Key Changes to the Serbian Public Procurement Act
Key Changes to the Serbian Public Procurement Act
On 23 December 2019, the National Assembly adopted the Public Procurement Act (‘’Official Gazette of RS’’ No. 91/2019 – hereinafter the “PP Act”) that started to apply as of 1 July 2020. The PP Act replaced the previous version of the Public Procurement Act and introduced numerous novelties that significantly change the public procurement landscape.
Without going into all the details introduced by the PP Act, we will outline several changes that we find interesting for companies participating in public procurements.
Submitting application electronically
The PP Act introduced the possibility of submitting an electronic offer. This is done online via the public procurement portal that was revamped in line with the new solutions introduced by the PP Act.
An instruction manual was published for users of the newly established portal.
Threshold increase for application of PP Act
The previous PP Act threshold for application of RSD 500,000 has been increased to varying thresholds depending on the type of procurement (e.g. procurement of works in the value of less than RSD 3 million or services below RSD 1 million).
Also, the procedure of minor value public procurement is removed from the PP Act.
Criteria for selecting the offeror
The criteria and procedure for the qualitative selection of offerors are changed significantly.
One of the major changes is that now the offerors can prove the qualitative criteria by submitting a statement listing the names of the issuing authorities that handle the records relevant for the selection criteria in the procurement procedure.
Naturally, the contracting authority may request the offeror to produce official documents listed in the statement or inquiry with the relevant authority on the validity of the statement made by the offeror.
These changes aim to increase the efficiency and speed of the process of submitting an offer while enabling the contracting authority to request proof of documents when and if needed.
The Register of Offerors, run by the Business Registers Agency, has been updated to include information on the absence of key reasons for exclusion from the public procurements. Although the transition from the previous law to the new information handled by the Register of Offerors was burdened with significant delays and red-tape, the Register should prove to be useful and efficient in the context of public procurements.
Amendments to public procurement agreements
The scope of amendments to public procurement agreements has been significantly expanded. The effect of this change provides for more flexibility in the execution of these agreements, which can be especially useful for complex or long-term agreements.
For example, the previous law allowed amendments to be made only regarding the price if the agreement did not stipulate additional grounds (which was the case too often).
This led to contractors being severely limited in their freedom to change elements of the agreement that were not essential. For example, they could not replace sub-contractors (the only exception was insolvency of the sub-contractor) if the need arose.
Hence, under the previous legislation, if the sub-contractor refused or was unable to participate in the public procurement, there was rarely a way in which the parties could remedy the situation without committing a breach of the contract.
Such situations led to creating considerable risks on both sides. For the contractor, the public procurement agreements were terminated and collaterals activated to compensate for the breach, whereas the contracting authority would lose precious time and resources in order to initiate a new public procurement procedure for the same purpose.
Limitations for engaging sub-contractors
The limitation of a maximum 50% volume of work that could be delegated to sub-contractors was entirely removed, meaning that offerors have significantly more freedom when structuring their offer now in terms of their internal organization and division of work.
The changes shown above only begin to show the novelties introduced by the PP Act which seems to have received very positive remarks from the public. It remains to be seen of course, how these will be implemented and utilized by contracting authorities and offerors in practice.
This text is for informational purposes only and should not be considered legal advice. Should you require any additional information, feel free to contact us.
Radovan Grbović, Partner
Boris Radojčić, Senior Associate
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