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7 Current Practices in Complaints Review: Examples from the Region and the EU_English


ENI East Regional Conference Public Procurement Current practices in Complaints Review Bozzay English

ENI East Regional Conference Public Procurement Current practices in Complaints Review Bozzay English

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  • 1. © OECD AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU OECD Headquarters, Paris, 24-25 April 2014 Current Practices in Complaints Review: Examples from the Region and the EU Erika Bozzay, SIGMA
  • 2. © OECD AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Country example: HUNGARY
  • 3. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU I. INSTITUTIONAL FRAMEWORK 3
  • 4. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Dual System of Public Procurement Review Two separate paths of review: 1. a specialized review body (first instance)  appeal against its decision to administrative court (second instance)  remedies other than damages 2. civil courts  damages  render the contract ineffective in a given case But: no direct way to civil courts!
  • 5. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Prior Complaint to the Contracting Authority BUT: • possibility to complain directly to the contracting authority as well • optional - not a precondition for judicial review • getting more and more frequent way of dispute settlement in public procurement cases in Hungary (and most complaints do not go any further)
  • 6. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU First-instance Review Body PUBLIC PROCUREMENT ARBITRATION BOARD • operates in the framework of Public Procurement Authority (PPA) independent part of PPA + independent from the government, from Contracting Authorities BUT: there is a risk of collusion • permanent body, founded by law in 1995 • takes decisions on the basis of legal rules • its decisions are legally binding, subject to an appeal in administrative courts
  • 7. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Public Procurement Arbitration Board • specialized for public procurement cases - experience and expertise! • members:  civil servants (appointed by the PP Council)  must fulfil almost the same requirements such as judges (e.g. not having been convicted for a criminal offence)  minimum criteria: higher education degree, 3 years working experience + for lawyers: bar exam  BUT: not only lawyers are members - panels include public procurement experts with economic, transport, IT, construction or engineering background as well
  • 8. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Public Procurement Arbitration Board • Members (cont.)  Strict conflict of interests rules: • members cannot assume other paid occupation except scientific, teaching, artistic or other legally protected intellectual activity • no membership with financial obligation in business companies • no political membership • no financial interest above a certain threshold in a business company  shall act in an independent and impartial manner  are not subject to any kind of instruction but solely to law
  • 9. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Second Instance Review • Appeal against the decision of the PPAB: Administrative Courts (unfortunately no special procurement panel within the court) • Administrative court may change or annul the decision of PPAB BUT: the general rule is to change the decision (and finish the debate) annulment only in specific cases 02-May-2014 9
  • 10. © OECD AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU II. AVAILABLE REMEDIES
  • 11. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Remedies Public Procurement Arbitration Board:  Setting aside of procurement decisions (including the contract award decision)  Interim measures  Penalties Civil courts:  Damages  Annulment of concluded contract 11
  • 12. © OECD AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU III. LEGAL FRAMEWORK
  • 13. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Scope of the Review System The review system applies equally to  contracts below and above EU thresholds  all contracting authorities and entities (utilities)  defence procurements as well Any act relating to the award procedure before and after the contract has been concluded may be challenged (most frequently in practice: • conditions of the contract notice, esp. selection and award criteria • technical specifications • Designation of the winner or unsuccessful termination of the tendering procedure)
  • 14. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Initiation of proceedings Who has the right to make a claim? 1. Bidders, candidates – but they have to show a special interest in the context of the contract in question 2. Economic operators who are not bidders but whose right or legitimate interest has been harmed or is likely to be harmed by an activity or default which is in conflict with the PPL (e.g. potential bidders, candidates) 3. Chambers or interest representation organisations with an activity related to the subject-matter of procurement but only against the illegal nature of the contract notice, the documentation or the amendment thereof
  • 15. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Initiation of proceedings 4. Contracting authorities 5. Entities, institutions authorized in PPL, e.g.:  President of the Public Procurement Authority  State Audit Office  Government Control Office  Hungarian State Treasury  Commissioner for Fundamental Rights (Ombudsman)  Entity granting subsidy for a procurement  Hungarian Competition Authority  the public prosecutor, etc.
