Legal Journal: Legislative Compass - June 2024

AMENDMENT TO THE ACT ON PUBLIC PROCUREMENT

The Ministry of Investment, Regional Development and Informatization of the Slovak Republic is the proposer of the amendment to Act No. 343/2015 on Public Procurement and on Amendments and Additions to Certain Acts.

The main reasons for the announced changes are:

• reducing administrative burdens;
• significant time savings,
• speeding up public procurement, and
• elimination of procedural complications.

The amendment to the Act includes changes not only in the public procurement process itself and its limits, but also changes in control over public procurement and sanctions for violations of the Public Procurement Act.

UNIFICATION OF RULES FOR BELOW-THRESHOLD AND LOW-VALUE CONTRACTS

Rules for Below-threshold contracts and Low-value contracts in public procurement, the new they will unite. This unification is to be understood as meaning that the law completely excluded the award of low-value contracts, removed its procedures and adopted new rules for the award of below-threshold contracts.

In the current legislation, we distinguish 3 types of contracts:

1. Small-scale order

2. Below-threshold order

3. Above-limit order

An essential part of the amendment is an increase in the threshold of a below-threshold contract from the current EUR 10,000 to EUR 50,000. This is to bring us closer to the European average (Ireland – EUR 50 000, Hungary – EUR 40 000, Poland – EUR 30 000) and speed up the procurement process in practice.

This means that while a contracting authority to which the Public Procurement Act applies could purchase goods, services and construction works up to EUR 10,000 outside the Public Procurement Act, this limit has now been increased to EUR 50,000. And so today it can buy up to EUR 50,000 without being subject to the rules of the Public Procurement Act.

NEW RULES FOR BELOW-THRESHOLD CONTRACTS

From now on, two basic procedures apply to below-threshold contracts:

• with publication and
• without publication.

These rules will affect the way in which contracting authorities obtain goods, services and works.

PROCEDURE WITHOUT PUBLICATION

For the procurement of goods and services up to the value of the entire below-threshold contract, it is possible to use the procedure without publication. In this case, the contracting authority must address at least three economic operators and ask them to submit a tender. At the same time, it must ensure that the costs incurred are cost-effective. Once the contract has been concluded, it is necessary to publish the contract report in the Central Register of Contracts within 10 days. The contracting authority also has the option to voluntarily choose the procedure with publication.

PROCEDURE FOR CONSTRUCTION WORK

In the case of construction works, the procedure depends on the estimated value of the contract. If the value of the contract is up to EUR 800,000, the procedure can be followed in the same way as for goods and services, i.e. by contacting at least three entities without publishing a call.

For contracts with a value of EUR 800,000 or more, it is mandatory to publish a call for tenders via an electronic platform. This procedure with publication ensures transparency and fairness in the procurement process.

VALUE THRESHOLDS FOR UNDER- AND OVER-LIMIT CONTRACTS

Goods and services:

Below-threshold contracts: EUR 50,000 - 142,999.99 / EUR 220,999.99

Above-limit contracts: from EUR 143,000 / EUR 221,000

Construction works:

Below-threshold contracts: EUR 50,000 – 799,999.99 and EUR 800,000 – 5,537,999.99

Above-limit contracts: from EUR 5,538,000

These new rules provide clear and efficient procedures for the procurement of goods, services and works, while ensuring that public money is cost-effective and transparent.

CHANGES TO THE REVIEW PROCEDURES

The amendment also regulates the revision procedures. A request for redress is deleted from the law without compensation. This step is an effort to simplify and speed up public procurement, as it is not a required institute according to European Union regulations. However, following the amendment to the Act, the Public Procurement Office of the Slovak Republic states that bidders in public procurement will still be able to address questions to contracting authorities and contracting authorities in the form of "Requests for clarification".

Objections in public procurement are excluded for all below-threshold contracts. In the case of below-threshold contracts for construction works, the amount for which no objections can be filed is increased from EUR 800,000 to EUR 1 500 000. This means that objections cannot be raised when awarding a below-threshold works contract if the estimated value of the contract is equal to or less than EUR 1 500 000.

The time limit for lodging objections has been extended to 10 days.

CHANGE IN THE PROCESS OF IMPOSING FINES FOR VIOLATIONS OF THE LAW

The range will now apply 0.1 to 5 % of the contract price or the sum of the prices, which should make it possible to take into account the specificities of a particular case so that the sanction imposed corresponds to the facts and at the same time reflects both mitigating and aggravating circumstances.

A review of the inspected person's actions after the conclusion of the contract may be carried out by the Office as part of the inspection:

a) on the Office's own initiative,

b) on the initiative of the managing authority,

c) on the initiative of the audit authority.

CONDITIONS OF PARTICIPATION IN PERSONAL STATUS

A person who has been convicted of specific criminal offences, who has the right to act on behalf of the applicant/tenderer or has rights related to decision-making or control in the entity, will not be able to meet the conditions for participation in personal status. Such a person is considered to be a person who has decisive influence on the activities of the tenderer or candidate, its strategic objectives or significant decisions through the right of ownership, financial interest or rules governing the tenderer or candidate.

Decisive influence includes situations where another person:

• owns a majority of the shares or a majority share in the bidder or bidder;
• has a majority of the voting rights of the candidate or candidate;
• has the right to appoint or dismiss a majority of the members of the statutory body or supervisory body of the applicant or applicant, or
• has the right to exercise decisive influence on the basis of an agreement concluded with the tenderer or candidate or on the basis of a memorandum of association, memorandum of association or articles of association, if permitted by the law of the State governed by that person.

