Some notable changes in the field of public procurement law that were made last year have been intensely debated in practice. The purpose of this article is to briefly explain the source of changes and the consequences occurred in practice.
- Review of the Changes: Scope and Effect
According to the explanatory memorandum to the Emergency Government Ordinance no. 45 of May 24, 2018 (“E.G.O. no. 45/2018”), amending and supplementing some laws in the public procurement field, the changes are meant to improve and make the public procurement process more flexible, in order to increase the spending of funds.
In the legislator’s view, the changes were also necessary for a greater clarity of the normative acts with impact on the public procurement system, as well as for ensuring a better correlation with the EU law. It was explained in the memorandum to E.G.O. no. 45/2018 that without such changes „(…) there is a risk of diminishing the spending of the allocated funds, including the European funds, the most serious consequence in this case being the postponement/ delaying the implementation of major investment projects with social and economic impact at national or local level.”
Without contesting the novelty elements brought to the public procurement laws by means of E.G.O. no. 45/2018, which are mostly welcomed, there are some changes that seem to depart from the stated purpose and might constitute a real obstacle that hinder people’s ability to access justice.
With the aim of establishing a unitary regulation of stamp duties due for challenges in the matter of awarding public procurement contracts, E.G.O. no. 45/2018 introduced new rules for stamp duties.
As such, starting with the date of entry into force of this normative act (i.e., June 4, 2018), the court actions deriving from the performance of administrative contracts are subject to a tax established by reference to the estimated value of the contract, as follows: a) up to RON 100,000,000 inclusive – a stamp duty of 2% of the estimated value of the contract; b) exceeding the amount of RON 100,000,000 – a stamp duty of 1% of the estimated value of the contract.
Changes in E.G.O. no. 45/2018 apply accordingly to challenges of public procurement contracts that fall within the scope of Law no. 101/2016 on the remedies in the matter of awarding public procurement contracts, sectoral contracts, works and services concession contracts, as well as for the organization and functioning of the National Council for Solving Complaints (“Law no. 101/2016”).
To this end, Law no. 101/2016 was amended so that to impose a stamp duty computed by reference to the estimated value of the public procurement contract instead of a stamp duty computed by reference to the amount in dispute, as it was regulated in the past.
Thus, irrespective of the amount in dispute, if such steams from an administrative contract with a value of up to RON 100,000,000 inclusive, the claimant owes a stamp duty worth up to RON 2,000,000 (the equivalent of roughly EUR 420,000). In the case of court actions derived from contracts worth more than RON 100,000,000, the stamp duty that should be advanced by the claimant would be at least RON 1,000,000.01 (the equivalent of roughly EUR 200,000).
In these conditions, one may naturally ask the question of the extent to which the access to justice is limited and consequently, this constitutional right becomes only an illusory right.
Using comparison analysis, one may note that, while the previous stamp duties were affordable in the past, now is clearly very burdensome to initiate court actions in light of the new law establishing a stamp duty quota of 1% and 2% respectively of the value of the contract.
The next step of this article is to determine whether, the new regulation of stamp duties does not violate the fundamental principle of free access to justice.
- Understanding Effective Access to Justice
When reading the explanatory memorandum to E.G.O. no. 45/2018, it appears that the legislator’s intention was to protect the contracting authorities against possible inappropriate behavior of economic operators. Thus, it was intended to reduce the risk of submitting ungrounded complaints, only for the purpose of delaying/canceling the award procedure, with a negative impact on both the performance of the contracting authority’s activities and of major investment projects.
However, it should not be forgotten that, for protecting the constitutional rights and guarantees, it is necessary to ensure that the new stamp duties do not become an impediment in the exercise of legitimate rights by those who want to challenge even the abusive conduct of the contracting authorities.
By imposing prohibitive taxes, it seems that the ordinance determined the impossibility of reaching its goal, namely improvement and greater flexibility of the public procurement system. On the contrary, it would appear that, with the entry into force of the new law, economic operators’ access to remedies in the matter of awarding public procurement contracts is restricted as those who do not have strong financial capacity are in a position to waive certain procedural rights against the contracting authorities.
- Remedies and interpretation of law
The reactions generated by the new rules in the field of public procurement litigation have not been delayed, as starting with November 2018, the Constitutional Court of Romania has been notified with two unconstitutionality pleas of the legal provisions regulating the taxation at the estimated value of the public procurement contract. None of the two unconstitutionality pleas has been decided yet and until the decisions will be released the courts of law will continue to enforce E.G.O. no. 45/2018 and the new rules on stamp duty.
On the other hand, E.G.O. no. 45/2018 is subject to criticism also because of the drafting technique chosen by the legislator.
According to the legal norm in question, the stamp duties related to the court actions resulting from the performance of administrative contracts are determined not in relation to the actual value of the public procurement contract, but in relation to its „estimated” value.
However, once the procurement procedure is completed and the administrative contract is concluded, one can no longer talk about an “estimated” value but only about the “actual/established” value of such contract. This distinction is clear also in the Law no. 101/2016 which refers to the „established” value of the contract when regulating the security due for contestations to be settled by the National Council for Settlement of Contestations or by the competent courts.
From this perspective, it seems that the legal provision in question does not meet the requirements of clarity and predictability that a text of a normative act has to comply with. Also, the new provisions on stamp duty are not correlated with the different categories of remedies available under Law no. 101/2016.
In conclusion, besides the fact that the analyzed provisions do not meet the above prerequisites, it is naturally a legitimate question whether, through their effects, these provisions go into conflict with the constitutional rights and guarantees. It is undeniable that, precisely the exorbitant amount of new stamp duties imposed for public procurement litigation may lead to a denial of access to justice and possibly irreparable harm caused to economic operators.