Government Emergency Ordinance no. 39/2011 amending and supplementing Public-Private Partnership Law no. 178/2010 was published in the Official Gazette no. 284 issued on April 21st, 2011.
The Ordinance was passed further to a notification sent to the Romanian authorities by the Internal Market and Services Directorate General of the European Commission according to which the Public-Private Partnership Law contravenes the EU regulations on public contracts.
The amendments and supplements mainly concern:
- defining certain terms and phrases;
- types of activities in public-private partnership (hereinafter referred to as “PPP”) projects;
- public partners;
- exclusion;
- general rules for entering into the PPP contract;
- stages of awarding the PPP contract;
- standstill period;
- requests for clarifications;
- advertising rules;
- termination of the PPP contract;
- challenging the public partner’s acts;
- dispute resolution in court;
- language of the procedure;
- petty offences;
- final provisions.
Definition of Certain Terms and Phrases
The following definitions, inter alia, were changed:
- private investor – a new requirement is added, namely the legal entity or the association of legal entities must have expressed their interest to participate in the selection procedure;
- project company – the phrase “Romanian resident company” is replaced with “Romanian legal entity” and the concept of “shareholders” is removed from the definition;
- notice of selection for PPP – the concept of “prior information notice” is replaced with “notice of selection” and the definition specifies that the notice is published in the Electronic Public Procurement System (hereinafter referred to as “SEAP”) and in the Official Journal of the European Union (hereinafter referred to as “OJEU”).
The following new definitions are introduced:
- private partner – any private investor that has signed a PPP contract;
- open procedure – the procedure for the selection of a private investor, that is conducted in only one stage, pursuant the law, and whereby any investor may submit a tender;
- competitive dialogue – the procedure for the selection of a private investor by the public partner, which is open to any private investor and is conducted in two stages (evaluation stage and negotiation stage) and whereby the public partner conducts a dialogue in accordance with the PPP Law;
- the estimated value of the PPP contract – the sum of the public partner’s contribution value and the total costs as indicated by the pre-feasibility and substantiation studies.
Types of Activities in PPP Projects
According to the amendments, a PPP may be achieved by the following types of contracts:
- contracts for goods and services;
- works contracts.
Also, the following thresholds are set for the PPP contracts:
- RON equivalent of Euro 125,000, exclusive of VAT, for goods and services;
- RON equivalent of Euro 4,845,000, exclusive of VAT, for works.
Public Partners
The Ordinance imposes certain rules for the association of public partners. Thus, the public partners have to determine, by mutual agreement, the member of the association who shall act as a holder of the ownership right and any other requirements concerning the legal status and the enhancement of the public asset that is the subject of the PPP contract. In case of an association between a central public authority and one or more local public authorities for the purpose of a PPP project of national interest, upon completion of the contract, the public asset is transferred to the public partner, namely the central public authority, at no cost and in good condition, free of any liens or encumbrances.
In the above mentioned hypotheses, the prior information notice and the attached document include the agreement of the associated public partners.
Exclusion
The Ordinance takes over the situations of exclusion referred to in art. 181 of G.E.O no. 34/2006. Therefore, the following persons are not allowed to participate in the selection procedures:
- legal entities that are bankrupt pursuant to a decision rendered by a syndic judge or have been the subject of similar procedure under the national law of other countries;
- legal entities that have not fulfilled their obligations relating to the payment of taxes, charges and social security contributions to the budgets part of the general consolidated budget, in accordance with the Romanian legal provisions or the legal provisions in the countries they are established;
- legal entities convicted under the Criminal Code in the last 5 years.
- legal entities that provide inaccurate information or fail to supply the information requested by the public partner in order to prove that they meet the qualification and selection criteria.
If a private investor that falling within one of the above cases justifying exclusion submits a tender or a letter of intent, the public partner will disregard them.
General Rules for Entering into the PPP Contract
According to the Ordinance, the project company may be assigned, subject to the project company’s consent, all or part of the contracts/services provided by the public partner in fulfilling its duties for the entrusted public sector, in connection with the subject of the PPP contract. The PPP contract may also include a clause according to which the public partner empowers the project company to collect the payments made by the end users for the rendered services during the contractual period.
