Public procurement in Bulgaria. Illegal practices. Appeal.

Introduction:

With this article, I aim to shed light on a case from practice concerning an architectural open competition for a project held in accordance with the Public Procurement Act (PPA) in the direction of the limits of interpretation of the legal framework by the Contracting Authority, which without any irony in case, it turns out there are none. 

Through the specific case study, typical examples grossly violating the imperatives of the PPA and its principles - equality and free competition, the ranking of favored participants, notice through an optional element of performance, and yet gave priority in the evaluation and ranked the competition projects in the first three places.

An interesting highlight of the public procurement, which will be analyzed, is the determined prize fund for the first three ranked participants in the amount of BGN 20,000 in total, with the focus being on the additional condition specified in the announcement of the competition and which states that " the ranked First of all, a participant  will be invited to prepare a technical and working investment project and author's supervision for the construction of a new building in accordance with Article 79, paragraph 1, item 9 of the Public Procurement Act. [1]  ", for which project note that  300,000 BGN have been allocated . Thus set, the condition for participation of only the first ranked in a subsequent procedure with a significant predictive value, is worth discussing in accordance with the legal and judicial doctrine of the Community law of the European Union and the introduced rule in the direction of ensuring competition on the widest possible basis, laid down in fact as a rule in Directive 2014/24/EU.

1.  The main first problem in the analyzed public procurement is the flawed anonymity of submitted project proposals, the guarantee of which ensures the principle of equality of participants. In the specific case, anonymity was violated through the non-regulated electronic platform introduced by the contracting authority in the absence of legal grounds.

In the Notice to publicize the procedure, the contracting authority indicated an address for sending tender documentation, cit. "electronically via: (URL)  https://app.eop.bg/today/292480 ". 

Contrary to Art. 39a of the Civil Code [2]  and Art. 89, para. 1 [3]  PPZOP, the contracting authority has introduced additional alternative ways of submitting the competition projects and the participation documents, stating in the participation documentation that they can be submitted through the "competition website  https://competition.puppetry.center/ ”, as well as “Conventional, on paper”, but the same are not specified in the Announcement.

By introducing an external platform through which documents and tender projects can be submitted, as an alternative to the Centralized Automated Information System "Electronic Public Procurement" (CAIS EOP), the contracting authority in practice  violates the conditions guaranteeing the anonymity of the participants. Argument in support of what has been said are the following basic legal provisions:

The contracting authority did  not have the status of a Central Purchasing Authority [4] , according to Art. 96, para. 1 of the Civil Code, in order to justify the alternative electronic platform  https://competition.puppetry.center created by it .

Another possibility providing the right to an alternative platform is the possible  presence of classified information [5] . In this hypothesis, however, the contracting authority should have indicated the special rules for its exchange, in accordance with the PZR of the ZOP, Part E, item 16, i.e. "the information that must at least be contained in the project tender announcement", resp. . pursuant to  Art. 172, para. 1 ZOP.  [6]  There are no such instructions, and there is no classified information that would justify the alternative way of submitting the tender projects. 

The conducted competition  does not have a specialized nature [7]  - art. 39a, para. 9 ZOP , which is another reason allowing for an alternative platform. And in this hypothesis, the contracting authority has not presented in the announcement reasons justifying the use of specific tools and devices, in alternative formats and files to be supported by non-public applications. For the latter, there is no information from the contracting authority that they are used in the contested order and are the subject of a license scheme for the protection of copyrights. Respectively,  there is no indication of a way to prepare and/or present  the offers, in connection with the specifics of the format, file, etc.

And last but not least,  https://competition.puppetry.center/ ” as an alternative Internet address for the contracting authority, is not indicated in the announcement, which is a violation of the procedure and misleads the participants. 