  • 16. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Time Limits for Filing a Complaint • applicants have to initiate proceedings within certain time limits • reason for time limits: to achieve a balance between the private interests of tenderers and the public interest in legal certainty and in commencement of the execution of the contract
  • 17. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Time limits for filing a complaint • Applications shall be lodged within 15 days from the occurrence of the infringement, 10 days in cases of unlawful contract award decisions • If the infringement become known at a later date, time limit shall begin at that date • But no claim admissible after 90 days following the occurence of the infringement • Special time limits:  illegal direct award of the contract: 1 year following the conclusion of the contract/beginning of performance  applications against the contract notice, invitation to tender: 5 days before the expiry date of submitting tenders
  • 18. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Legal effects of launching a review proceeding • Initiating a review process does not suspend automatically the procurement procedure BUT:  the contracting authority may suspend the ongoing procedure  the contract cannot be concluded until the final decision of the PPAB
  • 19. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Time limits for decision making • PPAB has to take decisions rather quickly:  within 15 days when there is no hearing,  within 30 days if a hearing is necessary  within 60 days, if the proceedings initiated against the amendment or performance of procurement contracts  an additional 10 days (in the third case 30 days) extension can be granted if justifiable circumstances arise • courts require considerably more time to issue a judgement – there are no mandatory time limits for courts to make decisions
  • 20. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Costs, Fees and Deposits • the complaint to the contracting authority is free of charge. • proceedings before the PPAB are subject to an administrative service fee – the amount of which depends on several circumstances;  the value of public procurement  the content of the application (the number of the elements of the plea) • the losing party has to bear all or part of the costs of the winning party
  • 21. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Communication of Decisions PPAB decisions are • delivered to the parties and other interested parties by regular mail • also published in the Public Procurement Bulletin (official press of PPA, only on-line version) • published on its own website as well: Judgements of the court are also published on the website The most important decisions are also published and commented in Közbeszerzési Szemle, which is a monthly legal publication.
  • 22. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Database of decisions, judgements • Decisions of PPAB and judgements of courts are available through internet • Web-based database:  Public  Free of charge  Searching possibilities 22
  • 23. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Unified application of law within the PPAB • The PPAB shall operate a college for the cases and groups of cases set out in the organizational and operational regulations. • The college shall examine the practice of the PPAB and express its opinion on the disputed legal issues in order to enhance a uniform practice of review.
  • 24. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Remedy against the decision of PPAB • Before administrative court • The court may change the decision (and finish the debate). Annulment only in specific cases. • The court’s decision can be appealed only in exceptional cases – as a general rule there is no third instance
  • 25. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU IV. PUBLIC PROCUREMENT REVIEW ENVIRONMENT AND CULTURE 25
  • 26. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU General level of knowledge • Wide range of training opportunities for lawyers, judges, tenderers, contracting officers • Post-graduate programmes in public procurement law and procurement management • Policy and research institutes • Websites and specialised journals on public procurement • National associations on public procurement: • e.g. Hungarian Official Public Procurement Advisors’ Association (HOPPAA) (But it is the result of a lengthy development…) 26
  • 27. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU The Operation of Review and Remedies Systems in Practice Annual (public) reports on the operation of the PPAB give us an overview: • how frequently is the review system “used”by tenderers? • are first instance decisions appealed in a second or even third instance? • are tenderers successful and satisfied with the outcome of proceedings overall? • which remedies are actually awarded in practice?
  • 28. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Attitudes Towards Review Proceedings • Some bidders see review proceedings as a matter of last resort • Others intend to obstruct procurement through review proceedings (previously it was rather frequent – current answer for it: high fees, but: high fees may deter from seeking judicial review…) • In some cases, bidders do not turn to the PPAB but ask the delegate of the relevant professional organisation which is represented at the Public Procurement Council with a request to submit a complaint instead of the company.
  • 29. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Remedies Culture • Number of cases per year: • 2010: 1011 • 2011: 1011 • 2012: 695 • Some 20% of PPAB decisions are challenged in court: • 2010: 196 • 2011: 164 • 2012: 130
  • 30. AjointinitiativeoftheOECDandtheEuropeanUnion, principallyfinancedbytheEU Non-official English translation of the Hungarian PPL is available on the website of the Public Procurement Authority: