BCC and institutions discussed the new PPA

Bulgarian Construction Chamber (BCC) for the fifth consecutive time hosted a roundtable on “Modernization of public procurement”. The focus of discussions this year was the recently adopted by the National Assembly new Public Procurement Act (PPA), which enters into force on 15 April. The event, organized by BCC at the initiative of the Regional Office – Sofia, with official media partner “Stroitel” newspaper brought together representatives of institutions and the industry. The Chairman of the Chamber and host of the forum Eng. Svetoslav Glosov pointed out that over 80% of the work in the construction sector is provided thanks to EU funds. He added that according to preliminary data of the National Statistical Institute (NSI) the signed contracts on announced public procurement in sector “Construction” for 2015 number 2,840 worth 1.347 billion euros. “That is why the industry relies heavily on public tenders. The quality of the underlying PPA and the regulations for its application are crucial for the construction sector,” summarized Eng. Glosov. Deputy Prime Minister for EU Funds and Economic Policies Tomislav Donchev was definite that the new PPA is certainly better than the acting so far because the opinion of all parties was taken into account in its drafting. “From now on the challenge is to learn how to apply it,” said Deputy Prime Minister. He underlined that the standardization of procedures would prevent violations. “We have come a long way on this topic. The most severe will be the final phase in terms of construction. Within a few months the process of supplies will be standardized. Five or six types of criteria will be introduced, which every contracting authority can use,” said Tomislav Donchev. He also announced that is discussed the idea of introducing tougher sanctions for contractors allowing systematic violations in tenders. Minister of Environment and Water Ivelina Vasileva determined the new PPA as expression of the desire to modernize the process of award. “It guarantees the effective use of public funds and ensures the economic development of Bulgaria,” she added. Vassileva said that her office is ready by-end April to submit to the Public Procurement Agency developed in partnership with BCC standard documents. Deputy Minister of Regional Development and Public Works Nikolai Nankov stressed that the law gives a chance to small and medium companies. Petar Kanev – Chairman of the Committee on Economic Policy and Tourism at the 43rd National Assembly, said that the new PPA with its predictability will benefit contracting authorities and governing bodies and will allow for better planning and avoiding the risk of delay in projects and low absorption of EU funds. At the Fifth roundtable, where moderator was Eng. Nikolai Stankov – Deputy Chairman of BCC and Chairman of the Regional Office – Sofia, also participated Malina Krumova – Acting Director of Directorate “Central Coordination Unit” to the Council of Ministers, Eleonora Nikolova – Acting Director of the Center for Prevention and Countering Corruption and Organized Crime, Doncho Barbalov – Deputy Mayor for Finance and Economic Policy at Sofia Municipality, Ivo Katsarov – Secretary General of the Public Procurement Agency, Eng. Asen Antov – Executive Director of National Company “Strategic Infrastructure Projects”, Reneta Georgieva – Executive Director of Enterprise for Management of Environmental Protection Activities (EMEPA), Yana Georgieva – Director General of DG OPE, Nedyalko Nedyalkov – Deputy Chairman of the State Agency for National Security, Ioanis Parteniotis – Vice President of CL “Podkrepa”, as well as representatives of the Public Financial Inspection Agency, Ministry of Agriculture and Food, and State Fund Agriculture. The forum was opened by Deputy Prime Minister of EU Funds and Economic Policies Tomislav Donchev. “I start with a wish: if not this year, let next year or in 2018 the trend to reverse – to maintain and if possible increase the volume of funds that come as public funding and you receive in public procurement; only their share in what you do to be smaller – around 40 – 45%, and the remaining – to come from private investors. This is a mark of vital, working, growing economy. Our intention is financial resources that enter the market to be not less. Even after 2015, when due to the end of programming period 2007 – 2013 and its overlap with the current 2014 – 2020 the amount of disbursed funds was a record,” Deputy PM addressed the representatives of the construction industry. He noted that for another year the event was attended by all key state institutions – the Public Procurement Agency, ministries, departments and funds. Deputy PM reported that in 2015 there were 5,913 contractors, almost 24,500 performers, 11,111 public procurement of which nearly 10% with European funding. The total value of signed contracts in tenders was BGN 6.9 billion. “This is a huge resource – over a quarter of the state budget. It triggered the whole machine – the Council of Ministers, ministries, agencies, specialized structures that are intended to supervise or control the process to reach the smallest municipality and company. It is extremely surprising that such a complex process –because of European legislation and national complicating of the process, is available for such a wide range of participants. Only after several years of effort, despite all defects and faults, it moves according to national and European requirements, which is an achievement,” said Tomislav Donchev. In terms of control, he said that a new idea is discussed for sanction regime for contractors with over 4 – 5 violations by reducing government subsidies. “When talking about cutting funding for local authorities, I do not mean it to be half because we do not aim to punish citizens. But imagine a subsidy 5 – 10% lower and the series of extremely sharp and unpleasant questions that it will create among the public. Politicians are susceptible to public pressure in a good sense of the word and we should try upon infringement it to be provided. Ministries and other institutions will be punished in a similar way as municipalities – by reduction of funds for salaries. Let us not look at the topic seen through the prism “good state and bad municipalities” or