The stages preceding the conclusion of the PPP contract are amended, as follows:
- initiation of the PPP project through the publication by the public partner of the notice of selection and the attached document;
- selection of the private investors by an “open procedure” or “competitive dialogue”;
- conclusion of the project agreement with the selected private investors, if the “competitive dialogue procedure” is used;
- negotiation with the selected private investors that have signed the project agreement, if the “competitive dialogue procedure” is used.
Moreover, it is provided that the project company may only be set-up as a joint-stock company.
Stages of Awarding the PPP Contract
According to the amendments, the PPP contracts are awarded by “open procedure” or by “competitive dialogue”.
A. Open Procedure
The public partner goes through the following stages:
- definition and approval of the PPP project start-up opportunity;
- preparation and approval of the pre-feasibility or substantiation study;
- preparation of the notice of selection and the attached document;
- setting up and appointing the tender evaluation committee;
- preparation and approval of the evaluation criteria, scoring grids, and the treatment of late or unsealed tenders;
- publication of the notice of selection and the attached document:
- the time between the submission of the notice of selection to be published in SEAP and OJEU and the time limit for submission of the tenders must be at least 52 days, if the estimated value of the PPP contract is equal to or higher than RON equivalent of Euro 125,000, exclusive of VAT for goods and services or RON equivalent of Euro 4,845,000, exclusive of VAT for works;
- the time between the submission of the notice of selection to be published in SEAP and OJEU and the time limit for submission of the tenders must be at least 22 days, if the estimated value of the PPP contract is below the thresholds mentioned above.
- receipt and registration of the envelopes containing the tenders prepared by the interested private investors;
- convening of the evaluation committee and the opening of the envelopes containing the tenders in the presence of all members of the committee and the interested private investors;
- evaluation of the bids and the attached documents;
- drawing up of the tender evaluation report, the ranking of private investors and establishing of the successful tender by the evaluation committee.
- communication of the selection decision to each private investor who participated in the procedure:
- the decision is accompanied by a summary of the reasons for rejecting that investor’s tender and a precise statement of the standstill period;
- the public partner is entitled not to communicate the above-mentioned information, only if such disclosure would cause non-application of a legal provision, would impede enforcement of a legal provision, would be contrary to the public interest, would prejudice the legitimate interests of private investors or would prejudice fair competition;
- entering into the PPP contract with the successful investor.
B. Competitive dialogue procedure
The public partner may decide upon the awarding of the PPP contract by competitive dialogue in case of technically and/or financially complex projects and when it is not able to describe beforehand and without help the technical means to satisfy the needs or not able to make the legal or financial arrangements for the project. In this respect, an explanatory note is drafted by which the public partner explains the choice of this procedure.
The procedure involves the following steps:
- definition and approval of the PPP project start-up opportunity;
- preparation and approval of the pre-feasibility or substantiation study;
- preparation of the notice of selection and the attached document;
- setting up of the letter of intent evaluation committee;
- preparation and approval of evaluation criteria, scoring grids, and the treatment of late or unsealed tenders;
- preparation and approval of the negotiation criteria with the private investors;
- publication of the notice of selection and the attached document;
- the time between the submission of the notice of selection to be published in SEAP and OJEU and the time limit for submission of the letters of intent must be at least 37 days, if the estimated value of the PPP contract is equal to or higher than the RON equivalent of Euro 125,000, exclusive of VAT for goods and services or RON equivalent of Euro 4,845,000, exclusive of VAT for works;
- the time between the submission of the notice of selection to be published in SEAP and OJEU and the time limit for submission of the tenders must be at least 22 days, if the estimated value of the PPP contract is below the thresholds mentioned above.
