Zoran Blažević, dipl.iur. Temporis Consulting Ltd., Zagreb, Croatia 17 June 2015 Intercontinental Hotel, Bucharest NEW EU PUBLIC PROCUREMENT DIRECTIVES, IMPLEMENTATION PROCESS IN REPUBLIC OF CROATIA – STATE OF PLAY Better legal protection for EU financial interests in Romanian public procurement

Content Main focus on: Public procurement cycle and its implementation in Republic of Croatia Institutional and legislation set-up Distrust between parties in public procurement procedures New EU directives – way forward 2

3 Assessment of needs Tender preparation Selection of the bidder Concluding of contract Contract performance What are public procurement activities?

Croatia: Institutional framework CROATIAN PARLIAMENT GOVERMENT OF THE REPUBLIC OF CROATIA VICE – PRESIDENT OF GOVERMENT AND MINISTER of the MINISTRY OF ECONOMY, LABOUR AND ENTREPRENEURSHIP Negotiator for Chapter 5 -Public Procurement - (pre-accecion phase) MINISTRY OF ECONOMY, LABOUR AND ENTREPRENEURSHIP Directorate for the PP System (POLICY) REPORT STATE COMMISSION FOR THE SUPERVISION OF PP PROCEDURES (REVIEW) PARTICIPANTS IN THE PUBLIC PROCUREMENT/ APPEALS MINISTRY OF FINANCE (concession) Agency for Investments and Competitiveness COORDINATING BODY for the IMPLEMENTATION of PP SYSTEM INFORMAL OPERATIONAL WORKING GROUP

Croatia: Legislative framework - Main question, one PPL or more laws? 5

Croatia PP system - legislation Legislation: Public Procurement Law Concessions Law PPP Law Law on State Commission for Supervision of Public Procurement Procedure. By – laws: On public procurement On Concessions On PPPs 6

Drafting of legislation? Drafting legislation with a policy that “everyone dealing with public procurement is a criminal” is a wrong approach. Have in mind that:  number of irregularities are consequence of lack of knowledge, changes in legislation, lack of experience,  restrictive and bureaucratic provisions do not decrease risk of irregularities, fraud and corruption,  as system develops, procurements that are corrupted are usually fully in line with all procedural requirements (especially administrative one),  current political and public pressure towards contracting authorities,  changing the law is usually perceived as the only solution for fighting the irregularities – but is it so? 7

External impact on contracting authorities CONTRACTING AUTHOROTIE Employees Stakeholders Competitors Unions Suppliers Users Political parties National and local government Educational institutions Public interest groups and NGOs Financial institutions Legislation and policy 8

Perception of public procurement Negative in most of the regional countries. Distrust between public and private sector is evident. Functional vs dysfunctional distrust? Lack of integrity and missus of the remedies system. Delays in procurement procedure and execution of the contracts. How to change this behavior? How to create trust from the side of private sector and avoid distrust? 9

E-tendering - preparation for new EU directives Voluntary e-tendering for private sector (obligatory for CAs) Compulsory e-tendering for both sides Contracting authorities Above thresholdBellow thresholdAbove thresholdBellow threshold Central Purchasing Body 1 January January 2015 Other Contracting authorities 1 January July January July

New EU directives – way forward Reduce lengthy and burdensome procurement processes that add cost to business and barriers to market competition. Modernise the procurement procedures and provide more flexibility for purchasers to follow best commercial practice. Support measures to enhance SME access to public procurement, where such measure are non- discriminatory and are consistent with a value for money approach. Allow assessment of past performance of bidders (Art. 57(4)(g) provides for exclusion of economic operators for significant or persistent deficiencies). Allow the skills/quality of service providers to be taken into account, where appropriate, at the award stage (Art. 67(2)(b)) provides that relevant experience of the staff can be taken into account for service contracts and contracts involving the design of works). Less red tape in the selection process though self-declaration (European Single Procurement Document) with the winning tenderer required to supply supporting evidence: Art 59). Make clear how social/environmental aspects can be considered in various parts of the procurement process, such as production processes in award criteria: Art. 67(3). 11

Procurement under EU thresholds EU Treaty principles have to be applied. Croatian experience – not adequate to define only general provision on application of public procurement principles: - need for definition of more detailed implementing rules. Detailed assessment and analysis of implementing models existing in different MSs. Same or more simple rules for low value procurement? Same rules – complex procedures for lower values. Easier for everyday use as contracting authorities don't have different sets of rules (less mistakes in procedure). Introducing third threshold. Contracting authorities defining their own rules of procurement bellow lowest threshold, based on procurement principles. 12

How to fight fraud and corruption? Focus on correctly implementation of public procurement rules: rules have to have real influence, not representing only additional administrative burden, different approach to irregularities: one approach towards irregularities that are caused by lack of experience or expert knowledge, than to those that are mainly related with fraud and corruption, dealing with fraud and corruption is usually covered by other laws and institutions such as Criminal Law, under responsibility of Criminal Police, and State Attorney Office. 13

Flexible or restrictive rules? As public procurement system develops, shift to less bureaucratic and flexible provisions is possible. Competent institutions have to recognize adequate timing and introduce new developments: close cooperation with practitioners - it is crucial to recognize when public procurement system, (general public – also), is ready for further developments, better to introduce less extensive, but implementable amendments than ideal ones which cause delays and will not be accepted in practice or, if needed, better to be regulated in subordinate legislation as it allows easier and faster amendments, Croatian experience – number of provisions that were introduced nationally had increased the complexity of award procedures and were abandoned in time. 14

Conclusion Education of both private and public sector Education about overall procurement goals and tools Clear definition of conflict of interests Introduction of ethical behavior at all levels E-procurement Best practice models should be visible Publicly available guidelines for both public and private side of procurement system 15

Time for…. Questions and comments ??? 16

Thank you for your attention… Zoran Blažević, LLB, director Temporis Consulting Ltd., Republic of Croatia Web: 17