vice versa. There is no difference here and differentiated approach will not be applied. Such sanctions are applied in a number of countries – an example is Ireland. There, if the administration does not meet the criteria of efficiency, its subsidies reduce for next year,” explained the proposal Donchev. He said that when the final vision is ready, legislative amendments will be needed. “With BCC we know that when we do something it should be open and in dialogue – that is why I allowed myself to share the idea. The envisaged changes will be in the legislation governing financial relations between the central and local government and between governmental departments. The amendments would affect more than one normative legal act. But I underline that this is an issue that we so far only discuss,” said Deputy PM. Speaking to reporters after the opening of the roundtable, he commented on the complaints in public procurement by the Commission for the Protection of Competition (CPC). According to him, the discussed in parliament issue whether cases be distributed randomly among members of the CPC, should be solved not by the new PPA but by amendments to the Law on the Protection of Competition. “I sympathize with the proposal cases to be given randomly although the point of this is limited. CPC takes collective decisions and the rapporteur has a secondary role. However, I talked to MPs and have given my full support – the change to happen,” said Tomislav Donchev. Minister of Environment and Water Ivelina Vasileva also commented on standardization. According to her, now is the time to focus on good planning. She thinks from this point of view standardization of documents for public procurement, which is part of the concept of modernization, is essential both for the construction industry and the institutions. “Standardization will ensure maximum efficiency in the investment of public funds. Thanks for the good partnership with BCC because together we are in an advanced stage in the development of standard documents concerning public contracts in construction of infrastructure projects in the sectors “Water” and “Waste management”. This includes standardization of contracts, methodology and criteria for selecting contractors,” said Vasileva. She pointed out that in this way will be provided a balance between the interests of all parties and mistakes will be reduced. “Some have paid costly the mistakes with serious consequences for the municipalities on which were imposed financial corrections. Our expectations are that the good cooperation and partnership we have built over the years will lead us to simplification, more efficiency and benefits to society. We believe that by the end of April we will be ready to present to the Public Procurement Agency the developed standardized documents. We are grateful to the Central Coordination Unit at the Council of Ministers and to the Agency that we work together,” explained Minister Vasileva. Then Deputy Minister of Regional Development and Public Works Nikolai Nankov took the floor. He pointed out that having in mind the recent adoption of PPA now all participants in the system of public procurement need training. According to him, with its introduction from 15 April we will witness objectification of evaluation criteria, exclusion of the discriminatory conditions in the procedures. “The law will give a definite plane of equal competitive start. It encourages drafting of standard tender procedures. We have been long discussing with BCC standardization,” added Nankov and reminded that some days ago they had discussed with the Chamber standard contracts under the National Program for Energy Efficiency of Residential Buildings (see p. 10). In this regard Nankov said that currently under it were completed and settled 5 buildings and are implemented 800. By the end of the year are expected to be fully ready 1,255 buildings. Nankov expressed his admiration to BCC for the organization of a number of forums, including the roundtable, which he attends. “These events are important for all parties. In this way we exchange experience and views to achieve the great goal – more efficient spending of public resources,” said Nankov. Petar Kanev, Chairman of the Parliamentary Committee on Economic Policy and Tourism, said that the main task is to regulate the processes for better business environment in Bulgaria and PPA is one of the necessary components of it. “Bulgaria holds 100th position in the ranking of doing business by the World Bank for duration of the procedure for obtaining construction permits. Our country in the same study is after 110th position in terms of inclusion in the energy system. Seemingly these are legal problems but practice shows that in 90% of the cases normative legal acts are not as bad as transitional and final regulations which empower the relevant departments with regulations to govern the processes,” said Petar Kanev. With regard to CPC he underlined that the Commission is anti- monopoly, and 98% of its decisions are related to PPA. That is why according to him, a debate should begin whether it is appropriate institutional appeal under the law to be again job of the judiciary instead of the CPC. “Public procurement contracts are not end in themselves; they are a tool to obtain best services at best prices. They do not end with the signing of the contract but with its implementation,” said Malina Krumova – Acting Director of Directorate “Central Coordination Unit” to the Council of Ministers. She commented that are needed efforts in terms of quality of the contractors and their capacity to organize the procedures. “Let us bear in mind that in order to have good conduct of public procurement there should be good planning. They do not operate in a vacuum; PPA is not the only law we have to consider. We are about to learn that conducting public procurement procedures can go with approval of project proposals. The new law ensures a good environment, but we should be able to apply it, to use electronic public procurement,” summed up Krumova. Eleonora Nikolova – Acting Director of the Center for Prevention and Countering Corruption and Organized Crime, reminded that her office and the Chamber have been long discussing the topic to introduce e-procurement, central purchasing bodies and preliminary certification