- receipt and registration of the envelopes containing the letters of intent prepared by the interested private investors;
- convening of the evaluation committee and opening of the envelopes containing the letters of intent in the presence of all members of the committee and the interested private investors;
- evaluation of the letters of intent and the attached documents;
- drawing up of the evaluation report by the evaluation committee by which the selected private investors are to be invited to negotiate and sign the project agreement;
- setting-up of the committee to negotiate with the selected private investors for entering into the project agreement;
- inviting simultaneously and in writing the selected private investors to conduct negotiations and to sign the project agreement:
- minimum number of candidates invited is 3;
- the public partner may limit the number of selected private investors that enter into the project agreement, provided that the number of candidates is sufficient to ensure a genuine competition;
- conducting negotiations with the private investors that signed the project agreement according to the criteria mentioned in the attached document;
- submission of the final tender, at the end of negotiations, within the time limit set by the public partner:
- the time limit cannot be shorter than 5 days after the end of negotiations with all candidates if the value of the PPP contract is equal to or less than the RON equivalent of Euro 125,000, exclusive of VAT;
- the time limit cannot be shorter than 10 days after the end of negotiations with all candidates if the estimated value of the PPP contract is higher than the RON equivalent of Euro 125,000, exclusive of VAT;
- the time limit for submission of final tenders is published in SEAP by the public partner
- drawing up of the report ranking the private investors and appointment of the successful tender;
- service of the selection decision to each private investor who participated in the procedure:
- the decision is accompanied by a summary of the reasons for rejecting that investor’s tender and a precise statement of the standstill period;
- the public partner is entitled to withhold the data referred, only if such disclosure would cause non-application of a legal provision, would impede enforcement of a legal provision, would be contrary to the public interest, would prejudice the legitimate interests of private investors or would prejudice fair competition;
- conclusion of the PPP contract with the successful investor.
Regarding the evaluation and negotiation criteria, the lawmaker has established that these criteria must include at least the total cost of the tender, the performance objectives defined in accordance with the purpose of the contract, sustainable development and the share of contract that the private partner is going to assign to SMEs. Other evaluation and negotiation criteria related to the subject of the contract may include: tender quality and innovative character, the time limit for works execution, the equipment or intangible values and the architectural, aesthetic and functional characteristics. The negotiation criteria must be different from the evaluation criteria.
The hypothesis of submission of a tender with an abnormally low price was also introduced in the PPP legislation. In such a situation, the public partner is entitled to disqualify the tender if after the analysis of some details requested from the tenderer, the tender is not supported technically, financially, logistically or does not correspond in other respects established by the public partner in the notice of selection and/or the attached document.
Last, but not least, the public partner is entitled to require the private investors a tender security of 1%, exclusive of VAT, of the estimated value of the contract. The public partner has the duty to verify that the tender security has been created upon the tender opening date, respectively on the letter of intent opening date.
Standstill Period
The PPP contracts may be signed only after the end of a minimum 10-day standstill period from the date of the communication of the outcome of the procedure.
Failure to comply with the standstill period is sanctioned by nullity of the contract.
Requests for Clarifications
The provisions regarding the request for clarifications were taken over from G.E.O. no. 34/2006 on the award of public contracts, public works concession contracts and services concession contracts (hereinafter referred to as “GEO no. 34/2006”) regarding the request for clarifications by the economic operators, however with slight differences:
- any interested private investor is entitled to request clarifications on the notice of selection and the attached document maximum 6 working days before the submission of tenders/ letters of intent;
- the public partner must respond to any such request no later than 3 working days from the receipt of such request;
- the public partner must respond to any such request at least 3 working days before the date of submission of the tenders/ letters of intent.
Advertising Rules
Publication of the notice of selection in OJEU is mandatory in all cases when the estimated value of the PPP contract to be concluded is equal to or higher than the RON equivalent of Euro 125,000, exclusive of VAT, for goods and services or RON equivalent of Euro 4,845,000, exclusive of VAT, for works. The minimum data that must be included in the notice of selection are provided by the appendix to the law.
Termination of the PPP Contract
The new law provides a time limit for the project company’s notifying the public partner of the intent to deliver the public assets and the goods resulted from the PPP contract. Thus, the project company has to notify the public partner at least 90 days but no more than 120 days before the expiry of the contract.
