© OECD

A j

oin

t i

nit

iati

ve o

f th

e O

EC

D a

nd

th

e E

uro

pe

an

Un

ion

,

pri

nc

ipall

y f

ina

nced

by t

he

EU

The Croatian Experience of Building a Remedies System

Mihaela Matokanovic, SIGMA Expert

OECD Headquarters, Paris, 24-25 April 2014

Size and the importance of PP market…

• The economic significance of public procurement in EU is substantial.

• According to estimations, governments spend on average between10% and 15% of their GDP on public procurement (according to some even more than 20% in developing countries).

• Someone could be displeased with the process and the outcome…

Remedies system

‘’Remedies are legal actions which allow

economic operators to request the

enforcement of public procurement

regulations and their rights under those

regulations in cases where contracting

authorities, either intentionally or

unintentionally, fail to comply with the legal

framework for public procurement.’’ (SIGMA

Brief 12)

The Remedies Directives coordinate national remedies systems by imposing standards intended to ensure that rapid and effective measures for correction are available in all EU countries in cases where bidders consider that contracts have been awarded unfairly.

As soon as the alleged irregularity occured!

Effective remedies system is in the interest of all stakeholders:

• economic operators

• contracting authorities

• society as a whole.

Stable and efficient remedies system will:

-increase the lawfulness and transparency,

-build up confidence

-help opening up the PP market to foreign

economic operators.

Remedies systems of EU MS have to be

established according to the requirements

of the EU Public Procurement Remedies

Directives 89/665/EEC and 92/13/EEC,

amended by Directive 2007/66/EC, the

Treaty and the case law of the CJEU.

Main requirements for remedies system

• Rapidity

• Effectiveness

• Transparency

• Non-discrimination

• There are few different models of institutions competent for remedies in EU Member States, due to the diversity of national legal systems.

• Regular courts

• Specialised administrative bodies (in approximately half of MS)

• A combination of the two

• It is difficult to claim that in general one model is better than another.

Advantages of the establishment of specialised

procurement review bodies

• The procedure is usually simpler and

quicker than in Courts (rapidity)

• The members are dealing exclusively with

procurement cases (specialised experts)

• Lower costs

Basic requirements for a specialised

review body-judicial character

• The body is established by law.

• The body is permanent (not ad hoc).

• The body’s jurisdiction is compulsory (decisions

have to be enforceable)

• The procedure before the review body is

between the parties (inter partes).

• The body applies the rules of law.

• The body is independent (on institutional and

personal level).

Non-judicial character

• In the case where review bodies are not judicial in character the award of public contracts may be reviewed in the first instance by such bodies provided that:

- there are written reasons for their decisions

- the decisions made by bodies not having a judicial character must be subject to judicial review or review by another body, which is a court or tribunal and is independent (and meets above mentioned).

Republic of Croatia

• The Republic of Croatia is a 28th EU Member

State. Croatia became Member State on July 1,

2013.

• ‘’Croatia's accession marks another milestone in

the construction of a united Europe. It also

provides fresh evidence of the transformative

power of the European Union: torn by conflict

only two decades ago, Croatia is now a stable

democracy, capable of taking on the obligations

of EU membership and of adhering to EU

standards.’’ (www.europa.eu)

• Main goals for Croatian public procurement

strategy and action plan, including remedies:

1. Development of legislative framework

2. Development of institutional framework and strengthening administrative capacity

3. Prevention of corruption in the public procurement system

Strategic decisions:

-have strong impact on a particular area

-are directing the development in certain direction.

-to be clear of desired direction and aware of the consequences

-to take into account opinions and views of all major stakeholders of the system

So it is important:

Development Process I:

• Development of new regulations and institutions can be

organized through:

- formation of working groups (formal or informal, at the

level of central policy makers, at the level of major

stakeholders, with communication between all groups)

- regular meetings,

- systematic correspondence,

- sending the draft texts to relevant institutions etc. for

their opinions.