What is stated in this paragraph aims to illustrate the fact of a vicious practice by a public contracting authority, which is so striking that perhaps we should raise the question of the possibility of self-reporting to the competent institutions in case of significant violations of the public interest with a significant amount of spending of public resources - 320 BGN 000 

2 The second problem , which clearly speaks of a violation of the principle of publicity and transparency, is the concluded service contract (No. 30/27.01.2023) with an external company ("Optimistas" OOD), but not published on the buyer's profile according to arg. of Art. 44, Para. 3, Item 1 of the Civil Code. In addition to this fact, there is also the fact that the contracting authority has given this external company the status of  "organizer"  of the competition. On the basis of Article 5 of the Public Procurement Act, I would like to point out that the Contracting Authority is the one responsible for the correct forecasting, planning,  implementation , completion and reporting of the results of public procurement. No other person, company, etc. has and cannot have the status of "organizer" of a public procurement in the event of spending public funds. Contrary to the law, however, in the specific procedure, the contracting authority allowed the preparation, consultation, assistance and its implementation to be carried out by the same external legal entity. 

The presence of the same external entity in the overall process of the public procurement violates the Public Procurement Act, as Art. 44 of the Public Procurement Act regulates the hypotheses of the participation of  outsiders  with its expertise  in the preparation  for awarding a public procurement until the moment of its announcement. The argument for this statement is drawn from the provision of Art. 29, paragraph 2 PPZOP.  [8]

Correlative to what has been said so far is the next paragraph.

3.  The contracting authority has allowed the participation of outsiders who raise reasonable doubts about the anonymity of the conducted competition and lead to a hypothesis of a conflict of interests, evident from a reference in the Commercial Register. It turns out that one of the owners of the capital of the foreign company, the so-called "organizer" is related to a lawyer who (please note) "aids and assists" the client by consulting and submitting documents and projects on behalf of the participants.

The legitimate question arises, is it possible for a lawyer hired by the contracting authority to serve participants in the procedure? How many participants can he fill out and submit the EEDOP and the competition projects and how does he guarantee their anonymity?? The answers are categorically negative, and we leave the conclusions again to you!!!!

In fact, it turns out that the lawyer in question, from the same profile in CAIS, submitted the multiple tender projects. 

There is a presumed conflict of interest given the possible kinship of two persons, since one person directly advises participants in the competition (the lawyer), submits documents on their behalf, identifying them by name, and another legal entity, through its manager, participates in the preparation and notice the running of the contest. This alleged connection between related persons and the functions granted to them by the contracting authority on the occasion of the procedural procedure reveal a significant danger of influencing the outcome of the ranking, not least because anonymity is violated already in the project preparation phase.

This flagrant illegality continues through the actions of the other manager of the "organizer" company, who was appointed  as an official "guaranteeing the anonymity" of the competition projects , according to Art. 90, paragraph 1 PPZOP.  

The question reasonably arises, how does the contracting authority guarantee the anonymity of the projects and the principle of equality in the public procurement process??

I think the answer is obvious given the fact that the person participated in the preparation of the order, in the preparation of the conditions and requirements for the participants, in the development of criteria applied in the evaluation of the projects, in the formation of the estimated value (an element that we will also touch on below ), is the same person designated by the contracting authority as an official to guarantee the anonymity of the offered projects. In fact, the same related persons - organizers prepare the procedure, participate (as lawyers) in the submission of "anonymous" project proposals and EEDOP, participate in its implementation by accepting the projects in their capacity as officials "guaranteeing anonymity". Absolute no sense!!!

In addition to the above, I will note a few interesting facts that bring an additional nuance to the topic of project proposal anonymity and independent participant selection, namely: 

a) a member of the jury in the current competition was part of the team that won the competition, the last one organized and conducted by the "organizer" namely of the current competition.

b) the winner of the first place in the current competition was again nominated for first place in another international architectural competition. "Surprisingly" the organizer is again the one of the current competition.

Obviously, the organizer, the winner, the lawyer, the official guaranteeing anonymity, the juror, are persons participating in the contested procedure, which in their interconnectedness give rise to a dubious tone regarding the objectivity and anonymity of the disputed competition, and also create a feeling of a foregone conclusion with a clear winner.

4.   Favoring a certain participant .

In the community law of the European Union, a rule has been introduced in the direction of ensuring competition on the broadest possible basis, laid down as a rule in Directive 2014/24/EU.

The judicial practice says "The procedure under Art. 79, para. 1 of the ZOP does not authorize the contracting authority to automatically negotiate with one operator. Such an interpretation finds no support in the law and contradicts the basic principle of competition. The procedure under Art. 79 ZOP is an exception (in this sense also paragraph 50 of Directive 2014/24/EU). But precisely because of the existence of an exception,  the expansive interpretation of the provision is inadmissible.

There are no objective prerequisites that would motivate the contracting authority to limit the competition as invitations to participate in the procedure to only one participant - the first ranked in the first place of the project competition held.

Given the nature of the procedure as an international open competition for a project with expected significant international interest and a significant material public resource, the contracting authority already with the Announcement sets a restrictive condition in contradiction to the principles of fair competition and specifically Article 2, Paragraph 2 of the Public Procurement Law.

What happens to those ranked second and third, why are these business entities initially deprived of the opportunity to join the negotiation procedure without prior notice??

Since the Contracting Authority does not point to any specifics or motive to the extent that it is reasonable to initially exclude a reasonable alternative and lack of competitive contractors, the invitation to only one participant in a subsequent procedure for the development of a conceptual work project  is undoubtedly an artificial narrowing  of the parameters of the order in the part for the participants,  in violation of the principles of competition.

The law on public procurement, and even less the European legislation (in particular Directive 2014/24/EU), does not authorize the contracting authority to limit competition and send an invitation to negotiate to a participant chosen by him ranked only in first place. 

Even Art. 79, para. 1 ZOP, in connection with Art. 18, para. 7 of the same normative act, in connection with Art. 18, para. 1, item 8 of the Public Procurement Act is to be interpreted in the direction of an existing possibility for the contracting authority to send an invitation to only one contractor, then this possibility should be substantiated with a maximum guarantee of compliance with the principle of free competition and the will of the contracting authority to reduce its limitation as much as possible. the specific hypothesis this is not done.

The legal doctorate requires that in all contracts, competition is ensured on the broadest possible basis under arg. of Art. 160, § 2 of Regulation No. 2018/1046 EU. The exception of Art. 164, § 1, letter "d" - negotiation procedure without prior announcement, does not mean mechanical complete limitation of the competitive environment in all hypotheses of Art. 79, para. 1 ZOP, but means a foreseen opportunity to restrict competition in accordance with justified prerequisites for this. The judicial practice in this direction is numerous and uncontroversial [9] .

5.  Predeterminacy in relation to the participant ranked first is worth discussing through the hypothesis of (un)observability of the amount of the estimated value of the order. Is the "unlimited" international competition, in fact, limited to the "legitimization" of a known winner, with a focus on the second phase of the competition, given the significant value - BGN 300,000 (for the development of a technical and work investment  project from the first place. ) That is why the question of  how the estimated value of the order was determined and whether the principle of art. 21, par. 10, item 3 of the Civil Procedure Code was observed?

The contracting authority does not state reasons regarding the method of forming the estimated value and does not justify the amount of BGN 300,000 as appropriate for a project concerning the process.

    Architects - specialists in project studies and preparation of project documentation, similar to that in the appealed competition, are of the firm opinion that the value of the designer's fee in the amount of BGN 300,000 is several times higher than the generally accepted amount for the practice in Bulgaria.  

6.  The contracting authority gave false and illegal explanations, allowing offers to be submitted only in English - an imperative violation of Art. 33, para. 5 ZOP [10]  and Art. 84 PPZOP [11] : 

In the Announcement IV.2.4)  Languages ​​in which the projects or applications for participation can be prepared, the Contracting Authority has indicated Bulgarian and English.

In the Competition brief BG  page 11 it is stated that the official languages ​​of the competition are Bulgarian and English. On page 40, it is indicated that the competition project must be prepared bilingually in Bulgarian and English. On page 41 Explanatory text up to 2000 characters - bilingual in Bulgarian and English.

In the CAIS EOP, the Contracting Authority has published  an explanation - ex. No. АРХ-КО1/12.05.2023  cit.: "Answer 1 - All documents for the competition  are prepared bilingually ,  but you can  fill in and describe everything  only in English . " You do not need to apply a Bulgarian version if you do not speak the language. The volume of the description of 2000 characters applies only to one language in which it is written. Each participant chooses which of the two languages ​​- Bulgarian or English, or both - he wishes to submit the texts". "Answer 2 - You do not need to write anything in Bulgarian. The Bulgarian lawyer, whom you will authorize according to the power of attorney presented, will complete and submit the documents according to Bulgarian legislation".