Challenging the Public Partner’s Acts
The new regulation amends and supplements the legal provisions regarding the appeals against the public partner’s acts, taking-over provisions from the public procurement law as follows:
- “aggrieved person” – the concept of aggrieved person was defined as follows: any economic operator that had/has a legitimate interest in connection with that selection procedure and who was, is harmed or is at risk of being harmed by an act of the public partner likely to produce legal effects or by the public partner’s failure to respond to a request regarding the selection procedure in due time;
- “act of the public partner” – is any administrative act, or any other administrative action that produces or might produce legal effects, the failure to perform an obligation imposed by law in due time, omission or refusal to issue an act or to perform an action in connection with or in the selection procedure;
- “body responsible for appeal procedures” – the National Council for Solving Complaints (hereinafter referred to as “NCSC” or “Council”) is the authority responsible for settlement of appeals;
- “notification of the public partner” – prior to referring to the Council, the aggrieved person is entitled to notify the public partner regarding the alleged violation of legal provisions and the intent to address to the NCSC; after receiving the notification, the public partner may take any actions it deems necessary to remedy the alleged violation;
- “deadline for lodging appeals” – the Council can be notified within 10 days from the day following the date when tenderers are informed of an act of the public partner considered unlawful; if the notification regards the content of the tender documents published in SEAP, the date of acknowledging is considered the publication date;
- “remedial measures” – after receiving an appeal, the public partner is entitled to take the remedial measures it deems necessary; these measures must be notified to the complainant, to the other private investors involved in the selection procedure and to the Council, no later than a working day from taking such measures;
- “entering into the PPP contract” – the public partner is entitled to enter into the PPP contract only after the Council’s decision is communicated, but not before the expiry of the standstill periods; the sanction for the failure to comply with these periods is the absolute nullity of the contract;
- “content of the appeal” – the appeal must be lodged in writing and must include the following elements:
- name, domicile or residence of the complainant, or, for legal entities name, headquarters and the unique registration code; for the legal entities the names of their representatives must also be mentioned;
- name and headquarters of the public partner;
- the PPP contract’s subject and the selection procedure used;
- subject of the appeal;
- the legal and de facto grounds of the appeal;
- if possible, the means of evidence supporting the appeal;
- the signature of the partner or of the representative of the legal entity;
- “submission of the appeal” – the appeal is submitted to both NCSC, and the public partner, no later than the expiry of the 10 day-period, or shall otherwise be rejected as late; the complainant has to attach to the appeal a copy of the challenged act, if issued, and copies of the documents used as evidence, if available;
- “opinion of the public partner” – the public partner is required to send the NCSC, within maximum 3 working days from the expiry of the appeal deadline, its opinion on the appeal, together with any other documents considered clarifying and a copy of the selection procedure file; within the same time limit, the public partner must send the opinion to the complainant as well;
- “access to the selection procedure file” – the complainant has access to the documents submitted by the public partner in the selection procedure file to the Council; the technical proposals of other private investors participants in the selection are exempted and may be consulted by the complainant subject to the written consent of the private investors concerned; such consent is attached to the application that the complainant submits to the Council;
- “suspension of the procedure” – the Council may order suspension of the selection procedure until a decision is made on the merits in duly justified cases and in order to prevent an imminent damage; the suspension is ordered within 3 days, on the request of the interested party; the suspension decision may be appealed in court, separately, within 5 days since communication;
- “settlement deadline” – NCSC must settle the appeal on the merits within 20 days since the receipt of the selection procedure file from the public partner, respectively within 10 days, in case of an exception that prevents the analysis of the appeal on the merits; the deadline for settling the appeal may be extended just once, by 10 days in duly justified cases;
- “notification of the Central Unit for the Coordination of Public- Private Partnership” – if the Council considers that, besides the acts challenged in the selection procedure, there are other acts that also violate the law, but to which no reference has been made in the appeal, the Council notifies the Central Unit for the Coordination of Public- Private Partnership (hereinafter referred to as “CUCPPP”) within the General Secretariat of the Government by sending all the relevant data/documents in support of such notification;
- “retention of the tender security” – if the appeal is rejected by the NCSC, the public partner retains the following percentages from the complainant’s tender security, depending on the estimated value of the contract:
- between RON 63,000 and RON 420,000, including – 1% of this value;
- between RON 420,001and RON 4,200,000, including – RON 4,200 +0.1% of what exceeds RON 420,001;
- between RON 4,200,001 and RON 42,000,000, including – RON 7,980 + 0.01% of what exceeds RON 4,200,001;
- between RON 42,000,001 and RON 420,000,000, including – RON 11,760 + 0.001% of what exceeds RON 42,000,001;
- between RON 420,000,001 and RON 4,200,000,000, including – RON 15,540 + 0.0001% of what exceeds RON 420,000,001;
- RON 4,200,000,001 – RON 19,320 + 0.00001% of what exceeds RON 4,200,000,001.
The amounts above mentioned are returned to the complainant by the public partner within maximum 5 working days from the date of the decision of the court that admits the appeal against the Council’s decision to reject the initial appeal.