This is a time consuming process but this

approach guarantees quality results.

Development Process II:

• activities must be conducted on all levels

(national, regional, local)

• Full cooperation and coordination needed:

-institutions within the public

procurement system

- contracting authorities and

economic operators

- with other institutions: audit, internal audit and

control, prevention of corruption and conflict of

interest...

Remedies system…

• Very important part of the negotiation in Chapter

5.

• This was one of the first areas affected by the

EU pre-accession process.

• Negotiation process had a powerful impact on

the remedies system in Public procurement-it

changed dramatically.

Before EU membership negotiations…

• Remedies in public procurement were handled within a department in Ministry of finance.

• Separate department competent for appeals and policy making in PP, under the supervision of a minister.

• Most of the aforementioned basic requirements were not met.

• Result: lack of credibility.

In 2003….

• a separate, autonomous body was established-

State Commission for Supervision of Public

Procurement Procedures.

• The body was established by law.

• The body was permanent (not ad hoc).

• The body’s jurisdiction was compulsory

• The procedure was inter partes.

• Rules of law.

• Independent (accountable to the Parliament).

Nowdays…

‘’The State Commission shall be an

autonomous and independent public body

competent for considering appeals in

connection with public procurement

procedures, concession award procedures

and procedures for selection of private

partners in public private partnership

projects.’’

Legal basis

• Act on State Commission contains provisions

that have been aligned with Directive

2007/66/EC of the European Parliament and of

the Council of 11 December 2007 amending

Council Directives 89/665/EEC and 92/13/EEC

with regard to improving the effectiveness of

review procedures concerning the award of

public contracts (OJ L 335, 20.12.2007).

State Commission in 2007/2008

• Separate, independent body

• 5 members, one president, one deputy.

• All together 21 employees.

• In 2007, State Commission received 637 appeals/complaints

• State Commission was competent for appeals in public procurement lodged only by the bidders and only at the end of the procedure.

State Commission in 2014. • 9 members, one president, 2 deputies (working in 3

councils)

• All together 35 employees.

• In 2011, State Commission received 1921 appeals in

Public procurement and in concessions

• In 2013, State Commission received 2098 appeals.

• State Commission is competent for appeals in Public

procurement, Public private partnerships and

Concessions. The State Commission is also competent

for submitting accusatory motions in relation to

misdemeanors set forth in PPL and other regulations in

the field of public procurement

COMPETENCE IN 2014.

Appeals in Public procurement procedures

Appeals in concession award

procedures

Appeals in procedures for selection of private

partner in PPP

Submission of the accusatory motions

regarding misdemeanors in Public procurement

Statistics

By the end of 2013., total number

of appeals was 2098.

Greatest challenges in remedies I

• Constant growth in competences

(concessions, PPP, misdemeanors)

• Constant growth in number of appeals

(lack of administrative capacity )

• Prolonging in average number of days

needed to resolve an appeal (30 in 2007

and 70 in 2011).

Greatest challenges in remedies II

• Appeals became more and more sophisticated

• Special expert knowledge for some subject

matters

• Ex officio

• Problems due to automatic suspension

• Administrative court (long procedures, unclear

results and action after the verdict)

• Appeals from different countries and different

legal systems…

Lessons learned in Croatia…

• It is better to have specialised administrative body competent for remedies (in Croatia regular courts are overloaded, long and complicated procedures and there is a lack of PP experts).

• PP market was changing constantly, number of appeals kept increasing on yearly basis. We made a mistake with waiting too long before we took some actions (more members, more legal experts). You need to be flexible and adjustable-your problems are multiplying on the PP system.

• Fight against corruption:

- is extremely important but Remedies body in PP

is not excellent choice to place to many

obligations in this respect (ex officio).

• Full cooperation with policy making body.

• Constant capacity strenghtening.

• Transparency and independency in

work (the result is credibility among

contracting authorities, economic

operators and general society).

Thank you!