Public Procurement Alert: The new Public Procurement Law Comes Into Force In Latvia

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Dear Clients, 

Today, on 1 March 2017, the new Public Procurement Law comes info force, and by this Law Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 is introduced. 

To avoid unpleasant surprises and to use the possibilities provided by the new Law, we offer a brief insight into the most essential changes:

-  Thresholds for the application of the Law have been increased, and the new threshold amounts are as follows*:

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-  Electronic submission of applications and proposals will be implemented gradually until 1 January 2019:

  • In procurement procedures above the EU threshold organized by centralised purchasing bodies – from 18 April 2017;
  • In procurement procedures above the EU threshold organized by all the other contracting authorities – from 1 October 2017;
  • In procurement procedures below the EU threshold – from 1 April 2018;
  • In “small purchase procurement” and procurements regarding services listed in Annex No.2 to the Law – from 1 January 2019;

-  An obligation of contracting authorities to publish information on the planned procurement procedures in the state electronic information system www.eis.gov.lv intended for receipt of applications and proposals (from 1 June 2017);

-  Prior to commencement of procurement, the contracting authority is entitled to organize a meeting, as well as consult the suppliers to prepare the procurement and inform the suppliers about the plan and requirements for the procurement;

-  Stricter control of subcontractors (e.g., information should be given about subcontractors ensuring at least 10% of the contract (previously 20 %) and information about subcontractors will be required also in supply contracts);

-  Tender procedure with negotiations has been introduced, that essentially replaces the negotiated procedure, by publication of a contract notice;

-   Innovation partnership procedure has been introduced, and contracting authorities mayuse it for development and the subsequent purchase of an innovative product, service or construction work;

-   The most economically advantageous tender criterion shall be used as a contract award criteria (replacing the lowest price criterion), except:

  • If the technical specification is detailed and no other criteria are important;
  • In “small purchase procurements”;
  • For services listed in Annex No.2 to the Law;

-  The exclusion grounds regarding tax debts will be checked also regarding real estate tax debts (only for tenderers registered or permanently resident in Latvia);

-  New exclusion grounds have been introduced – severe professional misconduct by the candidate or the tenderer (the list of these will be specified in the Cabinet Regulations), as well as a failure to perform the contract concluded with other contracting authorities, if that fact has been acknowledged by a decision of a competent institution or judgement of court that has entered into force and is not subject to further challenges and appeals. The contracting authority may exclude a supplier, only if the above grounds have been specified in the procurement documents;

-  A deposit for filing an application to the Procurement Monitoring Office has been introduced – 0.5% of the estimated contract value, but no more than EUR 15,000 in case of construction work contract and EUR 840 in case of supply and public service contract;

-  The cases when the contracting authority is entitled to preliminary termination of the contract have been specified in the Law. For example, in case of significant and unacceptable changes in the contract, the contract has not been concluded per the procurement procedure rules, the exclusion grounds have been applicable to the respective supplier at the moment of conclusion of the contract. 

The already announced procurement procedures shall be finished, as well as challenged and appealed, in accordance with the rules that were in force at the time of their announcement or at the moment when the decision of the launching of the procurement has been taken (if the procurement does not have to be announced), with exception of certain provisions regarding publication of notices. 

Nevertheless, the story does not end with the Public Procurement Law – comparatively more essential issues will be regulated in detail by series of Cabinet 

Regulations. E.g., rules about the procedure for the course of procurement procedures and design contests, rules on the procedure for payment or submission and repayment or refunding of the deposit for procurement procedure violations, rules on the list of professional misconduct. 

In addition, on 1 April 2017, the new Law on the Procurement of Public Service Providers comes into force. It will replace the existing law, and by this law Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 is introduced.  This Law in principle contains the same changes referred above, except for different threshold amounts for application of the Law. 

If there is a need for more detailed explanation or additional questions arise, please contact us and we will be happy to help.

Linda Štrause, Māra Stabulniece, Džeina Gaile

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