Procedure for Public Procurement Proceedings Could Be More Honest and Transparent

The Chamber has expressed its opinion on the Draft Amendment of the Public Procurement Act and other acts, which by now are on the table of the Parliament. With this draft act, the state wishes to solve practical problems that have arisen in relation to the public procurements. The Chamber has submitted 6 amendment proposals to the Riigikogu, which are mainly related to fair competition and providing better transparency for the tenderers.

Chamber stands for honest competition in public procurement proceedings
In its opinion, the Chamber highlighted several pain points in defence of the tenderers and primarily honest tenderers, which we have presented in previous stages of the draft, but which have not been taken into account by the initiators of the draft act. Among other things, we expressed the position that the repeated failure to submit annual reports in due time could be one of the bases for removing someone from the public procurement proceedings as in practice the problem has been in the fact that public procurements are won by companies who have not submitted the annual reports for years or have failed to submit them in due time.

Repeated failure to submit annual reports as a basis for removal from the public procurement proceedings would serve two important purposes for the business environment. First, it would facilitate ensuring that companies fulfil their obligation to submit annual reports. Secondly, it will make competition in public procurement proceedings more honest, both in the sense that companies who have previously failed to perform their obligation to submit annual reports could not compete on equal grounds with honest entrepreneurs, and in the sense that the annual reports are a good indication for the contracting entity when assessing the actual economic status of the tenderer, and thereby mitigating various potential risks for the contracting entity.

Keeping in mind the previous aspects, the Chamber has made a proposal to amend the Public Procurement Act in the way which eliminates from the public procurement proceedings the tenderers who have previously repeatedly failed to submit the annual report in due time. 

Problems that need solving in relation to transparency of public procurements
The Chamber sees it as a problem that several contracting entities do not disclose the estimated cost of the procurement. However, that creates a situation where, on the one hand, contracting entities can easily reject all the received tenders by the reason of high cost. On the other hand, it also makes tenderers less interested in participating in public procurements, because in this situation it is difficult to assess what should the cost of the tender be in order for it to be competitive. Based on these issues, the Chamber made a proposal to amend the Public Procurement Act in the way that would allow rejecting all tenders by the contracting entity due to high cost only in case if the estimated cost of the procurement has been previously disclosed.

Another possibility to increase transparency for mini procurements is to oblige contracting entities to disclose the final results of mini procurements carried out within the framework of framework agreements under the same principles as public procurements, because the said mini procurements may sometimes exceed the limit of public procurements many times. This would give the tenderers a knowledge of what the expectations of the contracting entities for the tender are and the tenderers could take this information into account for tenders submitted in the future. Due to that, the Chamber has made a proposal to amend the Public Procurement Act in the way that it would oblige to inform the parties to a framework agreement of the decisions made within the framework of a mini procurement and preconditions of a successful tender. 

According to the draft act, the majority of the amendments contained in the draft act will enter into force on 1 April 2022. Some of the articles of the draft act are set to enter into force on 15 January 2023.