Bulgaria – Country Report PUBLIC PROCUREMENT & CONSTRUCTION Boyana Milcheva attorney-at-law Boyan Ivanov attorney-at-law Dimitrov, Petrov & Co.

Public Procurement Market - Fact Sheet (1) Legal Framework: Directive 2014/24 (classic contracting authorities) Directive 2014/25 (utilities contracting entities) Public Procurement Act (primary national legislation) Regulation on the Application of the Public Procurement Act (secondary national legislation) Bulgaria Country Report

Public Procurement Market - Fact Sheet (2) EU and national Thresholds EU regulations apply for: works contracts with indicative values > EUR 2,55 mill. National award of contract rules apply for: works contracts with indicative values > EUR 138 000 < EUR 2,55 mill. (award by means of a “public competition” or “direct negotiation”) works contracts with indicative values > EUR 25 500 < EUR 138 000 (award by means of a “public notice” or “invitation to specific economic operators”) works contracts with indicative values < EUR 25 500 (direct award with no procedure whatsoever) Bulgaria Country Report

Public Procurement Market - Fact Sheet (3) Over 6 400 Contracting Authorities / Entities, out of which: 240 utilities Over 6 160 classic Over 10 700 announced public procurement procedures on an average basis, per annum, out of which: Over 1650 concern the award of works contracts Over 3900 concern the award of supply contracts Over 5100 concern the award of services contracts Bulgaria Country Report

Public Procurement Market - Fact Sheet (4) Bulgaria Country Report

Public Procurement Market - Fact Sheet (5) Works contracts awarded by type of contracting authority / entity (data for 2017) 2 000 contracts by municipalities (with value of approx. EUR 874 mill.) 173 contracts by utilities (with value of approx. EUR 40 mill.) 477 contracts by central government (with value of approx. EUR 350 mill.) Bulgaria Country Report

Public Procurement Market - Fact Sheet (6) Bulgaria Country Report

Public Procurement Market - Fact Sheet (7) Bulgaria Country Report

Public Procurement Market - Fact Sheet (8) Bulgaria Country Report

Public Procurement Market - Fact Sheet (9) Bulgaria Country Report

Public Procurement Market - Fact Sheet (10) Bulgaria Country Report

Public Procurement Market – Recent Developments (1) Railway Infrastructure (Contracting Authority – National Railway Infrastructure Company) Ongoing evaluation of the tenders submitted for the modernization of the Elin Pelin – Kostenets railway section: Indicative value - EUR 716 mill. Open Procedure (three lots) MEAT criterion – quality + price + implementation terms Submitted tenders – 19 tenders Bulgaria Country Report

Public Procurement Market – Recent Developments (2) Railway Infrastructure (Contracting Authority – National Railway Infrastructure Company) Ongoing evaluation of the tenders submitted for the modernization of the Kostenets - Septemvi railway section: Indicative value - EUR 185 mill. Open Procedure MEAT criterion – quality + price + implementation terms Submitted tenders – 7 tenders Bulgaria Country Report

Public Procurement Market – Recent Developments (3) Railway Infrastructure (Contracting Authority – National Railway Infrastructure Company) Ongoing evaluation of the tenders submitted for the design and reconstruction of the Sofia – Voluyak railway section: Indicative value - EUR 87 mill. Open Procedure MEAT criterion – quality + price + implementation terms Submitted tenders – 4 tenders Bulgaria Country Report

Bulgaria Country Report

Bulgaria Country Report

Bulgaria Country Report

Public Procurement Market – Recent Developments (4) Road Infrastructure (Contracting Authority - National Road Infrastructure Agency) Zheleznitsa Tunnel Construction (part of the Struma Highway – lot 3.1) – contract awarded Indicative value – EUR128 mill. Open procedure (3 lots) MEAT criterion – quality + price + implementation terms Submitted tenders – 28 tenders Bulgaria Country Report