The given clarification concerns a significant violation of the material law requiring documents to be submitted in Bulgarian. This is a procedure announced by the Bulgarian contracting authority for the utilization of Bulgarian public funds, the jury also includes Bulgarian citizens who are experts in the area relevant to the competition. Giving the participants the opportunity to submit offers, projects or any other document regarding the procedure, only in English, is a clear violation of the ZOP, PPZOP, and neglecting the Bulgarian language as the official and main language, in which the documentation must be presented .

The answer "The Bulgarian lawyer whom you will authorize" reveals confidence on the part of the contracting authority that the services of a lawyer will already be used, which reveals previously conducted conversations with this participant, outside the permissible scope of communication under the PPA - of official inquiries and official clarifications published in TSAIS EOP.

In fact, in complete contradiction to the SOP and PPZOP, the second-placed participant presented his project only in English. 

7.  Favoring a participant ranked first due to an applied element in the project, constituting a "variable option", excluding its obligation. 

It is noteworthy that the main criterion that influenced the choice of the participant ranked first is the technical version of the project implementation, indicated by the contracting authority  as an option, not a mandatory condition [12] .   This "variable option", expressed in "connection of the lobby of the new building with the existing one", in this case also gave priority to the other two ranked, respectively in second and third place, despite the absence of an explicit instruction from the contracting authority" for preferential, increasing assessment when developing the criterion "connection of vestibule area with existing building". Indeed, this optional element - "connection of buildings in the Vestibule Zone with an existing building" was also implemented by other participants in the competition. However, the final result is surprising, where the first, second and third place are project proposals that  proposed this option. This obvious fact raises a reasonable assumption for preferential evaluation  of projects with the element "connection of the vestibule area with an existing building". Reasonable doubt arises about mutual exchange of information between organizers, evaluators and participants about what will lead to a better evaluation, since the first three have this  "optional element"  in their projects, clearly prioritized. 

On the occasion of the analyzed procedure, an official opinion was presented by the Chamber of Architects in Bulgaria, in which it advocates the opinion that an illegal jury was carried out, leading to an illegal decision. Attention is paid to the lack of a certain relative weight of the project evaluation criteria and the ways to determine a complex one. In this sense, the Chamber has expressed its competent opinion regarding the lack of an Evaluation Methodology, as new additional rules were introduced by the jury itself in the work process of the jury without any reason, beyond what is described in the contracting authority's documentation. I would add that not only were the jury's own initiative to add new rules for assigning a grade, but the grades themselves are without motive.

On this issue, the Commission for the Protection of Competition says:

"The jury must present reasons - certain facts from the projects of the participants in the competition, which lead to the conclusion that the relevant project has the qualities to receive a certain number of points, according to the documentation, taking into account the criteria listed by the contracting authority in the first column of the evaluation table , approved by the contracting authority." [13]

In counterpoint to the outlined obvious viciousness in the actions of the contracting authority and the jury itself, I would like to direct your attention to the European judicial practice, namely:

The need for an accurate and clear statement in the documentation for participation in public procurement has been the subject of analysis by the Court of Justice of the European Union (CJEU), which in its decisions expressly accepted that the indicators by which the conformity of technical proposals is assessed must be worded so that not only will committee members understand and apply them in a manner that enables the proposal's compliance to be actually verified, but that "all reasonably informed and exercising ordinary care potential bidders will understand their precise scope and respectively to interpret them in the same way". (See for example:  judgment of 10 May 2012, Commission v Kingdom of the Netherlands, C-369/10, EU: C: 2012: 284, para. 88, mutatis mutandis judgment of 16 February 2012, Costa, C -72/10 and C-77/10, EU: C: 2012: 80, item 73 ). It is necessary the contracting authority, resp. the auxiliary commission, through which it exercises its powers in connection with the admission and evaluation of the proposals, has the opportunity to carry out an actual check whether the offers correspond to the set requirements. ( Judgment of 22 June 2017, C-49/17, Unibet, EU: C: 2017: 491, paragraph 46, as well as judgment of 4 December 2003, EVN, EU: C: 2003: 651, paragraph . 56 and 57 ).