It will be possible to meet this condition by means of an affidavit, and this condition will not have to be met by the person concerned if an urgent public interest requires the performance of the contract in question. Within the framework of personal status, it will also apply that arrears of tax or the relevant levy not exceeding the amount of EUR 200 will not constitute a reason for exclusion.

Important changes may also include the obligation for the contracting authority and contracting entity to comply with the contract or concession award procedure determined at the start of the public procurement procedure, even if they would be entitled to use a different contract or concession award procedure.

APPROVAL OF THE ACT ON EXTRAORDINARY MEASURES FOR STRATEGIC INVESTMENTS

Adoption Act on Exceptional Measures for Strategic Investments and for the Construction of the Trans-European Transport Network and on Amendments to Certain Acts is to be accelerated implementation of strategically important investments for the Slovak Republic. These will be important investment projects in individual key areas, such as transport, healthcare, energy and security.

Investors can only be:

• The Slovak Republic, represented by a state authority,
• municipalities and higher territorial units,
• legal entities that are 100% owned by the state, a higher territorial unit or a municipality,
• legal persons established by law or state authority;
• associations of legal persons whose members are exclusively those legal persons.

Permitting processes and procedures in public procurement are time-consuming, as a result of which we have a problem building our key infrastructure quickly enough, and at the same time the interest of investors decreases. This is prevented by lengthy expropriation proceedings, construction and approval proceedings, as well as public procurement, lengthy proceedings at cadastral offices and courts.

The basic objective of the law is to make passable and effective:

a) property settlement of land and buildings for the preparation of the construction of strategic projects that are important from the point of view of transport, economy, healthcare, energy, defence and security of the Slovak Republic,

b) the permitting processes necessary for the approval of strategic significant projects;

c) procurement of strategic major projects.

The investor submits an application to the ministry, which is in charge of the administration in the area in which the investment project is to be implemented. In the event that the investment project concerns several areas, the investor has the option of submitting an application to any of the relevant ministries.

The Government of the Slovak Republic has the authority to assess and decide whether the planned investment is strategic, in particular with regard to the needs of fulfilling the tasks of the state, ensuring defence or security, building the reputation of the state, contribution to the economy of the Slovak Republic or increasing economic benefits, averting long-term environmental damage.

NEW ACT ON CREDIT SERVICERS AND CREDIT PURCHASERS

Law on Credit Administrators and Credit Purchasers Implements Directive (EU) 2021/2167 of the European Parliament and of the Council, which responds to the growing need to effectively address the problem of non-performing loans.

Collection companies, i.e. the credit purchaser and the credit servicer must adapt their activities to the new legislative requirements and thus ensure compliance with the new regulations.

The primary objective of the Act is to address the issue of non-performing loans granted by credit institutions. The Act does not apply to the servicing of loans by banks, asset management companies and other entities defined by law. It also does not apply to credit purchases by credit institutions and loan transfers made before it comes into effect.

As the financial crisis and recession led to an increase in the number of borrowers unable to repay their loans, as several companies and citizens faced persistent payment difficulties or even bankruptcy. As a result, the number of non-performing loans (NPLs), which can affect banks' performance, has increased.

Non-performing loans reduce a bank's income compared to non-performing loans, reducing its profitability. In extreme cases, these problems can jeopardise a bank's viability and have a negative impact on financial stability. At the same time, non-performing loans require a significant amount of human and financial resources from the bank. This reduces the bank's ability to lend.

A credit servicer is a legal entity that manages loans under a contract with a lender. It is authorised to administer loans on the basis of a loan servicer licence granted by the National Bank of Slovakia (NBS). To be authorised, a loan servicer must meet conditions relating to legal form, organisational and management structure and staffing.

A credit purchaser is an entity that acquires the creditor's rights under a contract.

A NEW LIST OF DEFENCE-RELATED PRODUCTS IS INTRODUCED

The Ministry of Economy of the Slovak Republic has issued Measure with effect from 7 June 2024, which introduces a new list of defence-related products. Reflects current requirements trade in defence products. List It includes various types of weapons, ammunition, military equipment and technologies that are important for security and are subject to a strict control regime. Entrepreneurs who want to trade in defence industry products, they are required to obtain the appropriate licenses and permits.

UNDESIRABLE OCCURRENCE OF BROWN BEAR

The National Council of the Slovak Republic has finally approved an amendment to the Act on Nature and Landscape Protection and the Civil Protection Act, which is to regulate the undesirable occurrence of bears. To begin with, it should be noted that the regulation applies only to brown bears and not to large carnivores as originally stated in the amendment. Conservation organizations opposed the proposal to eliminate all large carnivores, but this would also include the wolf or lynx. They also express concerns about possible excessive sniping. On the other hand, farmers and residents of the affected areas appreciated the introduction of preventive measures and compensation mechanisms.

In the event of a brown bear, an emergency situation will be declared similarly to an earthquake or terrorist attack. As stated by the Deputy Prime Minister of the Slovak Republic, the shootings will be carried out in the interest of protecting the life, health and property of citizens, preventively and in advance. Hunting associations will also be able to carry out bear shooting, and the reason for the shooting will be the very occurrence of the bear in the area where an emergency situation will be declared. The Ministry of the Environment of the Slovak Republic has issued a Manual that specifies the shooting of a problematic brown bear.