Bulgaria Country Report

Bulgaria Country Report

What the industry wants (1) On April 2018, the Construction Chamber invited the NGOs in the sector to form task groups for improvement of the construction legislation. A PPA Task Group was formed with representatives from the Construction Chamber, BSCL, Chamber of Engineers in the Investment Design, Bulgarian Association of Consulting Engineers and Architects, Union of Architects in Bulgaria, Chamber of Engineers in Bulgaria, etc. Bulgaria Country Report

What the industry wants (2) The PPA Task Group worked on three major workstreams selected as most important for the work with public funds in the construction sector: Amendments of the legislation to answer the concerns of the construction industry; Recommendations and proposals to the Public Procurement Agency for use of standard forms for tender documents and standard forms for construction contracts; Proposals to the Public Procurement Agency for issuing guidance on specific questions; Bulgaria Country Report

The bill of amendment of PPA (1) Subcontractors Current status The tender bid should state the name of the subcontractor and the part of the works to be assigned Substitution or hiring of a new subcontractor is considered amendment of the awarded contract The subcontractors should be used if stated in the tender documentation The regime is identical regardless whether the economic operator relies on the capacity of the subcontractor Simplifying the use of subcontractors both in the tender phase and during the execution of the contracts. Currently the procedure is burdensome – the subcontractor should be stated in the tender documents, including the contract and each substitution or hiring of a new subcontractor is considered amendment of the contract which is allowed only as an exception. The contractor is liable to the Employer for the works but it’s not free to use subcontractors and to include them during the construction, the subcontractors should be stated in the offer. This is applicable even in the cases when the contractor is not using the capacity of the subcontractor to meet the tender requirements. The result in practice – using of subcontractors “secretly” which is negative at least in two aspects: The companies - subcontractors could not use the track record and could not benefit from possibilities to receive payment from the Employer The companies contractors – are not free to delegate small scale work to subcontractors during the construction which most of the times makes them offer higher price for execution of the works by themselves. The proposed amendment aims simplifying the procedure and allowing more freedom for the contractor. The accent is put on the fact that the use of subcontractor should be a right and not obligation for the economic operator which is in any case liable for the due execution of the contract. So, the contractor is allowed not to announce the subcontractor during the tender stage and is free to select subcontractors during the construction by only notifying the Employer. Two regimes are differentiated – when the technical and professional ability of the respective subcontractors are used to meet the selection criteria and when they are not used The first option – the contractor should include information in the tender and the subcontractor should meet the qualification criteria. In this case the use of the appointed subcontractor is mandatory. In case of substitution the new subcontractors should also meet the criteria. The second option is present the choice of subcontractor is free and the contractor is not obligated to use the subcontractors. The substitution of subcontractors is free. Bulgaria Country Report

The bill of amendment of PPA (2) Subcontractors Proposed amendments Simplifying the procedure and allowing more freedom for the economic operators. The use of a subcontractor should be a right and not obligation for the economic operator which is in any case liable for the due execution of the contract The economic operator is allowed not to announce the subcontractor during the tender stage and is free to select subcontractors during the construction by only notifying the contracting authority Two different regimes depending on using of capacity of the subcontractors to meet the selection and award criteria Bulgaria Country Report

The bill of amendment of PPA (3) Quality issues in implementation of the public procurements in the construction sector Proposed amendments Stricter technical and professional ability requirements to the participants in the tender procedures and the evaluating commission Limitation lowest price award criteria to be used in the tenders related to design and consultancy services. Construction services contract could be awarded on the basis of lowest price only in case of prequalification based on technical and professional ability. In case of abnormally low or high tenders - the lowest and highest tenders which differ with more than 20% will be excluded Quality issues in implementation of the public procurements in the construction sector To face this - more strict technical and professional ability requirements to the participants in the tender procedures and the evaluating commission – requirements for at least 5 years of experience Limitation lowest price award criteria to be used in the tenders related to design and consultancy services. Construction services contract could be awarded on the basis of lowest price only in case of prequalification based on technical and professional ability. In case of abnormally low or high tenders - the lowest and highest tenders which differ with more than 20% will be excluded. Bulgaria Country Report

