Competition and Public Procurement Newsletter

New public procurement legislation – practical aspects from a supplier perspective

The new Public Procurement Act (the PPA) en­tered in­to force in 2017 and con­tains plen­ty of sig­nif­i­cant changes com­pared to pre­vi­ous leg­is­la­tion that are nec­es­sary for sup­pli­ers to be aware of.

Amendments in pub­lic con­tracts

There have pre­vi­ous­ly been no spe­cif­ic rules in the PPA re­gard­ing amend­ments of con­tracts. In the new PPA, how­ev­er, there are de­tailed rules in this re­gard. If a con­tract is amend­ed in breach of the PPA, the con­tract can be de­clared in­ef­fec­tive by the ad­min­is­tra­tive courts. Naturally, it is very im­por­tant for a sup­pli­er to be fa­mil­iar with these new rules in or­der to as­sess whether or not a pro­posed amend­ment is per­mit­ted. The new rules al­so ap­ply to con­tracts en­tered in­to be­fore 2017, which means that all ex­ist­ing pub­lic con­tracts are sub­ject to this new leg­is­la­tion.

Abnormally low pric­ing

Abnormally low ten­ders have pre­vi­ous­ly been pos­si­ble to ac­cept as it was up to the con­tract­ing au­thor­i­ty to de­cide whether or not an ab­nor­mal­ly low ten­der should be dis­card­ed. However, the new PPA states that ab­nor­mal­ly low ten­ders must be dis­card­ed un­less the sup­pli­er can pro­vide a sat­is­fac­to­ry ex­pla­na­tion. Hence sup­pli­ers must ex­pect ques­tions from con­tract­ing au­thor­i­ties re­gard­ing low pric­ing more of­ten than be­fore. It is there­fore im­per­a­tive for sup­pli­ers to know what ex­pla­na­tions are con­sid­ered sat­is­fac­to­ry and what ev­i­dence might be re­quired to sup­port them. The ad­min­is­tra­tive courts have al­ready de­cid­ed a num­ber of cas­es re­gard­ing ab­nor­mal­ly low ten­ders, and more cas­es are sure to come.

Case law

Public pro­cure­ment is an area of law which to a large ex­tent is gov­erned by case law. Due to the many changes in the new PPA, the need for fur­ther le­gal prece­dents is ob­vi­ous. New in­ter­est­ing case law can be ex­pect­ed in 2018.