In its consistent practice, the SAC accepts that valuation guidelines should be set out clearly, accurately and unambiguously in the procurement notice and in the documentation so as to enable all reasonably informed and exercising ordinary care participants to understand and interpret their precise scope in a uniform manner, as well as to allow the contracting authority to effectively verify that the tenders meet the criteria.

In conclusion:

The violations discussed in this article are not the only ones found upon familiarization with the complete documentation on organizing and conducting the public procurement.

I believe that an important step towards the idea of ​​passing a lawful decision on the selection of an executor in project tenders is the introduction of a legal mechanism in the ZOP, so that the evaluation of the jurors and the reasons with which they justify them are subject to control from to reasonableness and reasonableness , as it is in the civil process, although the proceedings before the CPC are special in nature. 

Unfortunately, despite the current regulatory framework and contrary to it, an interpretive manner of perceiving and applying the imperatives of the PPA is still implemented, which is used by contracting authorities and jurors when spending public funds and with an unjustified inflated amount of the estimated value. Opinion a propo, also expressed by the professional Chamber of Architects in Bulgaria regarding the process architectural open competition for a project.

Such practices should be stopped at the outset, otherwise the desire of significant professional organizations to participate in design contests will give way to apathy and mediocrity.

Author: Borislava Doncheva - attorney at law

[1]  Thus, Art. 79, Para. 1, Item 9 of the Public Procurement Act "Public contracting authorities may apply a negotiation procedure without prior notice only in the following cases: Item 9, the service is awarded after a design competitionconducted in accordance with the law, as invitations to participate in the negotiations are sent to the ranked participant or to all ranked participants in accordance with the conditions of the competition.

[2]  Art. 39a, para. 1 ZOP When awarding public contracts, including through a dynamic system for purchases, a framework agreement and a qualification system, as well as when conducting contests for a project, a centralized electronic platform is used.

[3]  Art. 89, paragraph 1 PPZOP "The tender project and the documents under Art. 39, para. 2 are submitted through the platform according to the rules under Art. 229, para. 1, item 12 of the Civil Code and subject to compliance with the requirements set by the contracting authority.”

[4]  Art. 39a, para. 6 of the LLP "The central procurement authorities may use platforms for electronic procurement, other than the platform under para. 1, provided they meet the requirements of para. 7 and provide an opportunity to perform the actions under para. 4 necessary to place orders through these platforms. 

[5] Art. 39a, para. 8 of the PPA. The assignors do not use the platform under para. 1 for preparation and exchange of documents containing classified information, with the exception of decisions under Art. 22, para. 1, item 1, 2, 4, 5, 6 and para. 8 and the announcements under Art. 156..

[6]  Art. 172, paragraph 1 of the Public Procurement Act, the contracting authorities indicate in the announcement whether the public procurement contains or requires classified information. In this case, in the documentation that it provides with the invitation to participate, the contracting authority sets requirements for the participants and their subcontractors in order to protect the classified information.

[7]  Art. 39a, para. 9 ZOP As an exception, contracting authorities may not require use of the platform under para. 1 when preparing and/or submitting bids, when the specialized nature of the public procurement requires the use of specific tools and devices, or file formats supported by applications that are not generally available and cannot be provided to the contracting authority for download, or remote use, including when included in a copyright protection licensing scheme. In the documentation, the contracting authorities indicate the method of preparation and/or presentation of the offers and indicate written reasons, which are published in the order file.

[8]  The persons who participate in the preparation of documentation for a public procurement are obliged  to keep confidential all data and circumstances that have become known to them in connection with their workuntil the procedure is opened

[9]  In this sense: Decision No. 337 of 10.01.2020 of the Court of Appeal under adm. case No. 13297/2019, Department VII, Decision No. 1177 of 24.01.2020 of the Court of Appeal under adm. case No. 8400/2019, Department VII, Decision No. 3635 of 10.03.2020 of the Supreme Administrative Court under adm. case No. 450/2020, VII department.

[10]  The clarifications cannot introduce changes in the conditions of the procedure.

[11]  Each person who participates in a project competition has the right to present only one project prepared in the Bulgarian language.

[12]  The optional condition in the project assignment is a proposal to connect the old and the new building of the Stara Zagora Puppet Theater.

[13]  Decision No. 1234 of 14.11.2019 on file entry No. CPC - 739 / 2019 of the Commission for the Protection of Competition