Government Emergency Ordinance no. 58 of 19 September 2016

On 22 September 2016, the Emergency Ordinance no. 58/2016 for amending and supplementing certain regulations having impact on the area of public procurement was published and entered into  force  (“GEO  58/2016”).  The  adoption  of  the  Ordinance  was  justified  by  the  need  for harmonization of certain regulations with the provisions of the new public procurement laws and with the European Union rules in the matter, in the field of small and medium-sized enterprises (”SMEs”) and of the Community public utility services.

GEO 58/2016 shall amend the following regulations:

• Law no. 346/2004 regarding the stimulation of the creation and development of small and medium-sized enterprises (“Law on SMEs”);
• Law on community public utility services no. 51/2006 (“Law on utility services”); and
• Law regarding sanitation services within localities no. 101/2006 (“Law on sanitation services”);

Here  is  a  brief  presentation  of  some  of  the  most  important  amendments  brought  by  GEO  no. 58/2016. 

1. Amendments to the Law on SMEs

GEO  no.  58/2016  repeals  the  provisions  of  art.  16  para.  (2)  of  Law  on  SMEs,  setting  forth facilities for the participation of the SMEs in the procedures for the award of public procurement contracts, in the form of a 50 % reduction of the criteria related to turnover, to tender guarantee and to performance bond.

The amendment was necessary, as the European Commission had noticed the non-compliance of these facilities creating a positive discrimination in favour of the SMEs with the European Union law. Thus, Romania risked the opening of the infringement procedure and the application of certain financial corrections in its non-reimbursable financing projects from the budget of the European Union in which the SMEs benefited from these facilities.

Instead, the new legislative package in the field of public procurement includes other provisions which foster the participation of the SMEs, however, without representing a breach of the European Union law. These provisions include to convert into rule the splitting of contracts into lots (the contracting authorities being obliged to justify any contrary decision) and the opportunity of the contracting authority to make payments directly to its subcontractors, which are SMEs in many cases.

2. Amendments to the Law on utility services

For a long period, Law on utility services and the former regulation of public procurement, GEO no.  34/2006,  have  been  applied  in  parallel,  and  the  attempts  to  harmonize  them  were  only partial, which resulted in ambiguities in practice. GEO no. 58/2016 takes into account to link the provisions of Law on utility services with the new legislation of public procurement.

The main amendments consider the following:

• the possibility of exercising direct management both through the agency of public law bodies, and through the agency of private law bodies, shall be regulated;
• however, private law bodies which are likely to benefit from direct management shall meet certain strict requirements:

• the territorial administrative units, alone or in their capacity as members of an intra-Community development association, exercise direct control and dominant influence on the strategic decisions of the operator in relation to the provided/rendered service, similar to the control exercised on its own structures in case of direct management. When acting alone, the territorial administrative units shall act as sole shareholder of the concerned operator;
• the operator exclusively carries on activities in the area of providing/rendering public utility services intended to meet the general public interest needs of the users within the jurisdiction of the territorial administrative units/intra- Community development association;
• the share capital of the operator is fully owned by the territorial administrative unit/territorial administrative units being members of an intra-Community development association: The participation of the private capital in the share capital of the operator shall be
  • a delegation contract for managing public utility services may be a public procurement contract or a service concession contract. The difference between those two contracts shall be made by the manner in which the contracting authority shall conceive the distribution of risks in the contract to be concluded;

• the award procedures, no matter the type of the delegated service, shall be those regulated by the new legislative package on public procurement and concessions for works and concessions for services;
• the provision regarding the maximum duration of 35 years for the management delegation contracts shall be limited, and the provisions regarding the duration shall be linked with those of the new legislative package on public procurement and concessions for works and concessions for services. The duration of the management delegation contracts shall not exceed the maximum duration needed for the recovery of investments lying on the operator. In the case of direct management, the local public administration authorities, except those which are members of the intra-Community development associations, shall be obliged to carry out analyses every 5 years, regarding the economic efficiency of the respective service, respectively to change the manner of management of public services, as the case may be;
• conditioning the participation of operators in the procedures for the delegation of public utility services management on the possession of a license issued or acknowledged by the relevant regulatory authorities shall be removed; instead, operators shall request and obtain the license within 90 days from the approval of the contracting out decision or, if appropriate, from the signing date of the management delegation contract;
• the management delegation contracts shall be directly awarded only after obtaining the opinion of the Competition Council regarding the compliance with the specific provisions in the field of competition and State aid. The exceptions to this rule shall include contracts whose estimated value is less than the value provided under the public procurement laws and the regional operators implementing projects financed from European non-reimbursable funds in the field of water and waste water;
• the settlement of disputes between the territorial administrative units and operators regarding the management delegation contracts shall take place according to the provisions of Law no. 101/2016 on remedies and means of appeal in the matter of public procurement. This explanation is welcomed and as necessary as possible in the context in which, after the effective date of the new legislation of public procurement, there were certain cases in which the National Council for Solving Complaints has declined jurisdiction of solving such disputes to competent administrative courts according to Law no. 554/2004 on administrative

3. Amendments to the Law on sanitation services

Similarly to the amendments to Law on utility services as regards the provisions related to the duration of the management delegation contract, in the case of the sanitation service, it was also intended to link these provisions with those of the legislative package in the matter of public procurement and concessions for works and concessions for services.

Hence, the provision according to which the maximum duration of the sanitation services management delegation contract is of 35 years, has been repealed. Accordingly, the provisions allowing the possibility of extending the initial duration of the contract under an addendum under certain conditions, without exceeding a total duration of 49 years, have also been repealed.

As a result of these amendments, the rules regulating the duration of the sanitation services management delegation contracts shall be provided for under the applicable laws on public procurement and concessions for works and concessions for services.

This information is not legal assistance. For further details, please contact us.