 months maximum; for services or supply contracts performed over a period exceeding 24 months, as well as for works contracts performed over a period exceeding 6 months, the inclusion of such clauses within the contracts is mandatory.

Furthermore, it is now stipulated the possibility for the contracting authorities to issue the documents acknowledging the (non)performance of obligations under a public procurement contract also during the performance of the respective contract, every 90 days, not only upon the completion of the works or services contract, as regulated until now. The documents acknowledging the non-performance of obligations issued for the failure to perform the contractual obligations by the contractor/member of the consortium, and, if the case, for the possible harm caused, will be published in SEAP, within 60 days from the issuance date, but no earlier than the expiry date of the term for submitting the objections.

4. AMENDMENTS TO GD 1/2018 – GENERAL AND SPECIAL CONDITIONS AND THE CONTRACTUAL AGREEMENT FOR THE EXECUTION OF WORKS AND FOR THE DESIGN AND EXECUTION OF WORKS

The provisions concerning the performance bond were amended and detailed, and certain sub-clauses pertaining to the work statements and payment certificates are supplemented by provisions on successive retentions as method of establishing the performance bond.

To establish the prices related to the contractual amendments, the Supervisor will also consider the profit share explicitly declared by the Contractor in the bid.

The qualification of the breach that may lead to the termination of the Contract by the Employer as severe is eliminated, if the Contractor, without reasonable justification, fails to comply with the provisions of a notice issued in accordance with item (a) of sub-clause 63.2, within the reasonable term set in such notice.

To sub-clause 64.1[1] a case for termination of the contract by operation of the law, without formal notice, notice of default, court decision, arbitral award or any other formalities, is added, for the situation where the Contractor fails to perform its obligations established after two notices issued by the Employer, each having a remediation period of minimum 30 days. The termination in these circumstances will be considered as unpredictable event for the Employer and outside its control, in accordance with the legal provisions.

If the agreement is terminated, the period in which the Supervisor must certify the value of the Works is shortened from 90 days to 25 days, the same term also applying to the drafting of the Supervisor’s report on the Works performed by the Contractor.

On the other hand, the Contractor will be entitled to terminate the agreement only after sending 3 notices to the Employer, informing the Employer about the failure to comply with the obligations under the contract, and not just 2 notices, as required under GD 1/2018 until now. Also, sub-clause 65.1 (1) letter b) is supplemented by indicating that any termination notice sent by the Contractor to the Beneficiary which does not comply with such provision shall be automatically deemed as null and void.

As regards the resolution of disputes, a new sub-clause is added, 70.2[1], expressly allowing the Employer to specify in the award documentation the way in which disputes are to be resolved, either by an ordinary court or through arbitration, and expressly referring to the application of the rules provided under Law 101/2016, if the Employer opted for the dispute to be resolved by the ordinary courts.

For design and execution of works contracts

The term for issuing the Administrative Order to Start the Design Activity is shortened from 30 days to 15 days.

A new provision is included with respect to the Administrative Order to Start the Execution of the Works, which is to be issued by the Supervisor only if the Technical Execution Project has been completed and the Building Permits have been obtained. Furthermore, it is established that the Supervisor will include the Work Commencement Date in the Administrative Order to Start the Execution of the Works, and this day should fall within maximum 30 days of the issuance of the Administrative Order to Start the Execution of the Works. The possibility of issuing the Administrative Order to Start the Execution of the Works per Sections/Sectors has been included within the new enactment.

The execution of the works will start on the Work Commencement Date, and the phrasing as soon as possible is deleted, which will speed up the execution process.

5. AMENDMENTS TO THE RELATED LEGISLATION

• Water Law 107/1996

The beneficiaries of infrastructure projects of national interest will be granted with a legal right of temporary administration of the land areas that are part of the public water domain, which will be specified in the water management permit, and will cease to be effective when the reception upon completion of the works is performed for the relevant projects.

• Law 50/1991 on the authorization of the performance of construction works

An exception has been included within the new enactment with respect to Art. 8 para. (2) of Law 50/1991. By this, the demolition permit is no longer mandatory for constructions located on land areas that are part of the expropriation corridor for transport infrastructure projects of national interest.

• Law 255/2010 on the expropriation for reasons of public utility, necessary for completing objectives of national, regional and local interest

An obligation is provided for utility owners with networks located in the area where the execution works will be performed. They must clear the site by diverting/protecting their systems, based on the technical project for the relocation of utility systems endorsed by the expropriating authority, within 6 months of the date when the necessary land areas are made available. Furthermore, it is stated that the site will be cleared either by the expropriating authority, using its own resources, or by the contractor. The deadline for issuing the permit for the technical project regarding the relocation of the utility systems is of 10 calendar days of the date of its submission by the expropriating authority.

It is stated that land areas necessary for borrow pits may be subject to expropriation pursuant to Law 255/2010, and that they will be transferred, at the end of the works, upon request, to the administrative-territorial units in which they are located.

Removing land areas from the agricultural circuit or national forestry fund is exempted from the payment of the taxes provided in the Forestry Fund Law and Forestry Code. New provisions are included with respect to the exploitation and marketing of wood obtained from the forestry land included in the expropriation corridor for the public utility works.

The period in which immovable assets which are the public property of administrative-territorial units, and are affected by public utility works, are transferred, according to the conditions set forth by the law, into the public property of the state and under the administration of the representatives of the expropriating authorities, is shortened from 30 days to 15 days of the notification of the administrative-territorial unit.

• GEO 101/2020 on certain measures for implementing EU funded projects to avoid the risk of losing the funds for the program period 2014-2020

To simplify formalities and reduce the terms provided in Articles 12, 13 and 25 of GEO 101/2010, transport infrastructure projects of national interest are exempted from the application thereof.

• Law 10/1995 regarding quality in constructions

The amendments refer to (i) the approval by order of the ministry of transport of the specific technical regulations regarding the design and execution of engineering constructions for the transport infrastructure of national interest, and (ii) including the National Authority for State Reserves and Special Problems among the state authorities that have control powers for the consistent application of the legal provisions on the quality of constructions.

• Establishment of certain terms intended to streamline certain types of public investment projects

Art. IX of GEO 26/2022 provides for special terms for the issuance of urbanism certificates, endorsements related thereto, building permits, regulatory acts in the environmental protection field from the perspective of the evaluation of the environmental impact of such project for (i) infrastructure projects of national interest, (ii) investment projects the value of which falls within the limits set forth in Art. 42 para. (1) let. a) of Public Finance Law 500/2002, as well as (iii) infrastructure projects funded from European funds implemented by regional operators, as these are defined by the Public Utility Services Law 51/2006.

The infrastructure projects listed above will be exempted from the payment of any taxes or fees requested by the urbanism certificates and established by the decisions of the local or county councils.

The failure to issue the urbanism certificates within the terms provided by the legislation, as well as requesting therein of certain permits/consents that do not have a technical and legal basis in relation to the object of the project, will be sanctioned as contravention.

Special provisions are adopted, which are intended to reduce the delays in the stage of obtaining the endorsements/consents and of the building permit, by the fact that the failure to issue such within the stipulated terms will be assimilated to the submission of a complete documentation, and the endorsements/consents will be considered as granted.

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