David Dvorak Czech Construction Law Society Bucharest, 26 October 2018 Construction Public Contracts with focus on contract modifications Country Report - Czech Republic David Dvorak Czech Construction Law Society Bucharest, 26 October 2018

Construction Public Procurement Country Report Strana

Basic legal background New Civil Code since 2014 („modernised version of ABGB 1811“) Bulding Act of 2006 (recodification planned) Public Contract Act of 2016 Strana

Public procurement in 2018 (1) Public Contract Act (PCA) No 134/2016 Coll. (in force since 1. 10. 2016) transposes all 4 EU procurement directives applies both to above and below-the-threshold contracts above cca 240.000 EUR for works and 80.000 EUR for services) new approach: less strict – less formalistic provisions e.g. reversed evaluation and assessment of tenders e.g. simplified qualifications and requirements on bids Strana

Public procurement in 2018 (2) simplified procedure for below-the-threshold contracts (works up to ca. 2 mil. EUR) no specific part for work contracts (1 decree on requirements on project documentation) e-procurement: NEN – governmental e-tool for public procurement (gratis for everyone) ca. 3-5 commercial e-tools review: Office for Protection of Competition (2 instances) administrative court in Brno (ev. Supreme Adm. Court) Strana

Construction contracts no national standardized construction contract most of public contracts – design&bid&build type increasing number of D&B contracts FIDIC (Red & Yellow Book) obligatory for road and railway construction (MoT) new translation and special provisions in 2016 plan to draft a Czech standard contract Strana

BIM specific guidelines for road and railway infrastructure (MoT) at present mostly private projects governmental policy for implementation of BIM approved in 2017 road map until 2022: technical/ICT measures (standardization) public procurement (planned mostly for 2019): guidelines for use of BIM in public procurement model tender documentation and model contract obligatory use for above-the-threshold contracts from 2022 digitalization of building permission processes specific guidelines for road and railway infrastructure (MoT) Strana

Modifications of public contracts Some points for discussion Strana

Modifications of public contracts Past situation formerly very strict attitude only additional works per art. 31(4)(a) Dir. 2004/18/EC, limited to 20 % great emphasis on objectively unforeseeable character of changes use of fixed prices (no measured prices) problems in construction process, loss of EU funding, even criminal proceedings… Strana

Modifications of public contracts Present situation new, more flexible approach Art. 72 Dir. 2014/24/EU transposed into PCA (only with some stricter % limitations) use of measured contracts allowed sometimes problems with Register of Contracts (publication of contract/amendment = force) e.g. Guidelines to modification of FIDIC contracts (variations & claims) according to PCA (MoT) Strana

Modifications of public contracts Situation 1 – review clauses Art. 72(1)(a): where the modifications, …, have been provided for in the initial procurement documents in clear, precise and unequivocal review clauses… CZ – e.g. inflationary clauses, extension of time, measured contracts Can a whole model contract (e.g. FIDIC) be seen as a „review clause“ (with variations and claims)? CZ – prevailing opinion – NO modifications have to be done according art. 72 Dir. Strana

Modifications of public contracts Situation 2 – extension of time Is an extension of time for completion of work seen as a substantial modification of public contract? CZ – prevailing opinion - YES How precisely shall be a review clause drafted in relation to time? e.g. subclause 8.4 FIDIC Red Book (extension of time) – „Exceptionally adverse climatic conditions“ or „when it snows and temperature falls below -10°C“ Strana

Modifications of public contracts Situation 3 – additional works Art. 72(1)(b): „for additional works [...] that have become necessary and that were not included in the initial procurement where a change of contractor: (i) cannot be made for economic or technical reasons [...]; and (ii) would cause significant inconvenience or substantial duplication of costs for the contracting authority.“ What kind of modifications are covered? Does it cover all changes which arise during the building process (e.g. FIDIC variations)? Strana

Modifications of public contracts Situation 4 – de minimis Art. 72(2): de minimis modifications (up to 15 % & EU thresholds) How do you calculate the value of the modification? Can it be used for qualitative modifications (e.g. extension of time, limitation of contractual penalty or liability, etc.)? If yes, how do you evaluate the modification? Strana

Modifications of public contracts Situation 5 – replacement of contractor Art. 72(1)(d)(i): „where a new contractor replaces the one to which the contracting authority had initially awarded the contract as a consequence of … (i) an unequivocal review clause or option …“ Is it applicable for (major) works? change of the scope change of deadlines liabilities and guarantees etc… Strana

Thank you for your attention! David Dvořák dvorak@mt-legal.com Czech Construction Law Society, Prague http://spolstavprav.cz/english-info/