- “Council’s decision” – once adopted, the Council’s decision is justified and communicated in writing to the parties within three days from the date when the decision is rendered; the decision by which the Council ordered remedial measures is submitted, in copy to the CUCPPP within the General Secretariat of the Government, institution that responsible for monitoring the remedial measures taken; the Council’s decision is binding on the parties, and the PPP contract signed in breach of Council’s decision is null and void;
- “review” – NCSC decisions on the settlement of the appeal and order to pay the fine may be subject to a review by an application filed in the competent court; the time limit for applying for review is 10 days from the communication of the decision;
- “the body responsible for review procedures” – the competent review body is the Court of Appeal, Administrative and Fiscal Litigation Division, within whose jurisdiction the headquarters of the public partner are located; the applications for review of the Council’s decision regarding selection procedures for the conclusion of PPP contracts for services and/or works related to the transport infrastructure of national interest are settled by the Bucharest Court of Appeal, the Administrative and Fiscal Litigation Division.
Dispute Resolution in Court
The supplementations and amendments relating to dispute resolution in court mainly concern issues such as:
- resolution competence – trials and claims for damages to cover prejudices caused during the selection procedures, and those regarding the performance, nullity, cancellation, rescission, termination for default or convenience of PPP contracts are firstly settled by the commercial division of the tribunal within whose jurisdiction the public partner’s headquarters are located;
- statement of defence and counter-claim – the defendant must submit the statement of defence within 3 days from the service of the statement of claim; the statement of defence is communicated as soon as possible to the claimant, who is bound to submit the answer to the statement of defence within 3 days from the service. The counterclaim must be submitted within the same 3 days from the service of the statement of claim;
- hearings – when the answer to the statement of defence is submitted, the judge sets by resolution the first hearing which will be held within maximum 20 days since the registration of the statement of claim, having summoned the parties; subsequent hearings cannot be set for dates beyond a10 day-period;
- suspension of the contract performance – in duly justified situations and in order to prevent imminent damages, before a decision is reached on the merits of the case the court may order suspension of the contract, on the request of the interested party, by reasoned decision and summoning the parties.
- nullity of the PPP contract– the court may declare the contract null in the following situations:
- the contract was entered into even if the public partner has failed to perform its legal obligations regarding the publication of the notice of selection;
- infringement of the legal provisions on entering into the contract after the expiry of the standstill period and after NCSC notifies its decision, as long as such violation has prevented the private investor to apply for review before the signing of the contract, if such an infringement is combined with an infringement of other provisions governing PPP, and as long as that infringement has affected the chances of the interested investor to obtain the contract.
- remedies – the decision rendered by the court of first instance may be appealed within 5 days from the service thereof; the second appeal is settled by the Commercial Division of the Court of Appeal, urgently and with priority and does not suspend the enforcement of the decision.
Language of the procedure
Under the new legal regulations, the whole procedure for entering into a PPP contract must be conducted in Romanian.
Also, all the management documents for the PPP contract must be in Romanian.
Petty Offences
Under the new law the actions below are considered as petty offences and are sanctioned as follows:
- refusal to make available to the CUCPPP the information concerning the PPP contracts, which is requested for monitoring and supervising purposes – fine between RON 80,000 and RON 100,000;
- failure to submit the documents concerning the PPP contracts within 5 days from the receipt of the written request from the CUCPPP – fine between RON 40,000 and RON 80,000;
- failure to meet Council’s decision in due time after the date when the decision remains final and irrevocable – fine between RON 40,000 and RON 80,000;
- any other breach of Law no. 178/2001 or of any enactment issued for the implementation thereof conducting to violation of the principles, except for the principle of efficient use of funds – fine between RON 20,000 and RON 40,000;
Authorized personnel of CUCPPP find the petty offences and impose the appropriate sanctions. The reports on offences may be appealed in District Court 1, Bucharest.
CUCPPP may be notified of the infringement of legal provisions regarding PPP contracts by any interested person. That person must submit to CUCPPP along with the notification all relevant data/ documents in support thereof.
Last, but not last, CUCPPP is responsible for checking procedural aspects related to the selection of the private partner, that are governed by PPP legislation.
Republication of the Law
Law no. 178/2010 as amended and supplemented by the Ordinance shall be republished once adopted by law and the texts renumbered.
