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“Special law” discharges most valuable public procurement

The Law on Special Procedures for the Implementation of Projects for the Construction and Reconstruction of Line Infrastructure Facilities of Particular Importance for the Republic of Serbia, whose proposal is before MPs, is yet another in a series of acts that may have the purpose and certainly result in undermining of the public procurement system. Although the new Law on Public Procurement was adopted less than a month ago, at the suggestion of the Government, in order to comply with EU rules, the bill on special procedures is being passing to enable projects worth several billion euros to be contracted under a different procedure.

This bill, like its predecessors - such as the one that was enacted in connection with The Belgrade Waterfront project, and served as a model in several later cases - follows the opposite logic: if something is "of particular importance to the Republic of Serbia", then it will be contracted to apply rules that provide less protection of public interest (especially when it comes to transparency and competition.)

Although the Draft Lawbrings a definition of "projects of particular importance",essentially it will primarily serve to cover deviations from the general rules in situations where project financing and project implementation have already been agreed or are expected to be arranged through agreements with other countries (construction of metro lines in Belgrade for example). This is also acknowledged in one part of the bill’s explanatory note questionnaire: “Is it possible to make a change by applying the actual regulations?It is possible, but the implementation period, that is, the start and end time of these projects would be significantly extended and in some situations the commitments from the signed bilateral agreements might not be fulfilled."Therefore, the adoption of this act may be a response to criticism coming from the EU regarding thenegotiations on Chapter 5 that Serbia too often uses interstate agreements as an exception to the implementation of the public procurement rules. Once this "special law" is adopted, it will serve to transform what has already been agreed with representatives of other states and their banks and companies in the form of a legal act and some sort of procedure for selecting a bidder.

The Law will apply to projects for the construction and reconstruction of public line transport infrastructure (road, rail, water and air) "of particular importance for the Republic of Serbia", and the Government is the one who will decide what projects are of that particular importance. Projects worth over € 50 million have already been identified as such, that is they will not need a Government’s special decision, and will be implemented through some form of public-private partnership.

The Draft Articles 32 to 36 stipulate that the rules on public procurement regarding “procurement plan, prior notification, manner of proving mandatory and additional conditions for participation in the public procurement procedure, deadlines for submission of tenders and deadlines for the Republic Commission for the Protection of Rights in Public Procurement Procedures to make a decision, shall not apply.”

Making exception from the obligation to plan these procurements like all others will reduce the possibility of insight into the estimated value of the procurement and into the methodology used to obtain the estimation. Shortening deadlines for the submission of bids will result in reduced competition. It will also create a space for a possibility for the contracting authority to conclude the contract, even though a request for the protection of rights has been filed, will expose the contracting authority to the risk of harm. The special law also releases the contracting authority from the obligation to ask the Public Procurement Office for an opinion on whether there are valid reasons for the use of negotiated procedure instead of an open procurement procedure.

In addition to all mentioned above, it is explicitly stated that when there are international agreements, then the rules defined in those agreements apply.

The application of the Draft Law Articles from 37 to 48 will cause the greatest disruption of the system. By these articles is stated that "especially in case of urgency and risk of the project realization" (ie, it may happen in other situations as well, and the risk is given only as an example), if a preliminary feasibility study with the general project has been already prepared, the Government may decide that the public procurement rules do not apply at all to the project or individual phases and activities of the projects, but rather "a special procedure for selecting a strategic partner for the purpose of implementing a project of particular importance for the Republic of Serbia".

The obvious intention is to tailor such special procedures to a pre-selected strategic partner. Article 39, paragraph 3, is explicitly read that the Government will issue a regulation defining rules for choosing a “strategic partner” for each project individually!

With all this in mind, the only correct move will be to withdraw this law from the procedure or to delete Articles 32 to 48 from it, and to apply the general Public Procurement Law and the Law on Public-Private Partnerships and Concessions to the construction of infrastructure projects. We also remind that the Law on Public-Private Partnerships should be significantly improved, since its actual version does not even provide fundamental level of transparency (publication of contracts, for example).

Other provisions of this special law should be also addressed systematically, that is, through possible amendments of relevant regulations, rather than by creating special rules only for one type of public purpose building.