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Doing Business in the C zech Republic III. How to Do Business in the C zech Republic

PUBLIC PROCUREMENT IN THE CR: PRINCIPAL CHANGES NOT TO BE OVERLOOKED The public procurement market in the Czech Republic is on the rise. After a three-year period of permanent decline, its value reached CZK 577 billion in 2014, thus returning almost to the 2009 and 2010 levels. It is highly probable that its total amount will exceed CZK 600 billion this year. The restored rising tendency is good news for the large numbers of foreign companies tendering for public contracts in the Czech Republic. What effect will the new legal regulation prepared for 2016 have on this dynamic market? It will be based on the European Directives, with contracting authorities as well as suppliers expecting it to streamline and simplify public procurement. In respect of public procurement legislation, the year 2015 has two highlights. In March 2015, a technical Amendment to the existing Law on Public Procurement came into force and solved some of its most acute problems. However, the second and truly pivotal change indeed still awaits public procurement. An entirely new Law on the Award of Public Contracts is prepared for debate by the government. It is expected to replace the existing Law on Public Procurement with effect from April 2016 and bring the Czech legislation into compliance with the new European Directives of 2014. The following article sums up the changes having the greatest impact on suppliers tendering for public contracts in the Czech Republic.

I. TECHNICAL AMENDMENT TO EXISTING PUBLIC PROCUREMENT ACT (2015) The existing law including the abovementioned technical Amendment will apply to all public procurement organised until the new law comes into effect, that is approximately by April 2016. The following are the main changes introduced by the Amendment.  A single received bid will not mean cancellation of the procurement procedure: Contracting authorities are no longer required to cancel the procurement procedure in the case of only one bid being submitted. Such a course is now voluntary. This will prevent unnecessary complications, especially in specific contracts where only a certain supplier is often capable of executing them.  Increase in extra work limit: Further, the Amendment increased the limit on the award of extra work to the same supplier to 30 % of the value of the original contract. But a further increase of this limit to 50% will be en-

sured probably by the new Law on Public Procurement and the Czech Republic will thus not remain among the countries with the strictest regulation of extra work in the European Union.  Assessment of supplier’s employees: A no less important change is the possibility of the contracting authority to assess the organisation, qualifications, and experience of the persons involved in the execution of the public contract, where they have a significant impact on its implementation. This is crucial in contracts the quality of which depends directly on the abilities of specific people (e.g. architects, designers, lawyers, or other consultants).

II. NEW LAW ON PUBLIC PROCUREMENT (2016) Main Motives for the Adoption of Revised Legislation: European Directives and Unsatisfactory Czech Law Both contracting authorities and suppliers have criticised the former European regulation of public contracts award as overly bureaucratic and complex. For example, the restraining rules did not allow contracting authorities to set the conditions of the procurement procedures sufficiently to suit their own needs and restricted their competence in negotiations with suppliers or in the determination of suitable assessment criteria. Similarly, it placed excessive demands on suppliers that could discourage them from participation in public contract tendering. Naturally, the Czech regulation suffers from identical problems. This is to be changed by the new Directives adopted by the European Union in February 2014. They represent the most significant overhaul of the public procurement legislation on the all-European level in the last decade. Member states, including the Czech Republic, are bound to transpose them to their legal systems by 18 April 2016 at the latest, or risk the discontinuance of European grants. The new Law on Public Procurement is also to forestall the constant amending, which has contributed to the excessive complexity and confusion of the Czech regulation currently in place.

NEW RULES WILL REDUCE ADMINISTRATIVE BURDEN The elimination of bureaucratic obstacles is primarily to reduce the excessive administrative work and length of procurement proceedings as well as related costs. The new rules are to improve especially the position of small and medium-sized enterprises.  Self-declaration on the fulfilment of qualification: Currently, participants in procurement procedures must submit numerous documents to prove their clean criminal record, fulfilment of qualifications, as well as the non-existence of conditions for exclusion. It will newly be possible to replace these documents with a self-declaration contained in the European Single Procurement Document. This is a standard form available on-line that the contracting authority is obliged to accept. Only the supplier who is selected as the appointed contractor will be required actually to submit the documents.

2015/2016

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Doing Business in the Czech Republic 2016  

This title (in English), appearing since 1994, contains topical economic, business and practical information intended for foreign businessme...

Doing Business in the Czech Republic 2016  

This title (in English), appearing since 1994, contains topical economic, business and practical information intended for foreign businessme...

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