The bill of amendment of PPA (4) Modification of contracts during their term The non-precise implementation of the article 72, paragraph 1, l. „а“ of Directive 2014/24 restricts the possibility of modification of contracts only in cases the subject matter is not altered rather than the overall nature of the contract The proposed amendment will allow lawful modifications during the execution term and use of international contracts (such as FIDIC) which in practice provide for clear, precise and unequivocal review clauses Currently the possibilities for modifications during the term is very limited due to non-precise adoption of the article 72, paragraph 1, l. „а“ of directive 2014/24 which allows modifications which do not alter the overall nature of the contract or the framework agreement. The Bulgarian PPA provides for modification which do not change the specific subject-matter of the contract. The proposed amendment will allow lawful modifications during the execution term and use of international contracts (such as FIDIC) which in practice provide for clear, precise and unequivocal review clauses, which may include price revision clauses, or options. which state the scope and nature of possible modifications or options as well as the conditions under which they may be used. Bulgaria Country Report

The bill of amendment of PPA (5) Signing of European Single Procurement Document (ESPD) Currently no differentiation between the persons for which there is information in the ESPD (in the exclusion part) and the person which has to sign the ESPD – they are treated as one and the same The proposed amendment – the ESPD to be signed only by the legal representative/s of the economic operator Bulgaria Country Report

Recommendations and proposals to the Public Procurement Agency (1) The selection and contract award criteria to be based on JASPER evaluation methodology for selection of consultants and construction companies for infrastructural projects Main recommendation - the lowest price criteria not to be used for consultant contracts Putting emphasis on the key experts and limitation of their substitution FIDIC-based contracts to be used as standard forms of contracts Issuing of guidance on the use of the frame agreements in the construction Recommendations and proposals to the Public Procurement Agency for use of standard forms for tender documents and standard forms for construction contracts - The selection criteria and contract award to be based on JASPER evaluation methodology for selection of consultants and construction companies for infrastructural projects which main recommendation is the lowest price criteria not to be used for consultant contracts - Putting emphasis on the key experts JASPERS ('Joint Assistance to Support Projects in European Regions') is a technical assistance partnership between the European Commission, the European Investment Bank, and the European Bank for Reconstruction and Development. Its purpose is to promote the efficient use of EU Structural Funds, thereby stimulating future investment. FIDIC -based contracts to be used as standard Bulgaria Country Report

Recommendations and proposals to the Public Procurement Agency (2) In 2017 the Bulgarian Public Procurement Agency (PPA) published draft standard forms for the design and construction of waste water treatment plants and other water and sewerage infrastructure, using the FIDIC 1999 Red and Yellow Books General Conditions On 4th September 2018, the Minister of Finance approved tender documents for the water sector Programme “Environment 2014-2020” and Programme “Development of Rural Regions 2014-2020”, using the FIDIC Red and Yellow Book 1999 General Conditions In 2016, at the request of the Bulgarian Construction Chamber, the BSCL developed Contract Agreements and Particular Conditions for the FIDIC Red and Yellow Books, harmonized with the national legislation. At present, FIDIC forms are used by the Ministry of Environment and Water, on projects financed by the EBRD, highway projects with EC co-financing and private projects with foreign clients. The Ministry of Regional Development and Public Works is expected to follow. In 2016 the Bulgarian Public Procurement Agency (PPA) published for consultation a set of draft standard forms for construction contracts, intended to become mandatory for public procurement. The proposed forms were criticized by construction law experts and did not enter into force. In June 2017, the same agency published draft standard forms for the design and construction of waste water treatment plants and other water and sewerage infrastructure, using the FIDIC 1999 Red and Yellow Books General Conditions. On 4th September 2018, the Minister of Finance approved tender documents for the water sector Programme “Environment 2014-2020” and Programme “Development of Rural Regions 2014-2020”, using the FIDIC Red and Yellow Book 1999 General Conditions. Bulgaria Country Report

Questions ? Bulgarian Society of Construction Law http://bscl.bg/en/