of the participants. Nikolova highlighted again the significance of CPRB of BCC. “From the center we repeatedly emphasized that the new PPA is approached to be a framework and to regulate principal matters. This leads to resistance of the legislation we have not observed so far,” said Nikolova. She said PPA regulates the basic objects, subjects, types of procedures, while technical aspects are left to the regulations for its implementation, which will be also carefully analyzed by the Center for Prevention and Countering Corruption and Organized Crime. “In the context of our good work with the Chamber I would like to invite its representatives to participate in our new project to reduce administrative burden on small and medium businesses by reducing corruption in municipalities because BCC has a very great experience on construction permits,” said Nikolova. Deputy Mayor of Sofia Municipality Doncho Barbalov underlined that Sofia is one of the largest contractors in the country. “On an annual basis from BGN 400 to 650 million are only the sites in our capital program. Moreover, we assign a lot of ongoing activities and all that happens under the PPA. The legislative framework in the sphere of public procurement is very important for us to improve our work,” he added and stressed that he hopes soon to be implemented the initiative for standardization of procedures in order to be used more standard documents. In this way, according to Barbalov, will be increased the effectiveness of awarding contracts. Secretary General of the Public Procurement Agency (PPA) Ivo Katsarov and Deputy Chairman of BCC Andrei Tsekov presented texts from PPA and the regulations to it. The roundtable continued with discussions in the second panel after statements of the official guests in the first one. Ivo Katsarov, Secretary General of PPA: This is the legal framework that outlines environment in the sector for next years PPA is a traditional participant in the organized by the Chamber forums. Now, however, for the first time we comment entirely a new PPA. Two days ago our colleagues were in Brussels where they met with representative of the European Commission (EC). It turned out that Bulgaria is one of the few countries that will succeed to transpose EU directives on time. Given the fact that this is a completely new law, it should be expected that there will be a certain period of adjustment. It is quite natural some questions to arise. This should not be a reason to turn our backs to its good features – we should try to solve the problems because, whether we like it or not, this is the legal framework that outlines the environment in the sector over the next ten years. The law reflects the European model. As a whole, accents in the directives and in our PPA are related to acceleration of the procurement process. A quick reach of the funds to business is sought. In times of financial crisis, the European lawmaker realized that he could not waste time in long and complicated procedures and there should not be restrictions to participants. Today standardization was mentioned a lot of times and I want to emphasize that the Executive Director of PPA will coordinate the process of its preparation. Currently we are completing work on the documents for law enforcement. So we hope by its entry into force to have the full documentation. The process of public procurement is running to develop a new platform for public procurement, which will gradually be triggered in its full version until 2017. Andrei Tsekov, Deputy Chairman of BCC: The draft regulations keep the principle spirit of the law When thinking of quality legislation, I always imagine the Obligations and Contracts Act (OCA), which although drafted decades ago, was amended a few times. The acting so far PPA is just the opposite example. In this sense, I would like to say that the new PPA is more like the OCA because it reflects quite correctly wisdom and experience that have been accumulated throughout Europe for 30 – 40 years when the tender law was developed. A year ago at the Fourth roundtable we were pleased to note the integrity and legal fairness of the draft for PPA, and now it is preserved in the discussion and adoption of the law in parliament. Certain provisions increase the chances of small and medium enterprises to participate in the procedures. We are satisfied with the regulation of the status of subcontractors. I have to say that precisely in this regard is perhaps the best example of cooperation between the Chamber and government institutions. As to the regulations, I had the opportunity to get acquainted in details these days. They keep the spirit of the law and correctly build on some basic fundamental tools stipulated in the Public Procurement Act. I am delighted to see regulations of the status of branches of foreign legal entities. I think the regulations practically eliminate one of the main arguments – that our legislation does not allow award of additional works within a construction contract. Great dignity of the law and regulations are the provisions governing publicity and transparency. When the Public Procurement Portal starts operations in 2017, it will be an additional tool for transparency. Article 30, which regulates preparation of the procedure for public procurement, raises certain concerns in me. I cannot explain exactly why it is necessary in cases where documentation for award of the tender is made by external persons they have to indicate their profession and job. There is an interesting provision we should pay attention to – Article 33, paragraph 1 introduces a ban on assessment of plans, schedules on organization of the implementation, that is, risk assessment, work program can no longer be used as award criteria. Certainly in a regulation cannot be covered all cases of the construction contract – this should be done in the process of standardization of documents. I would like to express concern related to the proposed fees for appeal procedures. They are relatively fair as a whole. But I want to say that introduction of a flat fee of BGN 1,000 for each order up to BGN 1 million will be impossible for small companies that bid for BGN 20 – 30 thousand. Perhaps a more differentiated tariff should be considered. Now the main challenge for all participants is the law enforcement.